How Millennials Are Affecting The Real Estate Market
Millennials are no longer a group that can be discounted. They are at an age where they are getting married, starting a family – and yes, buying a house. In the next five years, 66.1% of Millennials are expected to buy homes.
Because of the rising real estate market in Vancouver, many Millennials have remained on the sidelines. However, this is changing as Millennials are now earning more and settling down. This will have a huge impact on Vancouver and is changing the city’s landscape.
In Canada 40% of Millennials are parents and 9,000 Millennial women are giving birth each day. In fact, in the next 15 years, it’s estimated that 80% of Millennials will be parents.
Over the past decade, homeownership among Canadians between the ages of 25 and 44 has declined drastically. But with the help of the homeowners grant, and the fact Millennials continue to age many are finally taking the leap into ownership.
Housing Demand
Millennials have taken over Generation Xs as the largest demographic in the workforce which means they need homes that are closer to their work. Close to 65% of Millennials say convenience to work is the most important factor in choosing where to buy a home. Many Millennials have purchased condos and townhouses, but now their families and incomes are expanding which means they need bigger homes.
In fact, almost 86% of Millennial home shoppers indicated they were buying now because of a change in their household size. This was much higher for Millennials than for any other type of demographic group. Likewise, Millennials were more likely to say that a stable or improving income triggered them to shop.
Housing Supply
Demand for condos and houses continue to outpace supply and will likely do so for the foreseeable future. However there is some good news for Millennials. As baby boomers are getting older, they are beginning to downsize, making way for Millennials to buy larger homes.
While this trend is only beginning to take effect, it also doesn’t mean housing prices will drop as there are many other factors to consider such as foreign investment and interest rates. The other benefit with baby boomers downsizing is that they are now cash-rich and often help their Millennial children with down payments for those who haven’t saved enough for a home.
Education
Studies have determined the more educated a group of people are, the higher their salaries are. This may seem obvious but it does have some implications for Vancouver. Higher education and salary gains could make homeownership more accessible to Millennials, which might in turn will raise the Millennial homeownership rate in the next 10 to 20 years.
The overall effect of higher education is found to have been substantially more important for homeownership in the years since the Great Recession than it was in the pre-recession period.The percentage of Millennial Vancouverites and Canadians as a whole attaining a bachelor’s degree and doctorates has been steadily rising since the 1990, which bodes well for the housing market.
Conclusion
Each generation is slightly different so it’s no surprise that Millennials have their own attitude towards buying a house. Although Millennials are more transient than previous generations, their maturity have created a ripple in the real estate market. They are settling down and making Greater Vancouver their permanent home.
