TD Bank Group Newsroom
Generation Relocation: Millennials dreaming of their next home need to move out to move up
More than six in ten Millennials say moving to the suburbs is their only way
of owning the home they want
TORONTO, April 17, 2019 /CNW/ - The goal of owning the home of your dreams is alive and well – especially for Canada's Millennials. According to a new TD survey, eight in 10 (81 per cent) Canadian Millennials aspire to own their own home, but financial realities, including the rising cost of home prices across the country, mean many of today's buyers need to expand their search to the suburbs in their quest for an affordable property, even if they're already in the housing market.
According to the survey, even though a third of Millennials (33 per cent) report that city living is their preference, nearly two-thirds of Millennials (64 per cent) are willing to consider going from the urban to suburban life in order to own a home that meets their existing needs or future goals.
"We're now seeing Millennials looking beyond the city for their housing needs, particularly as they start thinking about their needs for the future, like having more space to raise a family," said Pat Giles, Vice President, Real Estate Secured Lending at TD. "As a result, many are choosing the suburbs to either make the move to a new home or upsize from their current one, a shift from just a few years ago when city living was this generation's preference."
The top three factors influencing Millennials' homebuying decisions are affordability (78 per cent), home size (60 per cent), and neighbourhood (59 per cent). Specifically, when it comes to moving outside of the urban centre and into the suburbs, Millennials say affordability (64 per cent), increased outdoor space (63 per cent) and larger living areas (62 per cent) are key factors in their decision to relocate.
Survey results show that in exchange for homeownership, Millennials are willing to make a number of day-to-day sacrifices including eating out less (58 per cent), shopping less frequently (56 per cent) and reducing their entertainment spend (50 per cent). Interestingly, respondents draw the line at an extended commute – only 27 per cent of Millennials say they're willing to spend more time travelling to and from work in exchange for their dream home in the burbs, ranking their desire to live close to work as another important purchasing factor (45 per cent).
"Although homes in today's housing market cost much more than they used to, the desire to own the right home hasn't wavered, especially for Millennials," said Giles. "And because buying a home is one of the biggest financial decisions someone will ever make, even if you've gone through the process before, our priority is ensuring our customers are prepared and feel confident at every step of the journey."
Whether you're buying your first or your fifth, TD offers advice to help reduce stress during the homebuying process:
Planning Your Purchase:
- Assess how much home you can afford: Before you start your house hunt, it's crucial to understand what you can afford. You'll want to assess how your lifestyle and other financial obligations will affect the size of your mortgage and ensure you can comfortably afford mortgage payments should interest rates rise in the future. If you already own a home, remember to factor in the equity from your current property and how it will fit into your total budget. Tools like the TD Mortgage Affordability Calculator allow buyers to understand how much home they can afford after existing equity and down payment, monthly expenses, debt payments and savings are all taken into consideration.
- Know the difference between being pre-qualified and pre-approved: While many lenders offer the ability to get you pre-qualified or pre-approved for a mortgage, the two are not the same. When you are pre-qualified for a mortgage, you have a general idea of how much mortgage you might be approved for and have a much clearer picture of the home you can afford and what you'll pay each month. Having your mortgage pre-approval in hand gives you the confidence that you can shop for the right home at the right price, and also lets sellers know you're serious when you make an offer. At TD, you can complete your pre-approval online at www.td.com/online-preapproval.
Making Your Purchase
- Plan for upfront costs: In addition to ongoing mortgage payments, it's important to understand all upfront costs above your down payment. Many are one-time expenses at the time of purchase, such as property assessments and surveys; home inspection fees; land transfer taxes; notary, legal and title insurance fees; property tax and utility adjustments; and moving costs. If you're selling your current home, you'll also have to factor in relator costs from the sales transaction. Remember to build buffer into your total budget so you can be prepared if unexpected costs arise.
- Look beyond the rate: While it might be tempting to make a mortgage decision based solely on the interest rate, it's key to understand if your mortgage gives you the flexibility you need. For example, when you need to respond to an unexpected situation, it is great to know that you may have the flexibility to speed up, slow down or even pause a mortgage payment. Not all mortgages are created equal, so it is important to understand your options before making a commitment. And when the time comes to prepare for a mortgage, TD customers can now submit their full mortgage application online, on their own time and at their own pace.
- Know what's new: From changing mortgage rates to the B20 Stress Test introduced last year, a lot has changed in the Canadian housing market in recent years. Whether you've already gone through the home purchasing process, or if this is your first time around the block, a financial advisor or mortgage specialist can help you understand what's new in the market so you can make an informed and confident homebuying decision.
Maintaining Your Purchase
- Consider the total costs of a new home: The costs of owning a home continue past the day you close on your purchase, especially if you're upsizing or moving from a condo to a house. After paying your closing costs, don't assume mortgage payments will be the sole home-related expense – you'll also have ongoing financial considerations, such as property taxes and everyday maintenance. Owning a home comes with additional expenses, and an emergency fund can help you be prepared for a rainy day, a leaky faucet or maybe an unplanned lawn mower.
About the TD Spring Homebuying Survey
TD Bank Group commissioned Environics Research Group to conduct a national online survey of 1,901 Canadians aged 25 – 69, of which 761 were Millennials between the ages of 25-34 from across the country. Responses were collected between February 22 – March 4, 2019. In order to qualify for this survey respondents had to reside in Canada and be a current homeowner or a renter with the intention of buying their next home or first home.
About TD Bank Group
The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Group ("TD" or the "Bank"). TD is the sixth largest bank in North America by branches and serves more than 25 million customers in three key businesses operating in a number of locations in financial centres around the globe: Canadian Retail, including TD Canada Trust, TD Auto Finance Canada, TD Wealth (Canada), TD Direct Investing, and TD Insurance; U.S. Retail, including TD Bank, America's Most Convenient Bank®, TD Auto Finance U.S., TD Wealth (U.S.), and an investment in TD Ameritrade; and Wholesale Banking, including TD Securities. TD also ranks among the world's leading online financial services firms, with more than 12 million active online and mobile customers. TD had $1.3 trillion in assets on January 31, 2019. The Toronto-Dominion Bank trades under the symbol "TD" on the Toronto and New York Stock Exchanges.
SOURCE TD Bank Group
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