Millennials may be the best of hope of saving Vancouver’s languid housing market.
They tend to dominate the condo market, where entry-units are aplenty, and fortunately for Vancouver there is no shortage of towers.
“When I look at the overall market, the detached and condo markets are two totally different markets,” said Wayne Ryan, team lead at REMAX Crest Realty. “Millennials are active in the detached market, but in the lower end of the condo market they make up a big percentage. We’ve had a situation in the detached market where, in the last several years, it’s shifted downwards. The foreign buyer tax and general attitude towards Asian buyers hasn’t been as positive as it was, so the result is we’re seeing properties sitting on the market longer.”
Ryan noted that Vancouver’s detached market correction actually began about three years ago while the condo market concurrently grew hotter and hotter, albeit with modest gains. But as the upper end of the market becomes prohibitive, the lower end brims with desperate buyers—many, if not most, of whom are millennials.
“We’ve seen a 7-8% price adjustment with sales down in the detached market, but there’s firmness in the lower end of the market,” said Ryan. “If you think about a pyramid, the narrower it gets you have fewer buyers, but at the base of the pyramid you have more potential buyers because it’s more affordable. The lower end of the condo market in Vancouver is definitely firmer. There are a lot of instances of multiple offers and it’s certainly being driven by the millennials.
As for what millennials look for, green, energy-efficient homes rank highly, according to REMAX Canada. As a climate-conscious generation, energy-efficient homes are widely considered to be one of the best ways to reduce one’s ecological footprint over a longer period of time. Having good insulation, efficient lighting and updated plumbing will reduce a home’s footprint and save money in both the near and long terms.
Smart technologies that control lighting, home security and thermostats are coveted by millennials, as are entertainment spaces, which include open concept floor plans.
Another sign that condos are preferred by millennials is their aversion to travelling great distances to and from work.
“Liveability, like walkable neighbourhoods with parks, are things more millennials are asking about,” said Ryan. “It’s become more of a focus than it was several years ago.”
However, affordability is millennials’ preponderant concern, and in many cases that might mean having to forego smart technology.
“With the mortgage stress test, affordability is an even bigger issue now,” continued Ryan. “Smart homes that are green are great and millennials love those things, but the reality in a lot of cases is the difference between being able to buy and not buy is the price. For $500,000, you can get a unit in a 25-year-old building at 1,000 square feet, or, for the same price, you get a unit in a new building for 650 square feet. Newer buildings have smart amenities, but not enough space. That’s the decision millennials will have to make.”
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