Toronto’s millennials are buying more space than they were a year ago but they are moving farther from the downtown to get it, according to a new report by Royal LePage.That’s in part due to Canada’s new mortgage stress test, which is adding significantly to the challenge of home ownership among the influential consumer group known as peak millennials, reducing their average purchasing power by 16.5 per cent or about $40,000.The expensive Toronto and Vancouver housing markets are particularly tough on first-time millennial buyers, says the report published Thursday.“A peak millennial can purchase a home in Moncton, N.B., for the cost of the 20 per cent downpayment on a home in the market segment accessible to them in the Greater Toronto Area,” says the report.That challenge is greater since the Office of the Superintendent of Financial Institutions launched new rules in January, says the real estate company. Now even home buyers who have a 20 per cent downpayment must qualify for a mortgage at a rate 2 per cent higher than the current rate or above the five-year benchmark rate published by the Bank of Canada.So a buyer who might have qualified for a 3.09 per cent loan prior to the stress test now has to qualify at a rate of 5.14 per cent. The same buyer that qualified for a $486,674 home at the 3.09 per cent, can now only buy a $406,479 place.Dubbed “peak millenials” by a U.S. economist, the cohort born between 1987 and 1998 is considered the most influential group of buyers since the baby boomers. These are the consumers typically launching careers and families.In the Toronto area, the average home, including condos, detached and semi-detached houses and town homes, sold for $784,558 in March. That compares to about $606,000 on average in Canada.The average Canadian peak millennial earns $38,148 annually and has a home-buying budget of $203,246. A two-income family — without help from parents or other sources R ...
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