According to research conducted by Ipsos for the Ontario Real Estate Association’s first annual Buyer and Sellers Research Report, real estate investors hoping to target millennial buyers on the resale of their properties would do well to avoid condo properties.
According to the report, which was released on March 5, only one in ten respondents are actively looking for properties in high-rise condos. Of the 19 percent of Ontarians who are currently looking for a home, 83 percent of those falling into the millennial cohort said they are looking for detached, semi-detached or townhouse properties. 51 percent of first-time buyers said they are hoping to buy a detached home, with 22 percent opting for a townhouse.
The data is hard to reconcile with the thousands of condo units currently being built in Toronto.
“Ontario needs to address the missing middle of housing supply by exploring innovative solutions like laneway housing and multi-unit homes, such as townhouses, stacked flats or mid-rise buildings, especially in downtown and urban areas,” said OREA president Sean Morrison in a statement accompanying the report.
As it stands, millennial buyers are trapped in the airless space between their desires and reality: They may be most interested in landing spacious detached properties, but the survey also found that millennials’ overwhelming concern when purchasing a home is price -- two priorities that will forever be in conflict with one another. Most millennials also said they prefer to live in downtown, urban or suburban locations, which are generally the most expensive areas of any major population center.
The question for investors is just how seriously to take these conflicting desires. Millennials may want space, but few have the buying power to secure financing on a $800,000 semi, let alone a $1 million detached home. Even getting into a $600,000 condo will be tricky for most.
What the OREA report ignores is that the majority of millennials wanting to live in large Ontario cities will be renting for years before they scrimp and save their way to a five percent down payment. With declining inventory forcing prices upward, those down payments will almost certainly grow faster than the wages of Ontario’s millennial buyers.
Despite what they say they want, millennials are, and will largely remain, a generation of renters. Targeting them as tenants will be a wiser move than targeting them as buyers.
Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate