When Echo Boomers Buy
Many of today’s young adults are still living with their parents. In fact, 17% more of Canadian young adults born between 1970 and 1990, known as Echo Boomers, still find themselves living with their parents. This is in part due to the recent economic and financial crisis, but also in part due to a trend in the children of Baby Boomers to simply delay the development steps of marriage and home ownership. These Echo Boomers account for 9.2 million young Canadians who have also been call the Boomerang Generation. For some reason I don’t think the term boomerang has anything to do with travels to Australia.
In one generation, we have gone from 33% of young adults (Baby Boomers) living with parents to the now record 50%. Past generations tended to get married earlier, start careers sooner, and buy houses pretty much as a scheduled series of events. The Echo Boomers, however, tend to delay both getting married and homeownership.
Over the coming years, this group of 9.2 million potential consumers will certainly become targets to be marketed to by the realty and mortgage industries. The industries will stress the lifestyle and financial advantages of home ownership to this unique, well-educated group:
-> 97% own a Computer (the same percentage that also use social media every day.)
-> 94% own a cell phone (and perhaps will never own a traditional land line telephone.)
-> 56% own a MP3 Player (I will have to ask my kids what that is, I might even own one!)
-> 40% of Echo Boomers chose television as their main source of news. (I’m sure that you can guess where some of the advertising dollars will be spent.)
-> Most use Email, text, Facebook, MySpace, UTube and Twitter to communicate.
The dream of home ownership is still very much alive in Canada. This Echo Boomer generation has only delayed homeownership rather than eliminating it. When they do buy, they will buy as a demographic group and are sure to become a major force in the Canadian realty and mortgage market. In the interim, perhaps we Baby Boomers can still have help solving computer problems while the Echo Boomers still live at home.
On a side note, one other interesting statistic is that, on average, this group of Echo Boomers speaks with their parents 1.5 times per day.
Paul E. Croy
Interesting Times for Canadian Mortgage Borrowers
Those of us who have been working in the mortgage industry for more than just a few years will agree that these are most interesting times. Borrowers who took advantage of variable rate mortgage offerings a few years back are now confronted with the hard question, “Do I look at locking into a fixed longer term mortgage or do I continue to “float” at a deeply discounted interest rate?” The one thing that I have learned about this business is that there is nothing more constant than change. Rates go up and rates go down. Rate volatility can happen for many reasons and some times not for the reasons a borrower expects, like a tight supply of mortgage funds or a Financial Institution’s Fund Matching requirements.
I agree that there are many economic reasons not to expect large increases in Canadian Mortgage Interest rates in the near future. However, based on the Bank of Canada’s position calling for an increase to the prime rate starting this summer, current mortgage underwriting guidelines that get less flexible every day, plus a recent trend that shows an increase in the 5 to 10 year Canadian Government Bond Rates, it may now be time to take a hard, honest look at the affordability issue of mortgage payments.
If interest rate were to jump 1%, 2% or 3%, would you still be comfortable with your shelter costs? Always remember that we are dealing with historically low mortgage interest rates. Some lenders offer the option of a split mortgage term. This permits a mortgagor to leave a portion of their mortgage floating while at the same time locking in a portion at a fixed longer term. This may well be a product that borrowers will start to embrace as a prudent option over the coming months.
Paul Croy
Video: Who Borrows from a Mortgage Investment Corporation and Are the Rates Higher?
Walt Neufeld answers the question, “Who Borrows from a Mortgage Investment Corporation (MIC)?”. He also discusses the rates for borrowers and explains why the rates may be higher.
