Pattie Lovett-Reid: The pros and cons of homeownership for millennials
To buy a home or not to buy a home – that is the millennial question.
The dream of owning a home is on the minds of many young Canadians, especially now that housing market appears to have lost some steam. Canadian home sales have pulled back and overall prices have been on the decline.
The coveted spring home buying season is around the corner, so is now the time to buy? Maybe.
Barring any major shock to the economy, further deterioration in 2019 could be averted given the strong job market, strong population growth and what appears to be a more patient Bank of Canada. And the big one – the Bank of Mom and Dad is alive and well.
Before you decide if buying is for you, first you simply have to run the numbers to determine what you can and can’t afford. Your financial institution, a mortgage broker or online calculator can help with this in the initial stage.
Knowing what you want, and more importantly don’t want, in a home is critical. For example, a growing trend is outdoor living space not just for grilling but entertaining and living. A fixer-upper with a renovation budget allows for the perfect kitchen to be within your reach. A generation accused of being urban dwellers and lovers of avocado toast appear to prefer function over size, meaning less square footage over a suburban sprawl. Transportation time to and from work is often a top consideration.
The good news for those exploring the spring market opportunities in the once-hot Toronto or Vancouver markets is that opportunities may become more available. Strong condo price growth has caused the price gap of single-family homes and condos to narrow significantly. This in turn provides the opportunity for move-up buyers to trade into larger properties, freeing up inventory.
Whether now is the right time to buy for you is personal, but it’s always a good time explore the possibility and weigh the pros and cons of home ownership.
- If you own a home, you stop writing a cheque each month and build up your net worth – not your landlords’.
- Home value appreciation. Sure there are costs, but over time, there has historically been wealth creation and capital gains exemption.
- Stability in your living space and freedom to change what you want when you want.
Not to buy:
-Lack of financial diversification and an unwillingness for lifestyle compromise.
-Mortgage costs, insurance costs and consumption costs. Your home can quickly become a money pit.
- Loss of opportunity to relocate when you want.
Homeownership isn’t a dream – or even a reality – for everyone. All I’m suggesting is the spring housing market could provide an opportunity to explore the option. Ultimately, the decision to buy or not to buy stems from affordability and the type of life you can sustain financially.
And for most, be prepared to be house poor regardless of the deal you may uncover.