With the Millennial Generation taking up an increasingly prominent segment of the home-buying population, real estate agents are beginning to consider the buying trends and needs of this group more in their own daily operations. We had a chance to speak with Mike Rampf and Shawn Anderson, top-producing real estate advisors at luxury brokerage Engel & Völkers, and co-founders of VANCITY Living about their experience working with millennials and how this generation’s home buying characteristics and needs are vastly different from others’.
Q: What trends are you finding in terms of millennials going into home buying? How are millennials handling home buying differently from other generations?
M: It's very different, the way millennials buy versus the older generations. The older generations are very happy with, and would prefer, face-to-face meetings, sitting across a table, going over a contract, having us pick them up and take them to a showing, or a tour, or an open house. Millennials are much more, "Text me. Email me the contract. DocuSign the contract. I don't need to see you face-to-face." Even just generally, phone calls are a push. Most of my communication with my millennial buyers is via text message and DocuSign. Their approach is much more digital and hands-off. They’ve chosen a professional they trust, so they don't feel the need to meet me as much.
S: Some of my millennial clients do like meeting in person and I do accompany them to open houses. They do like talking about the neighbourhoods in person. Some are fine just texting and emailing. Until they really narrow it down, we don't spend a lot of time together.
Q: Do you find, from an industry perspective, that brokerages are tailoring the way they operate to cater to millennial needs?
M: One hundred percent. Engel & Völkers is one of the first brokerages that we know of that incorporates virtual reality as a standard across our entire network. All of our listings have three dimensional virtual tours that allow you to wear VR goggles and do a complete walkthrough of the property on your computer screen. A lot of our millennial buyers have experienced our listings prior to even stepping foot in the property.
Q: With Vancouver’s high house prices, how are millennials affording to buy homes?
S: I'd say generally they're getting gifted down payments or parental loans. A lot of millennials’ parents are sitting on millions of dollars in real estate, and they realize how tough it is, or impossible it is for their children to get into the market, so that's primarily what we see. You just can't save up fast enough. The incomes in Vancouver aren't high enough to save faster than the rate of price appreciations in the last little while. So the parents are giving them a jumpstart into the real estate market. It might be a gift, it might be a loan, but it's very common.
M: When you look at a lot of moms and dads that we've worked with in the past, you see that they’ve bought their house for maybe $30,000 all the way up to a few hundreds of thousands of dollars. Now they're going to go sell their home for three to tens of millions of dollars, and that hand down of cash to the kids is very, very common. A lot of the clients that we work with are selling the big house on the West Side are gifting their kids a large portion of that money that they've taken from their sale and given it to their kids.
Q: How about millennials who aren’t being supported by their parents?
S: These are ones that typically got in the market, say a decade ago, and they're fortunate that they were in early enough that they rode the market up. As far as first time buyers, we have a few clients that are very successful in their businesses, and they're able to save fast enough to build these down payments. However, it’s not very common that someone from the Millennial Generation is able to save that much on their own.
Q: Are you finding you’re getting more millennial first-time home buyers because of the new BC home down payment loan?
S: Not us personally. We have seen it but have not encountered it much personally.
Q: Are you seeing more millennial home buyers struggling because of the Canadian government’s federal mortgage stress test?
S: It’s certainly affected affordability and it changed what people can and cannot afford due to the requirements. There are clients that it has affected and they just work with what they can afford.
Q: What is the biggest piece of advice you can offer millennial home buyers?
M & S: Just entering the market is the most important part. Don’t expect to be purchasing your dream home up-front – you can enter at a lower price-point and work your way up. Work hard, save hard and don’t eat the avocado toast.