Can Millennials afford a home in Vancouver market?

By NextHome Staff
June 05, 2018

In Greater Vancouver, Canada’s most expensive housing market, high home values are pushing many peak Millennials into the suburbs, according to Royal LePage.

And over the last year, high rates of price appreciation and heightened competition over listings within the region’s entry-level market have made it difficult for peak Millennials to find property, especially in the downtown core.

Stress test reduced purchasing power

Not to mention the average Canadian peak millennial’s purchasing power dropped by approximately 16.5 per cent ($40,103) after the introduction of the Office of the Superintendent of Financial Institutions (OSFI) stress test.

“As prices continue to grow across Greater Vancouver, peak Millennials have found it hard to find a home,” says Adil Dinani, real estate advisor, Royal LePage West Real Estate Services. “New mortgage regulations have weakened this demographic’s purchasing power, making it tougher to compete with other buyers who now find themselves in the entry-level market as well.”

Saving for a down payment can be greatest hurdle

In major cities across Canada, a growing number of peak Millennials will save, pool their money with a partner and/or borrow funds from their parents, many of whom are downsizing in retirement and can financially contribute to their child’s first home purchase. While peak Millennials are largely able to afford their monthly mortgage expenses, coming up with an adequate down payment often proves to be the greatest hurdle to homeownership among the demographic.

“These purchasers are trying everything they can to get into the market before prices move out of their reach,” Dinani concludes. “From what we are observing, the majority of purchasers within this age range are getting assistance from their families to find enough money for a down payment on a starter home.”

Moving to the suburbs is an attractive option

There are other options, too. According to Royal LePage, many peak Millennials are looking to the suburbs, such as Coquitlam, Langley and Surrey, or further east into Abbotsford, Mission and Chilliwack, where properties are even more affordable.

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