Millennials take their place powering the property market
By Kerry Gold
Published February 26, 2021
Berkeley Loh, 29, and Tom Holmes, 35, have been together a few years and living in their 800-square-foot Olympic Village rental, but they always had a plan to buy. They’d seen friends and family members buying properties, and they had a fear of missing out.
“You feel behind or something, I think that has something to do with it,” said Ms. Loh, who works as a project manager for clothing company Aritzia. “Our group of friends and family, everyone is buying. We never felt like we were not going to buy. It just seemed like the next thing to do.”
Adds Mr. Holmes: “We have never bought into the fact that the millennials will be renting forever. We’d hear these things like, ‘They aren’t going to own cars — they’ll just rent cars.’ No, we want property and we want a Tesla.”
In the past year, in the midst of the pandemic, Ms. Loh and Mr. Holmes became part a trend: millennial-age people driving the property market. They put a deposit on a 1,136-sq.-ft., two-bedroom condo with a large balcony at 50 Electronic Ave. in Port Moody, with a price tag of $819,000. Among the building amenities is an office space shared among the owners, which has become a bit of a must in the new pandemic world.
They quickly discovered many others in their circle of acquaintances looking to make the leap to home ownership.
Ms. Loh has three millennial age colleagues from Aritzia also buying condos, and another colleague who’s planning on starting a family recently purchased an empty property in Port Moody with plans to build a house. Another friend has bought a rundown house and is going through renovations.
“We have three or four friends who are moving out there,” Ms. Loh said.
Millennials may not be quite so shut out of the property market as has been reported over the past few years. The cohort, whose age range is somewhere between late 20s to early 40s, is entering a phase of life where they are settling down and thinking about kids. Real estate industry observers in the Vancouver area say that millennials have been driving a super hot real estate market. The onset of the pandemic could have seen the market move in the opposite direction. Instead, within months the market picked up steam. The Real Estate Board of Greater Vancouver recently released statistics showing that January, 2021, saw a 52.1-per-cent increase in the region’s home sales over January, 2020.
Like generations before them, millennials appear to believe in home ownership. In April, 2020, Zolo, a B.C.-based digital real estate company and brokerage that collects data on the market, surveyed 2,128 respondents. It found that 16 per cent of people aged 25 to 39 planned on buying a home in 2020, and 26 per cent planned on buying in the next two to three years. Only 15 per cent of that age group said they never plan on buying property. The survey also showed that 59 per cent of millennials had been saving for a home prior to the pandemic, while 51 per cent of the older Gen-X demographic had been saving for a property purchase.
Romana King, director of content for Zolo, said that millennials have been driving the market for several years. Their chief reasons for buying are less financial than psychological, such as wanting stability and permanence. During the pandemic, there’s been a “flight to safety” psychology at play for many buyers.
“Millennials have consistently been driving the engine, whether we recognize it or not, and not for the reasons we always assume,” she says. “I think there has been a lot of, maybe, rhetoric, or a lot of communication, about how millennials are shut out of the market, and I don’t think that’s untrue, but I think that millennials have been creative about their buying.
“A couple of decades ago, my parents or my grandparents might have decided to buy a suburban home because it was more affordable, and that is not an option for millennials. But I know millennials who have purchased a rental property and they rent it out and they live closer to work, and they rent themselves.
“Or they purchased a vacation property because they want the cottage lifestyle, and they know it’s cheaper to purchase that, and they can get a mortgage on a vacation property now. And then they rent in the city.
“So there are a lot of creative ways that millennials have become property owners, it’s just not in a stereotypical way. It’s not a family home in the suburbs, slash urban home … that provides a lot of context to what we have seen in our surveys.
“We have done surveys for the last several years, and consistently we find that millennials are always in the market — which makes sense, because first-time buyers drive the market.”
Backing up the assertion that millennials are driving the market is a recent Royal LePage quarterly house price survey for the end of 2020, which showed median price increases of more than 10 per cent for two-storey houses in 64 per cent of all regions they’d surveyed in Canada.
Randy Ryalls, general manager for Royal LePage Sterling Realty in Port Moody, has said millennial age buyers have emerged as the biggest demographic in the housing marketplace in Canada.
The demographic is at an age where they are earning good incomes and are tired of paying $2,500 or so for rent.
“They are moving into the marketplace in significant numbers,” Mr. Ryalls said. “They are probably buying a condo or a townhouse, although, that said, some of them are buying a $900,000 or $1-million house further out, a decent house with a suite in the basement as a mortgage helper.”
Andy Yan, director of the city program at Simon Fraser University, said the rate of ownership within the demographic hasn’t changed much over the decades. However, he says what has changed is the type of housing that they buy, based on price and location. Historically low interest rates are also playing a major role in their decisions. He cited census figures from 1991 to 2016 that looked at residents in charge of shelter costs for the household, also known as household maintainers.
“There have always been people in that age group jumping into the market,” Mr. Yan said. “In 1991, 36 per cent of 25- to 34-year-old primary household maintainers were owners compared with 39 per cent in 2016.
“However, these numbers do not account for those who are financially sidelined and still can’t enter the field as owner or renter.”
Mr. Holmes says his friends in London are also buying; however, they’re buying in the city’s outer regions instead of the central core.
More space played a big role in their decision on where to buy, says Ms. Loh, who was raised in Vancouver but didn’t want to live in the 500-sq.-ft. of condo that her brother purchased downtown. They’d outgrown their Olympic Village rental and working at home convinced them they needed more space, says Mr. Holmes, a self-employed creative director from Britain.
Mr. Holmes says that because they haven’t been able to travel for the past year, it has helped them save for their down payment. But Ms. Loh says she has been saving her entire working life to buy a property. Mr. Holmes, who has lived in London and Dubai, hadn’t saved as much, so he got help from family for the deposit. They want to pay as much toward their down payment as possible before their condo completes in 2022. As Mr. Ryalls says, it’s relatively easy to service the debt on a condo, especially with low interest rates.
“We always said when we were renting from the start that it would be great if our money wasn’t going into this black hole,” Ms. Loh says. “We were just waiting for the right time to have enough saved.”