Living through the pandemic hasn’t been easy for anyone. But, for millennials who want to buy a first home, it has been particularly trying. In addition to the usual stresses of home buying, they have added complexities relating to job security and every other area of life the pandemic has affected.
Still, the dream of owning a home is alive for millennials. A recent study has shown that homeownership has increased throughout the pandemic in the 25-to-35 age group. In addition, a recent survey found that 48% of 25-to 35-year-old Canadians now own a home.
4 Reasons Why Right Now Is a Great Time for Millennials to Buy a Home
Are you a millennial and still not sure about getting into the real estate market? Here are just a few reasons why now is a good time to change your mind.
1. It May Get More Costly
No one can predict interest rates or house prices. However, there has been an uptick in some consumer prices, including gasoline, durable goods and groceries. Those sorts of increases can lead to higher interest rates. In turn, higher interests mean higher mortgage rates – and a higher cost of homeownership. But, right now, interest rates remain at or close to historic lows.
2. It May Get More Competitive
Perhaps the only thing more amazing than the ongoing upward march of home prices is the fact that it continued through the pandemic. However, as our borders open up and travel restrictions fall, more new Canadians will start arriving. That means more competition for all types of homes. Of course, higher demand usually increases prices.
3. Rents May Go Up
The increase in immigration will also put pressure on our already stretched rental housing stock. So the alternative to owning a home, which is renting one, may get more expensive too.
4. It Will Be More Difficult to Qualify for a Mortgage
To qualify for a mortgage, home buyers must pass a mortgage stress test. The test means they must qualify for a “theoretical” mortgage rate, one that’s higher than current mortgage rates. The purpose of the stress test is to ensure that borrowers will be able to afford mortgage payments if rates rise in the future.
There are two factors putting upward pressure on the stress test. First, last summer, the federal government increased the minimum stress test interest rate to 5.25%, up from 4.79%. Second, if interest rates go up, it can push the mortgage stress test rate even higher.
The Bottom Line?
If you’ve thought about buying a Markham house for sale as a way to get into the real estate market, right now is a great time to do it!
If you enjoyed this post, check out our recent article “5 Tips for a Successful Condo Investment“.