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Millennials Saving for a Downpayment - the issues ...
June 28, 2021 | Posted by: Julie Stewart-Boyle
I hear many different opinions about why millennials are having to rely on parents to co-sign or provide a large downpayment to get into the real estate market. Why is this? Are they not working hard enough, saving enough or not as motivated enough? Enough I say! As a mortgage broker in Victoria, serving the entire island and BC, I found a good article which spells out why it is so much more difficult for our millennials. It takes a millennial 20 years to save up for a 20% downpayment as opposed to the baby boomers only needing to save for 5 years back in 1976. Ah, the days when a purchaser could actually view a property and offer less down than the asking price (and have it accepted!). Below are the key points from an article out of the Global News financial site:
“The reality for a typical young person is that they have to go to school longer, pay more for that privilege, to land jobs that pay thousands of dollars less and to face housing costs that are up hundreds of thousands of dollars, which drives up rent as wel
This causes the generation to have to delay starting their families. And when they finally decide to do so, the child-care cost is then near equivalent to another rent, or mortgage-size payment.
Moving out to a less expensive market may mean job availability in their career is not there. This may mean longer commutes to current jobs - meaning longer childcare days, car insurance, gas, maintenance
“So people may think, ‘What am I doing wrong?’ But this is not an individual issue, this is a societal, economical and political issueMillennials have been accumulating less and less wealth over the past 30 years.
When baby boomers hit a median age of 35 in 1990, they collectively owned 21% of the wealth in the U.S., according to the U.S. Federal Reserve.
This is a “snowball effect” of young people unable to get their foot in the door.
Because of this struggle, many young Canadians have to rely on their parents or grandparents for financial support when purchasing a home.”
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