Millennials seeking instant gratification in their homes need to be careful not to overextend their finances. Barry Magee of Sutton West Coast Realty offers advice
Barry Magee
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At one stage in most people’s lives there comes a time when you become tired of paying rent. Maybe there are pet restrictions that you no longer want to deal with, noisy neighbours or a landlord that never fixes things. Whatever the small reasons are, the primary reason always comes down to this – you want your own space.
Millennials (otherwise known as Generation Y) are definitely the internet generation and always seem to be in a hurry. How many times have you been at a dinner party in recent years where a topic is raised that no one is sure of the answer to, so the solution is “let’s Google it”? The internet is the most common way first-time buyers do their research, and this trend is only increasing.
Which is all fine, but being so used to instant gratification can provide some challenges, especially when you are dealing with something as important and complicated as the real estate process.
It’s quite common for a single person to pay $1500 a month for rent in Vancouver, and with that budget they can see that owning isn’t too far off. If you are in the financial position to do so, it can be rather tempting to jump head first into the local condo market. But it’s always important to take your time and analyze the situation. Rushing into any investment is never smart and the real estate market is certainly no exception.
The key challenge for Millennials is always saving for a down payment. After all, how many young people know the definition of the word “save” these days? With credit so readily available and encouraged, savings is pretty much the last thing on Generation Y’s mind. Not that I want to generalize and paint everyone with the same brush, but this is a reality in this day and age. If the bank of mommy and daddy isn’t available to come to the rescue, condo ownership can be out of the question. Saving is difficult in our society of consumption, and most younger people who are buying for the first time aren’t in their prime earning years, which also presents a challenge.
When it comes to the “I want my own space” part of the equation, many first-time buyers have a specific list of wants. When I take a new client condo shopping I always suggest they make two lists, one being a “must have” list, the other being a “nice to have” list. A must-have list could be comprised of number of bedrooms, neighbourhood, price range, and type of building. A nice to have list could feature a gas stove, a balcony, hardwood flooring as well as any other attractive features.
In my experience, most first-timers want everything on their list, don’t want to save for a down payment and want to extend their credit as far as possible by choosing as many upscale features as a home can have. While the desire for nice things is human nature and is only natural, overextending yourself financially is never a good option, and can lead to difficulties down the road.
Being excited about the possibility of owning a property is a great thing, and something to enjoy – but being realistic through the process is always advisable. The goal is to ensure freedom, both in your everyday life as well as the eventual financial freedom owning real estate brings. Live it, enjoy it, get excited, but try to be patient as well. You will thank yourself for it.
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