Millennials Are Set on the Suburbs: What Does This Mean for Urban Condo Developers?
A recent study by TD Bank found that 64 percent of millennials are now willing to consider moving to the suburbs in search of a home, with affordability being the biggest driving factor. When you combine this stat with the fact that 83 percent of young, urban home buyers would prefer to own and live in a single-detached home, the concern that millennials’ migration to the burbs will impact urban condo markets becomes more and more valid.
But is this a Canadian housing trend that urban condo developers should be concerned about? Or is there more to the story?
We have some thoughts to share.
Why Are Canadian Millennials Interested in Suburban Living?
Before we begin panicking about the potential of a mass exodus, we must first try to understand what millennials find appealing about life outside city limits.
Below are the three primary benefits of suburban homeownership for millennials:
There’s no denying it— a dollar goes further in the suburbs. Homes in the suburban community of Airdrie, for example, come with 22 percent more living space (on average) than similarly priced homes in Calgary. And if you venture a little further out to the suburb of High River, you’ll pay 12 percent less than you would for a comparable home within the city limits.
For millennials, this is an irresistible advantage, as many homebuyers within this demographic are paying off student loan debt and mortgaging a significant portion of their purchase.
2. Green Space
87 per cent of Canadian home buyers say green space is an important factor when purchasing a property, and with millennials being more focused on healthy living than previous generations, they’re no exception.
Millennial home buyers in Canada want to be able to enjoy the outdoors and keep up an active lifestyle— goals that aren’t as easily achieved in metropolitan areas. Suburban listings offer backyards, biking trails, public parks, and community recreation centers all within close proximity.
The increasing number of millennials who are becoming parents is another reason for the Canadian real estate trend of younger generations moving to the suburbs.
Urban living has its limitations when it comes to domestic comforts and conveniences. Property sizes are smaller, yards are virtually non-existent, and safety is often a greater concern. And since millennials are parents to 50 per cent of today’s children, it only makes sense that these downfalls of downtown living are influencing their real estate decisions.
What Other Factors Could Be Contributing to These Statistics?
Many reports would have you believe that millennial home buyers are leaving the city in droves. But is that necessarily the case? And what is the bigger picture?
Below are a couple of factors to consider before jumping to conclusions:
1. COVID-19 Price Drops
Across Canada, housing markets have been significantly impacted by the pandemic. Here in Calgary, for example, the average price of a home dropped by 8 percent in 2020.
Lower home prices can have an effect on many Canadian housing trends, including the number of millennials who are moving to outskirt communities. Many younger potential buyers are likely taking advantage of these low prices and buying suburban homes while prices are in their favor.
2. An Aging Demographic
With 41 percent of Canadian baby boomers planning to downsize in retirement, there will be an influx of detached family home properties over the coming years. This is relevant when discussing millennial home buying trends since an increase in availability would make it easier to find and afford suburban homes.
This could actually balance out over time, however, as 32.6 percent of Canadian condo owners are aged over 65 and there’s a good chance that number will continue to climb in 2020 and beyond. Perhaps baby boomers will move into the empty downtown condominiums millennials are leaving behind!
Are There Other Markets Interested in Urban Properties?
Yes, absolutely! While millennials are certainly a key demographic, they aren’t the sole target market for downtown living. Foreign real estate investors, baby boomers, and property management companies are all potential buyers for urban listings.
While it is true that millennial home buyers are looking toward the suburbs for their next move, the real estate market is a complex and ever-changing landscape. There is a broad spectrum of factors that can impact the demand for city center living, so urban condo developers shouldn’t panic. These things have a way of balancing themselves out!