Canadian Property Investors are Younger than Ever
The recent shift in Canada’s real estate climate has perhaps been most potent in the young adults market. Now, more than ever, 25- to 39-year old Canadians are homeowners, not just renters. What’s behind this trend? Yes, wages are higher, but so is the cost of living. For the answer, we need to go right to the source: mom and dad.
Parents are helping their children buy property
Rising property values have made it harder for this generation’s young adults to get into the housing market than it was for the baby boomers. With this in mind, it looks like parents are opting to give their kids a leg up, rather than splurging on a tropical vacation or a new R.V. A poll done by the Royal Bank of Canada suggests that parents are now socking away less for their retirement in favor of investing in their adult children. For many baby boomers, real estate has become the preferred gift to give.
It may seem like an overly generous gesture. However, the reality of today’s market is that most young adults simply cannot afford to buy their first home without financial assistance. Parents are getting involved because they know that without their help, their children could be well into their forties or later before they could get enough together for a down payment. When money’s tight, many parents also don’t bat a lash at making full or partial mortgage payments on behalf of their children.
Young adults choose a different kind of property
This is great news for many property developers because they have a whole new market to tap, not to mention the comfort of knowing that their buyers have the financial backing necessary to seal the deal. To attract these young buyers, developers are competing to create the marketing strategy most attractive to this generation. They know that young Canadians (and their parents) are shying away from pricey resale single-family properties. Advertising campaigns emphasize low prices in exchange for hip, trendy new pads with enough amenities to please both parents and children.
Property developers have significant opportunity in Canada because off-plan properties and multi-family developments are frequently more financially accessible to first-time buyers than other types of housing. Yes, parents are weighing in on the issue, but they’re looking for modest, ‘first-timer’ houses, not lavish places that cost as much as their own homes. For the sake of affordability, it’s condominium developments and new houses in the suburbs that are getting all the attention.
In the interest of being economical, young adults - with the help of mom and dad, of course - are progressively becoming some developers’ biggest customers.
