Thursday, September 14, 2017
DOLLARS AND SENSE At 25, an age when many millennials haven’t yet landed their first ‘real’ job, Deanna Minervini bought a three-bedroom house in Hamilton. It has a finished kitchen, parking for two and a view of the golf course and the escarpment.
Minervini, now 27, didn’t rely on ‘The Bank of Mom and Dad’ to fund her down payment when she bought two years ago. She came up with the $45,000 on her own, as a single woman just four years out of university. And she has been diligently paying it off ever since.
Minervini’s experience flies in the face of the recently released Peak Millennial Survey, from Royal Lepage which highlights residential real estate trends affecting millennials between the ages of 25 and 30. On the plus side, the report found Ontario has the greatest proportion of peak millennial respondents hoping to purchase property within the next five years (72 per cent).
And yet, roughly three-quarters (72 per cent) of those Ontario respondents said homes in their region are not affordable. That jibes with a recent research report from Theredpin brokerage indicating it takes an annual income of $200,000 or more to manage a mortgage on a detached Toronto house and about $100,000 to buy a condo.
Minervini, however, is quick to point out that she doesn’t make “anywhere near” that money. “The good news,” says Phil Soper, CEO of Royal Lepage, “typically when people put their mind to it and it becomes a priority, they usually achieve the goal of home ownership.”
Read on for five strategies that might ease the way. When it comes to saving up a down payment, it’s all about discipline, says Minervini.
“I work by day as a psychologist and behavioural therapist. And in the evenings, I teach at the gym,” she says. “That’s my play money if I want to go out for coffee or lunch. Plus, I get a free gym membership.” Side jobs help, she says, whether taking a few shifts as a server, freelancing if you have a particular skill or even participating in paid medical experiments. “They pay pretty well,” says Minervini.
Other tactics she uses to keep her costs down include packing a lunch for work every day, cooking at home rather than frequenting restaurants, collecting credit card points to be used toward travel and groceries, and avoiding bars and other money-sucking venues.
“I’m really regimented in that way,” she says. “I didn’t have to move in (with) my parents to save money, but I would have if I needed to. It just seems like such a waste to spend so much money on rent. Once you come up with a down payment, it can actually be cheaper to own a house.” Simply crossing the street can make a difference in pricing in some neighbourhoods, says Soper. What’s more, although the median price tag on a home in Toronto was $837,000 in Royal Lepage’s most recent quarterly report, he points out, some GTA communities provide particularly good value.
The median price for a home in Oshawa, for example, was just $252,000; Cambridge rang in at $270,000 and (if such a long commute isn’t part of your homeowning dream) the median price in Mississauga was $338,000. Tellingly, roughly 61 per cent of the millennials surveyed by Royal Lepage said they would be willing to move to another city or suburb where property is more affordable, if necessary. When Royal Lepage sales representative Margie Mcneil walked into an older condo recently with one of her millennial clients, the woman almost immediately turned around and walked out.
“The condo was dark and packed with furniture and toys, and it smelled bad,” says Mcneil. Yet, underneath all that clutter, it was spacious, with the kind of square footage you wouldn’t normally find in a new-build condo.
“We talked about its potential,” says Mcneil. And after the client viewed a few smaller units, “she wrapped her head around the idea of doing a bit of work. She bought the condo, painted it, gave the kitchen a facelift and replaced the flooring. Now it looks amazing.” “When you’re in university, it’s really easy to just assume you have this huge debt and it’s going to take forever to pay off, so what’s the difference if you spend a little bit of extra money here and there,” Minervini says. “But you have to think ahead.”
She worked two and three part-time jobs while at school and was able to pay off her small student loan immediately on graduating. She also avoided other debts and paid her credit card off on time religiously.
And — on her dad’s advice — she increased her credit limit whenever the bank offered in order to build up her credit. That meant she had an excellent credit rating when it came time to take on a mortgage. Although only about 35 per cent of peak millennials are already home-owners, according to Royal Lepage, by age 50 or so about 77 per cent of Canadians own a home.
“You’ll get there eventually,” says Soper. “It’s a myth that properties aren’t available and accessible in the GTA.”
Deanna Minervini, 27, who bought a three-bedroom house in Hamilton says it’s all about discipline when it comes to saving for a down payment.