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August 25 2015

The Millennial Renting vs Buying Real Estate Debate

The Vancouver media has written many articles over the past number of months regarding housing affordability and this has resonated loudly for the many individuals and families whose single most important concern is managing housing costs as their number one cost of living.

While much media attention has focussed on the influence of offshore investment on Vancouver's real estate market and related housing costs, Vancouver has long been a multicultural city whose real estate market has been most greatly influenced by limited supply of housing (as a city bounded by mountains and ocean), net migration trends, employment and income levels, financing costs and demographic trends.  Given the continued rise in housing costs, for many, the dream of owning their home has now been postponed, or forgotten, and replaced by an expectation to be renters for the medium to long term

In Vancouver's history, each successive demographic cohort entering the household formation stage of life has faced a significantly different housing market with significantly different housing product type and housing cost implications. The Millennial generation (aka Gen Y), born between the early 1980's and the early 2000's, faces the most challenging housing affordability, rent vs buy equation yet.

Huff Post Canada online posted an interesting article today regarding the Millennial Generation's future rent vs buy decisions and while it wasn't written in a Vancouver market context it did include some interesting tidbits as follows:

  • that Millennials, according to Forbes, are the largest, most divers and well-educated demographic ever to come of age, and that as they grow into late adulthood, they will bring with them the power to make big changes.
  • They have the strength in numbers to tip the scales of any market trend -- often in a very short span of time.
  • Last year, Millennials were blamed for a huge drop in home ownership in the U.S.. A combination of low income, high student debt, and a precarious job market meant that the homeownership rate dropped to 64.7%, in favor of renting, according to the U.S. Census Bureau -- the lowest level in nineteen years.
  • Millennials are also more civically conscious than preceding generations, which means that choosing the right chic, urban neighbourhood is as important as choosing the right living space. 
  • The Renting vs. Buying debate will only intensify as more and more of these intrepid, young people reach the age where they may actually be able to afford to make the shift from life as an tenant to life as a home owner. But until that time, renting is still the preferred option for the vast majority of Generation Y adults growing into their middle age. Many Millenials are still students, studying for a Masters or doctorate, which means that renting remains the reality amidst financial conditions that make owning a home nearly impossible. 
  • Looking for an apartment -- especially in a busy city with many university and college campuses -- can be a struggle, but if you plan to rent in a metropolitan city, be sure to do your research and visit one of a number of apartment listing websites in order to find the best rental apartments on the market. Utilizing the web can make searching for apartments, condos, and homes much easier, especially when renting in a city that you don't currently live in. 

Needless to say, we at wholeheartedly agree with the last point above!