It’s common to hear about houses going for hundreds of thousands over asking price, bully offers and bidding wars especially in large cities such as Toronto and Vancouver. The current housing bubble doesn’t appear to be anywhere near to bursting, and every day we are bombarded with media headlines and reports on the escalation of rising prices for homes.
But are the media headlines themselves affecting the market by making buyers more fearful about getting into the market? A recent study by TransUnion Canada says that one particular demographic says yes. More than half of Canadian Millennials (aged 18-34) agreed that the headlines around house prices are making them worry about their future home buying potential.
Braden Halpin, 28, is currently renting a condo in downtown Toronto, but hoping to enter the housing market, and he agrees. “Of course. Half the time I feel I need to do whatever I can to get into the market immediately, the other half I’m wistfully searching affordable properties in Thunder Bay and imagining they existed in the GTA.” In fact, Ontarians are more likely to say that media headlines are making them fearful of their home buying potential, at 50%, versus 39% in the rest of the country.
On the positive side, more than 55 percent of Millennials say that they will be in a financial position to purchase a home within the next five years. Halpin sees himself in this situation but with a qualifier. “I worry that I will be financially limited in almost every other aspect of my life because of the rising costs.” The research suggests that men are more likely than women to believe that they will be in a financial position to buy a new home, at 47% versus 38%. There are regional differences as well, with Manitobans are most likely to agree that they will be in financial position to purchase a home in the next five years, at 48%, with the lowest in Quebec at 38%.
39% of Millennials go so far as to suggest that the headlines they read and hear are preventing them from taking action to prepare for a home purchase in the future. Halpin says that this is the not the case with him and he is doing his research in order to make sure he is prepared. “It has motivated me to try and learn as much as I can about my options.”
Doing your homework, as Halpin is, is something that Heather Battison, Vice President at TransUnion would recommend. “Potential homebuyers should review their credit report and score at least six months before shopping for a home to allow time for credit building, if required,” she advises. Many new prospective home buyers have yet to take that crucial first step of getting a credit report and checking their credit score, but not Halpin. “I obsess over it,” admits Halpin. “I made a foolish mistake with my credit when I was younger which has made me particularly sensitive to staying on top of my credit score.” Battison says there are several ways to build credit. “Applying for a secured credit card, keeping your credit balances low and paying your bills on time.”
In addition to doing your homework and building your credit, Battison says to remember that it takes time to build credit, so start early, and take your time. Halpin knows it won’t be easy to find that first home that he and his fiancé can afford. “I will need to be creative, informed and prepared in order to find value.”