Millennials get talked about in the media sometimes as if they’re still teenagers, but the people aged between 26-41 are very much adults. They’re also buying homes, but the trends have changed compared to previous decades.
Let’s take a closer look at some of the differences.
Bank of Mom and Dad
Affluent parents helping their children enter the property market is not exactly new, but no generation has depended on that as much as Millennials. As CEO of the Ontario Real Estate Association Tim Hudak put it, “the affordability crisis has turned Millennials into ‘Generation Screwed’ across Canada.
Housing prices of recent decades have put homeownership out of reach for most Millennials, with homeownership rates falling across the country markedly. In urban cities like Toronto, renter households increased by 25% between 2011-2021.
The housing market is much easier to get into for those fortunate enough to have a lucrative job or considerable financial support from parents.
Real Estate Technology
Millennials use their smartphone for most things in life, and real estate transactions are no different. The digital innovator Regan McGee built a platform called Nobul, which lets homebuyers use AI to get perfect, curated listings and connect with a suitable agent in less time.
Now, millennials can list their budget and describe the home they’re looking for, and agents will compete to get their business by offering things like complimentary services or cash back. It makes sense that the generation struggling the most to enter the housing market would turn to new digital innovations to make it more affordable.
Nobul doesn’t accept money from agents to get listed or ranked, so the user reviews are reliable. The platform is also secure because agents never get user contact information, like email addresses or phone numbers.
During the second quarter of 2021, home prices were an enormous 35% beyond the borrowing capacity for the median income in the country. Unsurprisingly, in a housing market where prices don’t match people’s salaries, those who don’t have the upfront capital to cover a down payment and mortgage need to either rent or borrow the money from elsewhere.
The gap has existed for a while but is growing acutely as of late. In urban centres like Toronto, over the last decade, the benchmark house price and the price of affordable housing have a $400,000 discrepancy.
Higher Interest Rates at the Bank
With inflation and interest rates surging, borrowing money is getting more expensive. As a result, home sales are finally cooling down, albeit the slowdown is relative to years of red-hot growth.
Still, homes are selling without bidding wars. Borrowing money from the bank might be more expensive, but at least home prices are slowly coming down.
Whatever the current trends, real estate is one of the surest long-term investments you can make. They don’t make new land! If you’re a millennial, you can navigate the above trends to secure for yourself a wonderful investment and place to live.