Imagine living in 700 square feet of space, in an apartment, centrally located, stylishly appointed, with stainless steel appliances and public amenities such as a dog wash station. You don’t own a car; instead, you rely on transit or a bicycle for getting around. Unlike the old days, it’s not a temporary station until you can afford a house. It’s life as you’ll always know it, as you grow your career and maybe raise a family.
You’ll probably move around, from job to job, and city to city. You might consider yourself fortunate to have the freedom from the shackles of a big mortgage, job with benefits, and house that needs ongoing maintenance. Or, you might resent the fact that you can’t afford the home ownership rite of passage that belonged to your parents’ generation.
Millennial or Gen Y kids born between 1977 and 1994, if we use the Census Canada definition, have entirely different expectations from their parents.
“They will be the first generation that is not going to be better off than their parents were,” says Melanie Reuter, director of research for the Real Estate Investment Network.
Her interpretation. But, because millennials are such a large group in Canada, representing about 27 per cent of the population, says Ms. Reuter, it’s imperative that businesses gauge this group’s behaviour and respond accordingly. She has been studying Gen Y economic behaviour for the last few years, and has written a report on her findings to be used by investors.
“If you don’t pay attention to what this generation wants, regardless if you agree or not, you won’t have a business soon because they are such a large cohort that they do have spending power.”
They also have a lot of debt. A hefty part of that debt is student loans, but credit card debt is also responsible. British Columbians between the ages of 18 and 24 have the second to highest income-to-debt ratio on average in Canada, according to Ipsos Reid, 2012 Canadian Financial Monitor. British Columbians between 24 and 44 are in third position. (The highest average income-to-debt ratio belongs to Albertans between 25 and 44).
“It’s also in part due to their spending habits,” says Ms. Reuter. “These are all generalizations – but they aren’t savers.”
They might have grown up in a bedroom community, such as the west side, or a suburb. But they are a more urban group, no longer dependent on a car, partly because of cost, and partly because they genuinely care about sustainability. They don’t see the cachet of owning a car, as did their parents’ generation.
“They didn’t get their driver’s licence the day they turned 16,” says Ms. Reuter.
“For the younger generation, it’s almost a badge of pride they wear, not needing a vehicle.”
Because they use transit, they’ll want to be located close to work, and close to transit hubs. And because of the rise of single-parent households – roughly 16 per cent of all families, according to 2011 census figures – many were likely raised in townhouses or condos, and will already be used to living in smaller spaces, says Ms. Reuter. They also like new spaces, as opposed to old houses they’ll have to spend weekends fixing up.
“There’s no stigma to a condo,” she says. “That’s what they know.”
We’ve already seen the demographic shift in Vancouver neighbourhoods such as Dunbar, Kerrisdale, Point Grey and Kitsilano that used to be filled with middle-class families just starting out in life. Young families have mostly gone to the more urban east side, leaving the west side to an older, wealthier demographic.
Ben Smith, VP of sales and marketing at Rennie & Associates, says he’s already seen a major shift in the last six months. This year he’s seen a sudden surge in demand for three-bedroom condos, purchased by downsizing boomers. Those boomers are trading their homes for spacious condos. Those same boomers are helping their kids with a down payment on their own condo, which is the only way a lot of Millennials will ever afford to live in Vancouver.
“It’s exciting, because for years we’ve been talking about this, and we’re finally seeing it happen,” he says. “There is $88-billion worth of clear-title real estate tied up with boomers. In B.C. and Vancouver especially, we are all equity and no income. If you don’t have that down payment, you don’t have a home.”