Shenneile Henry was 19 when she and her partner, also a millennial, bought their first condominium in Calgary. They bought their second just two years later, in 2015. And earlier this year, as Ms. Henry turned 24, they bought their third.
“I think now is the time to invest, when you’re young, because by the time you’re 40 you for sure have some equity built up, which is the great thing about real estate – typically, it tends to appreciate,” Ms. Henry, who works in financial services, says.
“I’ve always been on top of the real estate market. For the past couple of years when the economy was high, and low, I’ve been doing my research to see what the prices are for re-selling, what the prices people are willing to pay for rent.”
Ms. Henry is living out a real-estate dream long forgotten by anyone younger than a baby boomer in most markets and certainly next to romantic fiction for a millennial buyer in Toronto and Vancouver. Indeed, the average price across all housing types in Toronto has fallen 30 per cent since 2017, yet remains a still-unattainable $767,818. Meanwhile, the benchmark price in the Greater Vancouver region just hit $1,094,000, a record.
With median incomes for 25- to 30-year-old Canadians – known as “peak millennials“ – sitting at just $38,142, according to a recent Royal LePage study, it’s not surprising that many younger residents are writing break-up letters with Vancouver or screaming about average rents in Toronto hitting more than $1,800 a month.
But Ms. Henry is in Calgary and the topsy-turvy nature of its real-estate market in the past few years has allowed her to buy downtown condos in preconstruction sales at sharp discounts. She’s been able to capitalize on the continuing slow recovery, which is seeing many flock to rentals such as hers, to build her investments.
“I am constantly researching the condo market, visiting show homes, learning about various developers and staying up to date with resale values and rental rates in the community,” Ms. Henry says.
And it seems her timing has been impeccable, too.
The city's “new normal,” according the Calgary Real Estate Board, is a market muted by the still recovering provincial economy in which federal mortgage rules have stunted the buying power for peak millennials by roughly $40,000.
But Dawn Maser, a real estate agent with Royal LePage in Calgary, says that has created something of a Goldilocks market: not too hot, and not too cold. Housing prices are stagnant but not falling, demand is stable but supply, especially of condominiums, is more than able to keep up – all while jobs, wages and optimism are recovering.
“I would say 90 per cent of my clients are peak millennials and they’re purchasing,” Ms. Maser says. “We’re in a sweet spot right now.”
Ms. Maser says average home prices in Calgary are in the low $400,000 range and that peak millennials are purchasing two-storey detached homes in the suburbs as a way to increase affordability over more central areas. She says similar money in the suburbs of Vancouver will get you a tiny one-bedroom condo. Indeed, Ms. Maser says several buyers have come after abandoning the too-hot B.C. market for a cooler yet still big-city opportunity in Calgary.
“We’re seeing a recovery [but] it’s just not happening really fast,” she says. “So, people are getting their jobs back and there is a bit more stability in the job market. Because the house prices are very slowly improving – it really means they’re not continuing to fall – it’s giving people that opportunity to get into the market now.”
Job numbers are up in Calgary, by 2 per cent so far in 2018 and 3 per cent in 2017 (the city’s job growth only went into negative territory in 2016, losing about 1 per cent), according to a Calgary Real Estate Board report. Population is up, too, by nearly 2.5 per cent in 2018 and by more than 7 per cent in 2017, according to the report.
But several experts say Calgary’s housing prices (and rental rates) remain flat because the city is still recovering from the highs of US$100-per-barrel oil in 2014 and then the sharp, double-digit housing-price crash that followed. Oil prices dropped to below $40 a barrel in 2015 and more than 6,000 residents left in 2016. Calgary’s office vacancy rate still hovers at a startling 27.7 per cent.
“Over all, fundamentals are supporting a modest recovery to span over the next two years,” the Calgary Real Estate Board report says.
On the ground, that’s led to guarded optimism among some millennials that real estate is a strong investment. But for others, finding their way back to where they were in the days of Alberta with $100-a-barrel oil is proving tougher.
Jayne McKay, an analyst with Urban Analytics in Calgary, a firm that tracks the rental market, says lease rates for dedicated rental properties are up significantly since last year, with high-rise rental properties 96 per cent leased, up from 83 per cent in 2017. “Over all, it’s a number of factors [behind the trend], including a renter’s current employment situation, flexibility, price point, proximity to employment or an LRT station, and specific project offerings such as building amenities.”
Jessalyn King would likely agree.
The 32-year-old freelance graphic designer is renting a two-bedroom townhouse with her partner in Airdrie, a Calgary suburb. She says she’s doing so partly for affordability and partly for Airdrie’s proximity to the Calgary airport, where her partner – who’s a pilot – has just secured his first “job-job,” as she puts it, after several years of contract work in different cities.
Because of the nature of both their jobs, Ms. King says, buying is a luxury that has to wait until more permanent “job-job” type stability materializes. “We will buy, because we do want a house at some point,” she says. “The question is really just when – when we end up saving up enough and where we’re settling.”
Ms. King says she is renting her townhouse from its owner. And statistics in Calgary show nearly 40 per cent of rental properties are similar.
One of them is Ms. Henry. She moved back to Calgary after living in Toronto and Montreal, where she rented. When she arrived, she says the city saw several preconstruction condos in the downtown core for sale. By purchasing preconstruction condos at a discount then waiting to move in (her first property took a year, her second took two), she says the units accumulated value by the time she and her partner took possession. And, she says, by buying at these discounts and calculating rents in the areas the condos are located in over a 10 years span, she is certain her and her partner’s mortgage payments are covered.
Today the two rent their first condo, Airbnb their second in the East Village and live in their third, a 650-square-foot two bedroom downtown.
“There’s still a lot more land [downtown] and room for new buildings to come up and that’s the area that I personally have focused on, preconstruction, whereas in bigger cities the market is a lot more mature so you’re not going to find a lot of the preconstruction,” Ms. Henry says. “Because Calgary’s growing there’s a lot more opportunity to get a great price.”
She also says that while she “a hundred per cent” knows she’s an outlier when compared to millennials in larger centres in Canada, she doesn’t feel like that in Calgary. “People are investing in my group of friends; definitely, the short answer is yes,” she says. “Despite there being an economy that’s slow, from a buyer’s perspective, there’s a lot of room for opportunity.
“I think millennials are full of passion, intelligent, innovative – and risk takers.”