In this article, I am going to talk about the recent increase of home sales in Calgary and the impact of this demographic group of people called “The Millennial” in the real estate market.
Since January of this year we have seen a dramatic increase in real estate sales in Calgary. Many new home buyers are beginning to take advantage of the low home prices as a result of the real estate market correction that we’ve experienced over the last couple of years. In fact, there are numerous reports of realtors encountering multiple offer situations, competing offers, and homes being sold for more than the list price. I myself have been involved with competing offers in the last few months.
It makes you wonder, who is buying? where were all these buyers last year? The unemployment rate has not changed, there are still reports of layoff taking place, the price of oil is about the same as it was two years ago, now we have a new carbon tax that is making it more expensive to live in this province and if that wasn’t enough, we are much closer to a thermo-nuclear war than ever before. If nothing has changed, who is buying real estate in Calgary and why?
I suppose it will be quite difficult to determine the “why” part of the question. People make decisions for many different reasons, some decisions may be logical and some may be emotional. Whatever the case may be, statistics show that people are more willing to buy now than in the previous two years. The “who” part is less difficult to determine as there are demographic statistics available which describe current buyers. One major demographic are the “Millennials.” Who are these Millennials? The millennials are the fastest growing demographic group of people in Canada. They are young, between 24 to 35 years old, most of them are educated professionals who live in major urban areas (Calgary and Edmonton to name a few), and who have jobs not necessarily related to the Oil and Gas industry. An important fact about millennials is that 93% of them said that “Owning a home is their primary goal.” It has been reported that competition between the millennials are helping to push home prices higher in Calgary.
You may be surprised as I was when I read about them. You may be thinking, you mean to tell me that a bunch of kids are driving the real estate market? Well, let me tell you. There are a lot of them in Calgary and Edmonton, in fact it has been reported that Calgary has one of the biggest concentration of millennials in the country and this demographic has been increasing steadily for the last few years. Not only that, 31% of millennials earn over one hundred thousand dollars a year. Which means that even with the new lending rules imposed by the Bank of Canada in October of last year, this group of people can easily qualify for a half a million dollar mortgage, which incidentally represents the average home price in Calgary.
Also, millennials prefer to buy a single family home with 3 bedrooms, 2.5 bathrooms and double garage. No wonder single family homes are selling faster than any other type of properties in Calgary. I suspect that once single family home prices become unaffordable for the millennial, we will see a recovery in the attached and semi-detached section of the real estate market.
Make no mistake about it, this demographic has the capacity to move the real estate market, not only in Calgary, but in most urban centers across the country. They are young, educated, technically savvy, and they form groups among themselves called “pods.” They have their own language to communicate amongst themselves within their pods, they have money, most importantly they have jobs not related to the oil and gas industry and 93% of them say that owning a home is primary goal.
How can you profit from knowing this piece of valuable information? In the stock market trading there is a saying among successful investors “The trend is your friend” The millennial are setting a new trend in real estate market, shouldn’t you at least consider investing in real estate at this point in time? Are you waiting for the bottom of the real estate market? No-one can predict with any degree of certainty the bottom of the market, the best that any pundit can tell you is when the bottom happened 6 months after the actual bottom of the market.
If I had an advice to give you, it would be the same advice that Robert Allen the author of the book Multiple streams of income gives to his readers “Don’t wait to buy real estate, buy real estate and wait” Over time, real estate always goes up in value, even after a market correction like the one we experienced over the last two years, prices never came down to the rock bottom prices we had from 1998 to 2000. Real estate investing is a long term investment strategy, over time, real estate always goes up in price due to a number of factors, mainly inflation and population growth.
I hope you enjoyed reading my article on The Millennials, the demographic group of people that is pushing the real estate higher in Calgary. Please remember to visit my website www.jbenitez.ca and like my Facebook page.
Joaquin Benitez is a licensed real estate agent and author of the book, The Foreclosure Phenomenon: How to Defend Your Home from an Impending Foreclosure, available at Amazon.com and chapters.indigo.ca