Buying a house? You may have heard the real estate mantra, “location, location, location?” A new survey from TD Bank shows, when it comes to house hunting, location is one item that Millennials are reluctant to compromise on, even if it threatens their budget.
And the reasoning? According to the survey, you only live once, and Millennials are not willing to waste their precious time on lengthy commutes.
Highlights of the survey include:
- Eighty per cent said that length of commute was the biggest decision making factor when buying a house
- Forty-eighty per cent of Millennials said that they were willing to pay more money in order to live closer to work (compared with only 34 per cent of all respondents across generations)
- These Millennials are steadfast in their thinking: 81 per cent are unwilling to compromise on being close to key amenities like shops and restaurants; 80 per cent are unwilling to compromise on their top choice of neighbourhood.
“While location and lifestyle should be a part of your house hunting wish list, the absolute top item should be your budget. You need to set your budget as the guideline, and then slide in the other items, as they fit,” says Jeff Schwartz executive director, Consolidated Credit Counseling Services of Canada.
“Given the high price of housing in a number of cities in Canada, that means that compromise is going to have to come in at some point, whether it is on location, housing type or size or on other spending areas in the budget. Something has to give. Maxing out on your mortgage just to check all the boxes on your wish list is not the way to go. Before too long you’ll be house poor and be forced to compromise in other areas of your life.” says Schwartz.
Looking for a home? Here are some points to remember:
Buying a house is a long term event
Is this the only home you’ll ever own? Likely not. As a first time homebuyer (which many Millennials are) if you compromise on some items on your wish list, you can own a home that you can afford, which is the wise move- for today and tomorrow. As you are paying down that mortgage, you can cash in on your equity and move up the property ladder, effectively being able to get more items on your housing checklist that you desire, as you can afford them.
The attitude our buy-now, pay-later society suggests that you shouldn’t have to wait for immediate gratification. That is a formula for spending dangerously beyond your means, especially when it comes to housing.
Be smart about location
If you are insistent on “location, location, location” pick one that promotes the growth of your housing asset, not just one that makes your life easier, or that appeals to your lifestyle.
If you can find a home that has proximity to amenities (e.g. shops, restaurants and entertainment), access to public transportation and is close to green space (parks are great), and schools. That’s a strategic buy, as long as it fits comfortably within the parameters of your current budget. The reality is, you may have to buy a smaller home, or a different housing type (e.g. condo or townhome) in order to have the location fit into your budget. That way you can aggressively pay your mortgage down and build up equity more quickly.