As the largest living generation in North America, millennials are impacting the real estate market.
Their values and approach to work-life balance is driving them towards buying condos. This is a major shift from previous generations that saw house ownership as a life goal.
As we’ll examine, there are many reasons why millennials are turning towards this type of living.
Condos Are Closer to the Action (and Work)
In recent years, millennials have been moving from the suburbs to downtown cores. After all, in most cities that’s where the action is.
Now consider commute times for the average North American that works in a city.
It gets worse in cities like Montreal, Vancouver and Toronto where the average time can reach over an hour (one way).
Those two factors combined are pushing millennials towards condo life. After all, most attractive condo developments are built in the downtown cores of cities.
Living close to the action also lets millennials walk or bike to work. For a generation that’s conscious of its impact on the environment, that’s another important consideration.
Millennials Prefer the Hands-Off Maintenance of Condos
The condo life brings with it a hands-off approach to maintenance and upkeep. In a condo, those issues are handled by a building company and paid via condo fees.
Millennials understand that it’s not worth trading time for money.
What counts is the experience.
This exchange is perfect for millennials who prefer to spend their spare time on what they want to do, instead of mowing the lawn of trimming hedges.
No Family Aspirations Means Big Houses Aren’t Necessary
Compared to previous generations, millennials don’t see getting married and having kids early as a life priority. In fact, a fair number of millennials intend on not having children at all.
This means some millennials have no use for a large house.
Being a generation that values practicality, a largely unused single family dwelling becomes a maintenance and cleaning burden.
Makes sense right?
After all, what’s the point of living in a mansion that’s away from amenities or in the suburbs if you don’t need it?
Buying a Condo Is Affordable, Even Compared to Renting
Most condos are smaller than houses or town homes.
Smaller square footage means lower real estate prices.
But it’s more than that.
When it comes to renting vs buying a condo, millennials need to consider that a new trend in real estate investing. New investors are buying condos and renting them out. As of 2018 stats in Toronto, approximately one third of new condos are investment properties.
Now consider that investors buy these properties as income-generating assets.
The rent they charge renters covers their mortgage, taxes and condo fees.
In other words, if you’re renting a property that’s in a condo development, you’re paying that investor’s mortgage. So for the same monthly payments, why not just buy a pre-construction or resale condo and pay yourself first?
Millennials Don’t Want to Be “House-Broke”
“House-Broke” is when, after all housing expenses are deducted from your paycheck (mortgage, taxes, utilities and maintenance), you’re left with little to no disposable income.
This is a millennial’s worst nightmare.
Truth is, it’s a nightmare that North Americans are living everyday. Take a look at this RBC study that goes over housing affordability. Don’t feel like reading 10 pages of real estate data? Here’s the main point to take away:
48.4% of most Canadians’ household earnings go towards housing.
But it gets worse!
Single-family dwellings prices aren’t going down anytime soon. This means that millennials who don’t want to be “house-broke” or “house-poor” have to look at cheaper alternatives: condos.
Condos Are Energy-Efficient, Perfect for Eco-Friendly Millennials
This might not seem obvious, but condos buildings are eco-friendly compared to houses in suburbs.
What it comes down to is density of residences.
By stacking multiple dwellings together in one development, there’s less energy loss due to the shared common elements (ie hallways). Not only that, the units above and under a condo help to insulate it.
This leads to substantial energy savings.
Now consider this:
Condos are closer to downtown cores and usually well-served by public transit. This helps reduce the carbon footprint of commuting.
Condo buildings also reduce the overall burden on a city’s utilities systems. Because of densification, cities need to install fewer water mains, sewage systems and electrical wires. This reduces losses since water and power are carried over shorter distances.
The same concept applies to roads. One road can serve hundreds of condos instead of a handful of homes in the suburbs. It also reduces the heating effect of the road grid, removes the need to deforest land and reduces emissions related to snow removal operations.
Being a generation concerned with its impact on the environment, it’s no wonder millennials are choosing the condo life instead of the suburbs.
Condos Offer Amenities Millennials Want
Most new major condo developments come with a suite of amenities that make urban living much more enjoyable.
It’s not uncommon anymore for a large condo building to offer amenities like rooftop swimming pools (some even have sand), lounge areas, natural gas BBQs, fully-equipped gyms and green space.
Not only would these amenities be out of millennials’ price ranges in a single-family dwelling, they’d also be a huge time commitment to maintain.
The Condo Market Is on the Rise
It’s just a fact, the residential real estate market has skyrocketed over the past decade. This has made single family dwellings in major cities out of financial reach for many Canadians.
Those same buyers turned to the cheaper alternative: condos.
What millennials understand is that the land most condos are built on is finite. There’s only so much real estate in cities.
So with a limited supply of condos and increasing demand for them, millennials who buy condos are positioning themselves for a decent pay off years down the road.
Wrapping This Up
All this to say, it’s not that millennials have forsaken the dream of owning a single-family home and will be condo dwellers for the rest of their lives.
It’s just that at this point in their lives, millennials are opting for cost-efficient, dynamic and urban options which happen to be condos.