Yahoo Finance Canada's millennials still bent on owning homes, even if it means relocating
Canadian millennials remain committed to buying homes, so much so that many are prepared to leave the country’s biggest cities in order to find a house they can afford, according to a survey by Royal LePage.
Millennials are aged 26 to 41. Some 60 per cent of that cohort aim to get out of the rental market, or their parents’ basement, despite some of the highest real-estate prices in the world, the survey said. However, of that group, 52 per cent said they would have to relocate to do it.
Canada’s housing market is cooling, as higher interest rates have curbed feverish demand, reducing the prevalence of multiple-offer bidding wars that characterized the stunning surge in house prices through the pandemic. Still, the country’s larger urban markets remain out of reach for would-be buyers who haven’t had the time to stash enough money for a down payment, or who earn too little to qualify for the mortgages required to buy in places such as the Greater Toronto Area, Vancouver and Montreal.
The survey results could signal that demand for housing in smaller cities and rural areas — which spiked during the pandemic, as the forced shift to remote work made working from anywhere a possibility — could continue, even as all the restrictions tied to COVID-19 fall away. Royal LePage said its study suggests that more than four million young Canadians will be looking to make a purchase between now and 2027.
“A huge number of millennials are telling us, `Yes, if I move, I could own my home,’ and that is very surprising,” said Royal LePage CEO Phil Soper. “We haven’t seen this before, and I’m sure this is a direct result of what we saw during the pandemic, which was people slowly leaving (Toronto) for places like Saint John, New Brunswick, and Moncton (N.B.), and PEI, and Montreal, as well as Calgary and B.C. We saw people migrating when they found they could work from home.”
Three quarters of millennials said that if housing was more affordable, they would prefer to stay in their current city or town. However, 54 per cent do not believe their salaries will increase at a rate that will allow them to buy a home in their current location. When asked what their ideal scenario would be, 19 per cent of respondents said they would prefer to live in the city and work fully remotely, and another 19 per cent said they would prefer to live outside the city and work fully remotely.
“What this survey confirms is that a large number of millennials — whether they live in a city or outside of an urban centre — appreciate the option to work remotely,” Geneviève Langevin, a Royal LePage broker in Montreal, said in the report. “To achieve this, some are choosing to leave the city, although this trend is less common today than it was at the height of the pandemic.”
Take Montreal, where a significant number of millennials appear set to leave, even though housing prices are the cheapest among Canada’s biggest cities.
Some 82 per cent of millennials who do not currently own a home believe they will one day, the highest rate among regions surveyed by Royal LePage; however, 55 per cent of that group said they would have to relocate in order to achieve that milestone.
The average cost of a single detached home in Montreal was $533,300 in July, compared with $1,357,500 in Toronto, $2,000,600 in Vancouver, $643,600 in Calgary, and $770,000 in Ottawa, according to the Canadian Real Estate Association.
Still, the survey found that just 35 per cent of millennials in the Greater Montreal Area are homeowners, lower than all the other big Canadian cities covered in the survey. The cause could be related to wages, as the average annual income in Montreal — $40,079 — is 15.6-per-cent lower than the national average of $47,487, according to CareerBeacon.com.
Still, 61 per cent of Montreal’s millennials plan to purchase a home within the next five years; 56 per cent say they will remain in their current city or town, while 38 per cent say they plan to relocate.
The relatively lower prices in Montreal appear to offer millennials hope of staying that doesn’t exist in other cities. In the Greater Toronto Area (GTA), 59 per cent of millennials who do not currently own a home believe they will one day, but 63 per cent of them said they would have to leave Canada’s biggest city to do so.
‘Softer’ values for detached homes bringing buyers back into the market
Canadian home prices set to drop by almost 25% by end of 2023: Desjardins
In Vancouver, 78 per cent of millennials said that if the cost of living wasn’t an issue, they would choose to continue living there. However, 58 per cent said they didn’t believe their salaries would increase at a rate that would allow them to buy a home in their current location — the highest rate among regions surveyed.
Soper said relocating simply to buy a home is an “oversimplified way to solve your life’s problems.” Regardless, the commitment of millennials to buying real estate suggests that the strong demand that has driven Canada’s housing boom over the past decade could persist, adding pressure on policymakers to address a chronically short supply of living spaces.
“If you follow their intent, millennials could be the highest homeownership generation in Canadian history,” Soper said. “Now, not all of them are going to pull that off, but even if half of them pull it off, we’d be looking at homeownership rates in this generation at a higher rate than the baby boomers who are the previous record holders.”
• Email: shcampbell@postmedia.com
