By Sheryl Smolkin
We recently posted the blog Rent vs Buy: A Reprise, but the subject of when, or even if millennials will ever buy homes seems to be a continuing theme in both the blogosphere and the mainstream media.
Its not surprising that issue is still a live one, particularly in cities like Vancouver and Toronto where housing prices have gone through the roof and only young people with great jobs and a hefty gift from the Bank of Mom and Dad can get their foot in the door.
Several months ago BMO published the report Rent-Weary Millennials Not in a Hurry to Become Home Owners; Need to Save Accordingly. In the prairie provinces, people age 19-35 gave the following reasons why they are delaying home ownership:
- 27%: Don’t feel comfortable making such a large purchase at this point in my career
- 46%: Other priorities take precedence (such as traveling, continuing education or starting a business)
- 33%: Don’t want to be left with no disposable income
- 40%: Not sure where I want to settle down
- 27%: Have to pay off debt first
In a Huffington post blog, Jackie Marchildon asks Are Millennials Choosing To Rent, Or Just Choosing Not To Buy? She argues that renting is its own lifestyle and although currently dominated by millennial city dwellers in Toronto and Vancouver, it is not unique to this generation, nor to their respective cities.
On the Financial Independence Hub Helen Chevreau (daughter of well-known personal finance guru Jonathan Chevreau) says she is Young, saving, and hopefully one day will buy a house. She critiques an article about “Tony” in Toronto Life who would rather spend his generous pharmacist’s salary on exotic trips and lavish spending than be shackled by a mortgage. She advocates for a happy middle ground: “somewhere between throwing down $1,500 on a meal and stealing toilet paper from the bathroom of the bar to save a few bucks.”
Another perspective comes from a young married couple who is saving up for a cottage because “they don’t want to invest their money in a shoebox.” They are also paying off student debt ($700/month) and spending $300/month on dog walking for their new Labrador mutt puppy.
Rent to Own | Option to Purchase is an interesting article by Saskatoon lawyer Richard Carlson. “There is no such thing in law as a ‘rent to own agreement.’ The idea was made up by people who wanted to sell to someone who did not qualify for a mortgage,” he says. “There is a good chance it will lead to a problem and a dispute.” He also distinguishes “rent to own” from an “option to purchase” which comes with its own set of challenges. Bottom line is, get independent legal advice before you enter into one of these questionable arrangements!
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