The high costs of housing across British Columbia – particularly in Vancouver – have meant that many “peak” millennials who want to buy a home cannot do so, according to a survey released August 17.
Nationwide real estate brokerage Royal LePage studied the largest group of Millennials – those currently aged 25 to 30 – to see how their hopes and expectations of home ownership will shape the market over the coming years.
In BC, 86% of respondents said they believe that homeownership is a good investment. But 83% stated that housing in their area is not affordable – the largest proportion of any of the provinces in Canada – and the same percentage said they think they will not be able to buy a home in the next five years.
The survey found that, in comparison with respondents from elsewhere in Canada, BC’s peak millennials had lower expectations for home ownership, with 42% saying they would like to buy a townhouse or condo.
Royal LePage also examined what buyers could get for their money. Using a sample budget of $350,000, buyers across BC can typically find a 2.5-bedroom, 1.5-bathroom bungalow with 1,187 square feet of living space, according to the report.
However, within the Greater Vancouver region, this price would buy only an 879-square-foot condo with two bedrooms and 1.5 bathrooms (and of course, in Vancouver proper this would be considerably smaller again).
Adil Dinani, real estate advisor at Royal LePage West Real Estate Services in Vancouver, said “As home prices continue to rise in what is Canada's most expensive housing market, affordability within the Greater Vancouver continues to be a matter of contention, particularly among the millennial cohort who are most often first-time buyers.
“As a result, we are seeing extremely strong demand in the condominium and townhouse segments, as younger purchasers look to at the last remaining touch points of affordability in the Greater Vancouver market.”
Across Canada, 87% of 25-to-30-year-old respondents said they believe homeownership is a good investment. However, even though 69% hope to own a home in the next five years, 57% said they think they will be able to afford one.
Phil Soper, president and CEO of Royal LePage, said that the market is very different than in previous generations. “Facing challenges their baby-boomer parents never encountered, peak millennials are confronted with significant obstacles that vary depending on where they live.
“While finding employment in our largest urban markets, Toronto and Vancouver, is relatively easy compared with other areas of Canada, buyers face limited inventory and high home values in these regions. Where prices are more affordable, job markets can be more uncertain.”
The survey report said that renting or living with parents can be part of a smart saving strategy for future home buyers. Some 35% of peak millennials surveyed across Canada said they already own a home, while another 50% are renting and a further 14% are living with their parents.
“The pent up demand for housing from millennials is enormous, with only a third of this large demographic currently owning a property and an overwhelming majority desiring to be homeowners,” added Soper.
Soper observed that the size of the Millennial cohort will have a huge effect on the housing market.
“Whether they choose to buy or rent, peak millennials will inevitably shape the housing market due to their sheer volume. We expect demand from this demographic to put additional pressure on entry-level housing and investment properties being used to supplement the limited inventory of purpose-built rental buildings.”