Millennials simply aren’t purchasing homes at the same rate as previous generations, and it’s not difficult to imagine why. Mortgage rates are at an all-time high, consumer prices are increasing, and many young people’s finances are crippled by student-loan debt. More than that, city life is proving to be more enticing. Many millennials would much rather pay rent to stay within downtown or midtown urban areas than buy a home in the suburbs.
Not long ago, many young adults still aspired to a traditional suburban life. However, with the social and economic changes of the past decade, including the advent of Tinder and hook-up culture and the fallout from the 2008 financial crisis driven by the US housing collapse, fewer young people are in a rush to settle down and get married and move outside the city. A four-bedroom home with wrought-iron front gate just isn’t feasible when you’re single and ready to mingle.
While millennials aren’t buying houses, baby boomers aren’t selling theirs. The oldest boomers are now in their early 70s, which in the past had been the age at which many would downsize to condos or apartments. However, boomers are healthier than previous generations and are staying in the workforce longer. This means they’re not yet ready to sell their homes and settle into retirement.
Not only are millennials not buying homes, in many cases they’re not even moving out; an increasing number of millennials continue to live with their parents during adulthood, which in turn gives boomers less incentive to downsize. Some boomers may not want to sell their homes due to fear of the low home inventory and high prices they’ll be subject to when diving into the market. After all, what’s the rush when your child is still around to tend to you while you age?
An analysis by Paul Kershaw, a professor at University of British Columbia’s School of Population and Public Health in Vancouver, found that in 1976, when baby boomers were thinking about buying homes, the price of an average Canadian home was $213,030 and median full-time earnings for a 25-to-34-year-old averaged $54,700. But in 2017, the average home price has more than doubled, to $510,179, and income for the same age group had fallen to $49,800.
While millennials are staying with their parents longer, the goal of previous generations – home ownership – is becoming even harder to reach. Since the beginning of the year, rent has increased by 11% to an average of $2,206, making saving for a down payment that much harder. Mom’s basement never looked so comfortable.
With the government now investigating ways to bring soaring prices under control and encourage more buyers, millennials can begin to enter, or at least start seriously thinking about, the housing market. But before that happens, there are a few things to be aware of.
Millennials are tech-savvy and live their lives – and conduct their business – through their phones. Realtors will have to step up their online presence to engage younger potential home-buyers. And as a generation with a reputation for being entitled, selling any fixer-uppers is probably out; many young people prefer the finer things and a potential house will need to be immediately Instagram-worthy.
It remains to be seen whether millennials have totally abandoned the idea of home ownership. Perhaps they’ll be lured into the housing market by more affordable prices or end up following in the footsteps of previous generations after all and migrating to the suburbs. It may simply be that their priorities are different and they’re moving at their own pace. Time will tell if they’ll delete their dating apps and download real estate apps instead.
Tasnia Nasar | Contributing Writer