By Melanie Reuter
With average home prices absorbing 81.6% of household income in Vancouver, you have to wonder how much longer that can be sustained.
First, it’s important to note that not all Millennials have the same wants and needs.
The lure of owning a home versus renting does not have the same pull as it had in the past for many; far fewer Millennials HAVE to own. Many are/will be career vagabonds who will move many times to suit their lifestyle and choose jobs in regions that support their interests (innovative surroundings, excellent transit, and a great mix of live/work/play opportunities nearby).
These Millennials aren’t willing to give up the comfortable lifestyle they grew up with merely for the bragging rights of owning a home. They want new homes, and they want the amenities. Many will choose to pay a premium to rent in the right location instead of paying the same monthly mortgage costs for older, ‘outdated’ models.
Yet others, the ones who are in the later ages of Generation Y or are knee-deep in starting a family do want what they grew up with and will seek to replicate their childhood in a location where they can afford to enter the housing market (however, also keep in mind that a larger than previous number of these Millennials were also raised in smaller homes – condos, townhouses – many by a single parent.
This group may not be seeking a large single family home with a yard for their family because they are content to replicate what THEY had). As you stated, in Metro Vancouver, we believe that Gen Yers ARE being pushed out of the home ownership market (in fact, we know it based on RBC’s Affordability Report, which as of today showed that it takes 82.4% of an average PRE-tax income to afford a median priced bungalow and 86.5% for a two-story home).
So for those Millennials that are seeking to own a home, a single family dwelling or have a piece of lawn, you can see the appeal of Northern BC and Alberta. Combine the high, competitive wages and the low home prices compared to Metro Van and it makes sense.
This group is the working age group, and many are just starting a career. Going where the jobs are makes sense and it is what REIN maintains drives the real estate market everywhere.
For more information on Generation Y and what it means for the future of real estate, be sure to follow our blog at blog.reincanada.com.
Melanie Reuter is the Director of Research at REIN and a Real Estate Investor owning both single and multi-family units.