It is expected that millennials are going to be a major driving force to boost Canada’s real estate in 2020. This was according to a forecast set by industry experts and analysts and a healthy price increase is expected next year as well. The average residential sale prices will also rise by about 3.7%, according to several reports.
This increase is seen because older millennials are now slowing moving towards the peak of their careers and are reaching a point in their lives where they want to invest in a good home and are in a position to do so. Also, ever since it was introduced, more and more millennials have adjusted to the mortgage stress test that stoked speculation in 2018. As a result, there has been an increase in mortgage applications by a handsome percentage. The applicants should be able to pay a down payment of 20% and should also undergo a stress test where they will be able to sustain the present, as well as an increased mortgage rate in future, which is about 2%, taking into account inflation rates.
Why millennials will impact the housing market next year
Millennials are now financially more at ease to make such commitments and with most families being double income families, these targets are now being met with greater ease. Windsor, Ontario, which is located near the US border, across the Delaware River from Detroit is most likely to witness the maximum price increase next year. This could be in the range of 9% as per reports. The average sales price would be around C$ 365,747 based on predictions for 2020. As a result, other factors would kick in and there would be an increase in sales, fewer listings, lower inventory and a higher number of Move- Over Buyers relocating here from the Greater Toronto Areas for accessing more affordable housing options.
On the other hand, even if the overall transactions are all set to increase, there might be slower sales figures for luxury housing units in 2020, after several years of immense growth. It has been seen that Southern Ontario has witnessed strong price growth and in some regions, growth has been in double- digits according to industry experts. The region has always had a somewhat resilient economy and relatively slower population growth while development has been consistent. All these factors are expected to create the foundation for a more promising housing market in 2020.
Other major regions to be driven by millennial home buyers
The next position is taken up by Vancouver East, which in 2020, is expected to see price growth of 8% to an average of C$ 1.1 million. This is because of its continually growing population and because of strong market activity in the past years. The most populous city in Canada, Toronto, will be expected to see price growth of 6% to stand at an average of C$ 880, 841. This is also a result of higher demand and better rates of employment. The economic growth of the country overall has also been a driving factor. The luxury market in the city has seen an increase of 8.5% annually and this has also spurred an increase in home sales figures for units priced over C$ 5 million this year. The same trend is expected to continue for the year 2020 as well.
The millennials today are much more open to trying out new avenues and they will shift anywhere which offers them stability in terms of jobs and housing which is affordable to buy and sustain. They are also a lot more flexible and do not mind moving to the outskirts if they can find a house which is affordable enough since work can be mostly taken care of at home or by freelancing. In many scenarios, millennials will require only intermittent traveling to the city. Such factors have resulted in greater buying potential for millennials and gives them more options to choose from, also redistributing the population over the country. With such trends on the rise, it is expected that real estate in Canada will see better days in 2020 and also in the future in the long run.