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Survey: How Do Young Montrealers Feel About Homeownership?

Fonds immobilier de solidarité FTQ measured buying intentions and consumer confidence among 18-34 year olds in Montreal.

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The Association des professionnels de la construction et de l’habitation du Québec (APCHQ), the Québec Federation of Real Estate Boards (QFREB) and the Fonds immobilier de solidarité FTQ recently published a survey focused on millennial buying and selling intentions in the real estate sector.

TL;DR: 50% of the 18-34 age group intend to buy a property within the next five years. This is higher than the provincial rate  of 46%. Contrary to the stereotype, millennials seem to prefer suburban homes over urban condos when it comes to homeownership.

Intentions to purchase in the next 5 years

  • 50% of Montrealers aged 18-34 intend to buy a property within the next five years
  • 55% would prefer to live in a city centre under certain conditions
  • 11% are considering buying an investment property

Purchases made in the last five years

  • 73% obtained a mortgage the first time they applied
  • 28% used the HBP as the main source of their down payment
  • 21% opted for a condominium and 52% for a single-family home

Young buyers prefer single family homes over condos

It seems the notion that young buyers prefer urban condo-living does not hold ground in Montreal.

Strong job creation in the Montréal CMA has given future buyers confidence, and this is especially true in the 18-34 age group. While 26% of all households in Greater Montréal intended to buy a property within the next five years, this rate rises to 50% among 18-34 year olds.

The majority of young adults aimed to buy a principal residence (83%) of which 58% dreamed of a single-family home. 52% of recent buyers (in the past 5 years) opted for a detached home. The rest turned to small, affordable condominiums. 28% of households who purchased in the last five years in the Montréal CMA chose a condominium, the highest rate in Québec.

Most young buyers (59%) started their search with a resale property, as this is perceived to be more affordable than a new construction. Most millennials (70%) intended to renovate their property, and expect to spend an average of $15,200.

“The Montréal market offers a variety of products that cater to several categories of buyers. According to our condominium construction partners, young people are disciplined. For their first purchase, they opt for a smaller, less expensive unit, which allows them to build their capital. A few years later, they sell for profit and then reinvest in a larger unit that better meets their needs. Condominiums can be seen as a great springboard for 18-34 year olds,” stated Normand Bélanger, President and CEO of Fonds immobilier de solidarité FTQ.

When it comes to property features:

  • 18-34 year olds want to buy larger properties than their current home in 72% of cases. For the 55 and older age group, the majority (55%) want to buy a smaller property.
  • Nearly one third (29%) of the 18-34 age group want to build their own property.

Intentions to buy investment properties

11% of the 18-34 age group in Montreal intended to buy a rental investment. This rate is a little lower for the province of Quebec as a whole (9%). Members of generation X age group (35 to 54 years old) showed the greatest interest in buying a rental investment (14%).

Montreal’s high proportion of renters compared to other Canadian provinces makes the rental property market a relatively secure investment.

Urban homeownership? Only under certain conditions 

According to the 2018 survey, 55% of prospective millennial buyers in Montreal would only choose the downtown core over the suburbs providing,

  • It offered more affordable prices (30%)
  • Improved accessibility of services (18%)
  • Better public infrastructure (13%) and
  • Larger dwellings (14%).

So overall, it seems the millennial home-buying cohort is leaning towards the suburban home. The survey also determined that once established in the suburbs, 60% of millennials would not return to the city centre.

Of the respondents intending to purchase a property within the next five years, the three most important selection criteria, excluding the price, were:

  • proximity to services (shops, restaurants, hospitals),
  • neighbourhood safety,
  • distance from the workplace.

Trends in mortgage options

49% of households in the GMA contributed a down payment of more than 20% of the cost of their property,.17% made a down payment of more than 50%.

Accelerated payments are also popular. According to the 2018 survey, 32% of households in the Greater Montréal area repay their mortgage every two weeks and 10% every week.

Among 18-34 year olds, 73% state that they obtained a mortgage on their first application. Personal savings is the main source of funds for the 18-34 age group (49%), followed by the Home Buyers’ Plan (HBP) at 28%. Only 4% of young buyers in Montreal used a loan from a family member or friend as their main source of a down payment.

58% of homeowners aged 18 to 34 pay a monthly mortgage payment of less than $1,000.

Seller intentions

The survey also measured intentions to sell, revealing that only 6% of homeowners intend to sell their property within the next year.

“Demand in the Montréal market remains very strong at a time when it is more to the advantage of sellers, both for single-family homes and condominiums. The strength of the market is due in particular to strong job creation, a historically low unemployment rate and the high level of consumer confidence,” pointed out Yanick Desnoyers, Manager of the QFREB’s Market Analysis Department.

34% of households who bought in the last five years plan to keep their property for five years or less.

26% of households in the Montréal CMA who will sell their property in the next five years will then rent a property. For those 55 and over, this rate rises to 43%.

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The web survey was conducted between October 4 and 19, 2018 from a representative sample of 6,931 French or English-speaking Québec residents, aged 18 or over. In order to be eligible, respondents had to be responsible (or co-responsible) for paying the mortgage or rent of their residence.  Quotas were established according to the region: 3,935 respondents came from the Greater Montréal area, 1,315 from the Greater Québec City area while 1,681 came from other areas of the province. In addition, the 18 to 34 target age group was “oversampled” and age-group quotas were established in order to be able to perform a generational analysis. Using data from Statistics Canada, the results were weighted according to age, regions, gender, language spoken in the home, education and presence of children in the household to ensure a sample representative of the entire study population.

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This article, Survey: How Do Young Montrealers Feel About Homeownership?, appeared first on Shupilov News.


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