Whats Next for Millennials In Real Estate?
We hear a lot about millennials. These twenty somethings have grown up with different opportunities than any previous generation. Their access to information, technology and the enhanced world of globalization in theory should propel them to potentially outpace and perform previous generations.
Over the next few years, millennials will make up one quarter of the home buying population and many millennials are choosing to live in larger cities. Access to jobs in their field and the desire to live an urban lifestyle makes Toronto a perfect nesting ground.
Living in the city comes with a price and in Toronto that price is huge. The average rent for a 1 bedroom apartment downtown is $1800/month. Entry level salaries are barely paying the rent. Factor in basic living expenses and student debt, the millennial generation is struggling financially. Will they ever have the required down payment to purchase a house?
A recent Toronto Star article suggested that renting for life might be the sacrifice this generation is willing to make in order to stay in the heart of Toronto. Parents may fork over the down payment to get their children into the market. Already this is quite common, with most first time buyers receiving some of their down payment from the bank of Mom and Dad. Or in my view, home ownership will come, just a little later for this generation. Similar to the women of generation X waiting longer and establishing careers before starting a family.
So despite the bleak earning potential right out of school, millennials have incredible earning potential in the future. They are a tech savvy generation. As the job market rapidly changes, they are also entrepreneurs, adapting and building their own success. I believe millennials are just on a different path than we have seen before. Patients will be required, as it is going to take a little longer for the goal of homeownership to be achieved.