When it comes to the future in real estate, all eyes fall to the millennials, who are just beginning to be seen on today's markets. With the millennial generation however, we are seeing a shift in the previous real estate trends from purchasing a primary residence, to investing in vacation property. What is it about the millennial generation today that has us seeing such a change in the markets?
The millennial generation is the first generation to be in our technology-based society as adults, and to have grown up with both eras. Alongside the changes seen in technology though, were drastic changes in the real estate market across Canada. In city-centres like Montreal and Toronto, we have seen an increase both in population, and in real estate prices. The price of a home in Toronto has risen 40% from 2010-2016, creating a new dynamic shift in the markets, with residents leaning towards condominiums as opposed to single detached homes. As prices in the greater city areas in Ontario rose, a trend amongst the Millennial generation has emerged, of purchasing vacation properties, or cottages, outside of the city. 65% of millennials aged 18-34 express interests in purchasing a cottage, cabin, or chalet in the next 10 years, even with the concern of high city real estate prices affecting their ability to purchase recreational property.
So why the big shift towards recreational property? What is it that these millennials are changing the trends for? Simply put, affordability. The growing rent and purchases prices in city areas are changing the way millennials, as well as growing families are considering their real estate options. The rent of many homes, apartments, and condominiums in Toronto has increased following an all-time low of vacancy rates in November 2017. Average rent for condominiums spiked to more than $2000 per month but this increase is still less of a factor in affordability than it is in buying a home. In 2017, the average price of an detached home in Toronto was $1.2million, so markets outside of the city demonstrate a more realistic, lower-cost entry into the real estate market.. Many families are considering the option of continuing to rent in the city, not becoming primary home owners, but using their vacation properties both as a getaway, and/or as an investment property by renting out the cottage when they aren’t using it.
An increase in work flexibility has also created a trend of millennials moving out of crowded city centres, for the choice of a quieter, less populated location. With the age, and ability of technology advancing, many millennials can work remotely. The ability to work-remote is broadening the geographical search range these millennials can consider, as well as the idea of having a home away from the city, even for summer and weekend activities.
The rise in technology greatly attributes to the changing trend, as it has become easier in the past few years, to have a vacation rental property advertised to a larger market. Sites like AirBnB allow owners to post their rental, and have a wide audience receiving this information. Although this ability has increased the ease at which rental properties can find tenants, it has also increased the competition amongst rental properties, at times causing owners to need to lower their rental price to be competitive amongst other properties. It is important to consider the vacation rental demand, and average price in the area you’re considering prior to planning on having a vacation rental.
Whether you’re a millennial looking for a change, or considering the future, there are multiple options that exist for you to find a way to step into the real estate market. With frequent communication with your realtor, your ideal property awaits you. Let the freedom of changing trends be a part of your search, and remember to always meet with a local realtor, who knows the ins and outs of the area you may call home. The times and technology are changing, but the millennial generation is taking each step in stride, changing market expectations, and trend realities.