BMO Report: Rent-Weary Millennials Not in a Hurry to Become Home Owners; Need to Save Accordingly

TORONTO, ONTARIO -- (Marketwired) -- 04/26/16 -- Canadian housing prices continue to rise, but prospective millennial first time home buyers are in no rush to enter the market. According to a new report released today by BMO Bank of Montreal, while 60 per cent of millennials surveyed are tired of paying rent, 70 per cent would rather delay home ownership until they can get what they really want in a home.

This comes at a time when millennials are expecting to pay more for their first homes than previous years, exceeding $350,000 on average nationally. That figure rises to more than $465,000 and $525,000 for Toronto and Vancouver respectively.

The Millennial Mindset

The report, conducted by Pollara, revealed that almost all millennials (89 per cent) agree that there is value in home ownership, but are willing to defer the decision to own until it is personally right for them. Three-quarters of those surveyed shared that they don't feel pressured to buy sooner (73 per cent).

More millennials view buying a home in terms of making an investment decision rather than achieving an important milestone (66 per cent compared to 55 per cent). It's no wonder then, that many worry about making that investment only to find something wrong with the home they've purchased (78 per cent), or to experience a drop in the value of their property (66 per cent).

"Our young clientele are savvy and mindful of how their investments will grow, and this holds true when it comes to real estate," said Damon Knights, Director of Home Financing, BMO Bank of Montreal. "More than the intangibles, the return on a home purchase is important to millennials and they take a thoughtful approach to how their home will fare in the current housing market. These are all areas where a mortgage specialist can help guide them through."

Mr. Knights added that even though millennials do not feel pressured to buy immediately, two thirds acknowledge the potential to build equity that home ownership offers (66 per cent). If the goal of prospective millennial buyers is to see quick increases in a property's value, postponing could actually affect their ability to afford a home independently if the market continues on the upward trajectory they're hoping for.

The Missing Milestone

Only one-quarter of millennials surveyed (26 per cent) identify as very likely to buy within the next year. Two thirds (66 per cent) indicate that other priorities or goals outweigh their desire to own a home:

--  42% prioritize travelling, going back to school or starting a business;
--  38% are reluctant to be left with no disposable income if they purchase
    a home;
--  31% are still unsure where they'd like to settle down, and the same
    percentage lists 'paying off debt' as a higher priority.

----------------------------------------------------------------------------
         Reasons Millennials Are Delaying Home Ownership (by region)
----------------------------------------------------------------------------
Reason                              NAT'L  ATL  QUE   ON  PRAIRIES   AB   BC
----------------------------------------------------------------------------
Don't feel comfortable making such
 a large purchase at this point in
 my career                            44%  50%  55%  43%       27%  40%  36%
----------------------------------------------------------------------------
Other priorities take precedence
 (such as travelling, continuing
 education or starting a business)    42%  33%  34%  47%       46%  41%  48%
----------------------------------------------------------------------------
Don't want to be left with no
 disposable income                    38%   9%  30%  42%       33%  49%  48%
----------------------------------------------------------------------------
Not sure where I want to settle
 down                                 31%  17%  20%  38%       40%  35%  34%
----------------------------------------------------------------------------
Have to pay off debt first            31%  46%  35%  27%       27%  24%  32%
----------------------------------------------------------------------------

Strategic Savings Plan

While they continue to pay rent, two thirds of prospective millennial home buyers (64 per cent) are also setting aside savings for that down payment - but they will need more than money in the bank; knowledge of the market and an adaptable plan are also essential to meeting a longer term home ownership goal. For the one fifth (21 per cent) aiming to save only up to 10 per cent of a home's purchase price for a down payment, they need to realize that amount will not stay static as time passes. Yet, only 39% of the group plan to consult a mortgage specialist to navigate their decision.

"As with many other areas of their lives, our millennial customers face unique realities in the housing market compared to past generations," said Mr. Knights. "Prospective home buyers should certainly not enter the market until it is personally right for them, but as they sit on the sidelines, they need to be mindful that the market is not waiting for them. If home ownership is an eventual goal, it is crucial to speak to a mortgage specialist and set up a saving strategy that responds to the ever changing, and likely rising, rate of home prices."

To learn more about BMO's mortgage offerings and how our mortgage specialists can help get you into the home you're into, visit: www.BMO.com/mortgages.

The survey results cited in the Bank of Montreal Millennial Home Buyer Report, conducted by Pollara, are compiled from a random sample of 2,079 Canadian19 to 35 years of age between March 14th and 17th, 2016. A probability sample of this size would yield results accurate to +/- 2.2 percent, 19 times out of 20.

About BMO Financial Group

Established in 1817, BMO Financial Group is a highly diversified financial services provider based in North America. With total assets of $699 billion as of January 31, 2016, and close to 47,000 employees, BMO provides a broad range of retail banking, wealth management and investment banking products and services to more than 12 million customers and conducts business through three operating groups: Personal and Commercial Banking, Wealth Management and BMO Capital Markets.

Contacts:
Media Contacts:
Michelle Agnelo, Toronto
(416) 867-3996
[email protected]

Jessica Leroux, Toronto
(416) 867-3996
[email protected]

Valerie Doucet, Montreal
(514) 877-8224
[email protected]

Internet: www.bmo.com
Twitter: @BMOmedia

Source: BMO Bank of Montreal

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