Millennial-aged Canadians looking to enter the housing market have been disappointed in recent years, but, miraculously, the pandemic has brought forth new opportunity.
“There’s been an uptick in the 25-35 bracket because they have seen their savings increase and I think they just needed motivation to transition from renting to buying,” said Mitch Parker, VP of sales and marketing at Hersh Condos, a brokerage specializing in preconstruction sales. “They saw this was their opportunity to get in through low-interest rates.”
Millennials are benefiting from a confluence of factors, like low rates and minimal competition in the starter home segment, that have made homeownership less prohibitive. Parker pointed to the GTA’s sales-to-new-listings ratio as proof.
“It was almost 91% in January 2021,” he said. “The average is 54%, so 91% means virtually every listing you’re putting on the market is selling, and that’s unheard of. Thirty-five markets in Ontario were under one month’s supply of inventory. The GTA is on fire, but it’s not an anomaly compared to the rest of the country, because Canada’s whole real estate market is doing extremely well.”
Royal LePage just released a study that found 68% of non-homeowners aged 25-35 planned on becoming homeowners in the next five years, while 72% of them are confident in their near-term financial outlook. Forty percent of those surveyed have higher savings than they did in March 2020.
Moreover, Royal LePage’s survey determined that 48% of Canadians between the ages of 25 and 35 are homeowners, with 25% of them buying their homes during the pandemic.
“The pandemic provided an unexpected prize for young Canadians—a path to homeownership,” Phil Soper, president and CEO of Royal LePage, said in the report. “Mortgage rates fell to historically low levels and the competition for entry-level housing lessened. Many investors sought to divest of property as traditional renter groups such as foreign students, new immigrants and short-term renters disappeared behind closed borders.
“In many ways, the pandemic has sucked the joy out of our normally kinetic young adults’ lives. No dining out, no concerts with friends or winter escapes to the sunny south. Even retail therapy has lost its luster when no one will see those new shoes on the next Zoom call. The silver lining is in soaring savings; unspent money that is finding its way into real estate investments.”
Parker isn’t surprised that millennials persevered through the pandemic to become homeowners in greater numbers than in years past. While sales centres have been affected by the government-mandated lockdowns, this generation of homebuyers is known for its predilection towards technology.
“I’m actually not surprised because that demographic is extremely tech-savvy and they’re not reliant on traditional media, unless they’re walking into an open house and looking at a property,” he said. “A lot of research can be done online and through countless other apps out there. They don’t have to be physically present to look at a property anymore.”
