TD Bank released a new survey this week revealing that almost half of Millennials surveyed are likely to spend more money on a home in order to shorten their commute to work.
This is compared to only 34 per cent of Canadians as a whole, which means that Millennials are valuing their time and convenience over other factors, such as size and price of home. 80 per cent of those suveyed said that commute time is paramount when it comes to their home purchase.
"While living close to work has many benefits, purchasing a home in expensive urban cities can come at a price," said Pat Giles, associate vice president of real estate secured lending at TD. “Finding your dream location means striking a balance among affordability, your non-negotiables and your financial future.”
The problem, of course, is that living closer to work often means looking for homes in more expensive urban housing markets, and Millennials' desire to cut down on their commuting time may simply be out of reach of their budgets and other expectations.
According to the "YOLOcation" survey, 68 per cent of Millennials are unlikely to move into a smaller house than they initially desired; 81 per cent are unlikely to sacrifice amenities such as living near shopping, restaraunts or services; 80 per cent are unlikely to compromise on their top choice of neighborhood; and 89 per cent are unlikely to give up a primary or secondary car. Given all of these factors, more and more Millennials are waiting to buy a home until they don't have to compromise much at all.
"Of course we want it all when it comes to finding our dream home," Giles said. "But it's important to know what trade-offs you're willing to make based on what you can afford and where you are willing to live. If an urban location is paramount, then saving for a large down payment is important. If you can accept a longer commute time, you may actually be able to afford more "you only live once" moments, like vacations, over time."
We know that Millennials tend to value spending money on experiences more than tangible items, but this suvey is an eye-opener to those people who think that Millennials will always travel as far away from urban centres as it takes to find an affordable home. Even so, Millennials need to be aware that just because you don't want to compromise doesn't mean that you should spend more than you have in order to get everything that you want.
"I think this is a message to people to say that there are key activities and key considerations that you need to take into account when you’re purchasing a home,” Giles told
mortgage broker News. “I think there are a number of common mistakes that Canadians tend to make when they’re going out and purchasing a home, especially if it’s a first home.”
In order to avoid those mistakes, TD advises the following:
Goal Setting –
TD suggests making a list of pros and cons of your "must-have" items and goals. If one of your most important goals is to live closer to a downtown work environment, for example, then you know other sacrifices will have to be made, such as the size of your home or owning a car. If you're not sure of what you'll have to sacrifice, then it's worth speaking with a real estate professional who will be able to familiarize you with different locations.
Affordability Map –
Don't assume that living further away from an urban core means a longer commute time. Maybe you live 40 miles away from a city centre, but rather than sitting in traffic twice a day, you can take a commuter rail into town, which is faster and more efficient. Some neighbourhoods that are futher out may have all of the amenities that you desire, such as shopping, nightlife, and recreational facilities. The only way to know is to really look at all areas of a city -- and that includes its suburbs -- to know what you can afford and where your affordability is located.
– There is nothing wrong with waiting until your finances are secure before you buy a home. Taking the time to build up a significant down payment can save you thousands of dollars, not only when it comes to your mortgage itself, but also when it comes to
mortgage insurance premiums. There are plenty of smart ways to come up with a down payment, and getting professional financial advice can give you a leg up. If you don't know how much you need to save, talk to your
mortgage broker. They'll be able to tell you where you stand financially, get a mortgage pre-approval
, and help you feel confident about your purchase.
"Location drives real estate prices, but so do emotions," Giles said. "Finding the right home on the right street in the right postal code is possible, especially when you get great advice to steer you in the right direction."
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