A fine piece by Kerry Gold in The Globe – Gen Y is redefining home ownership – with this insight:
Jens Ourom can divide his demographic into three categories. There is the group that sees home ownership has an “unrealistic sacrifice from both a financial and lifestyle perspective.”
There is the group that is “raging mad, resistant to retiring as renters – a potential powder keg whenever affordability, housing prices, mortgages, and anything related to the white picket fence … are broached as conversation topics.”
And then there is the “What’s the big deal about affordability?” group. Members of that group are counting on a trust fund or big inheritance to get them into the homeowner income bracket.
And some advice:
Millennial or Gen Y kids born between 1977 and 1994, if we use the Census Canada definition, have entirely different expectations from their parents.
“They will be the first generation that is not going to be better off than their parents were,” says Melanie Reuter, director of research for the Real Estate Investment Network.
Her interpretation. But, because millennials are such a large group in Canada, representing about 27 per cent of the population, says Ms. Reuter, it’s imperative that businesses gauge this group’s behaviour and respond accordingly. She has been studying Gen Y economic behaviour for the last few years, and has written a report on her findings to be used by investors.
“If you don’t pay attention to what this generation wants, regardless if you agree or not, you won’t have a business soon because they are such a large cohort that they do have spending power.”
They also have a lot of debt. A hefty part of that debt is student loans, but credit card debt is also responsible. British Columbians between the ages of 18 and 24 have the second to highest income-to-debt ratio on average in Canada, according to Ipsos Reid, 2012 Canadian Financial Monitor. British Columbians between 24 and 44 are in third position. (The highest average income-to-debt ratio belongs to Albertans between 25 and 44).
“It’s also in part due to their spending habits,” says Ms. Reuter. “These are all generalizations – but they aren’t savers.”
They might have grown up in a bedroom community, such as the west side, or a suburb. But they are a more urban group, no longer dependent on a car, partly because of cost, and partly because they genuinely care about sustainability. They don’t see the cachet of owning a car, as did their parents’ generation.
“They didn’t get their driver’s licence the day they turned 16,” says Ms. Reuter.
“For the younger generation, it’s almost a badge of pride they wear, not needing a vehicle.”
“They also have a lot of debt”
Not true, really. It’s easy enough to track down trends in debt levels by age cohort over time (just google “equifax canadian consumer credit trends”).
If you do, you’ll see that debt levels have flatlined for the lower age groups over recent years while skyrocketing for older age groups (especially 65+). Part of that is a massive increase in auto loan debt (especially in older cohorts) and part of it is just that it’s only the older age ranges that have the necessary collateral / capacity to actually qualify for loans.
The article fudges this by talking about young people having a high debt/income ratio but that’s because of a lack of income, not a lot of debt. Also, it’s not surprising that young people “aren’t savers” when they can’t even afford a car…
+ student loans
Yes indeed, unfortunately too many young students especially in social studies have been lured by the education system that a degree is actually valuable and have piled on debt. That is where the future federal NDP and Liberal voters come from. Many jobs for doctors, healthcare professionals, engineers but very very few for B.A.s. We need more trades in Canada and less BAs. Canada is a resource extracting, upgrading and exporting nations and that requires trades and not BAs in cozy Lower Mainland.
More like Europe, where I moved from in the 80’s. I grew up with the notion that house ownership is for the upper half only, and certainly not for me in my 20’s or even early 30’s. That is what is indeed happening in Canada, especially in bigger more expensive cities like Calgary, Vancouver or Toronto. Unless you have a sizable income and/or downpayment you remain a renter. That is why roughly 50% of people in Europe ( or Quebec btw ) rent, vs. only 30% in Canada. Expects Gen Y folks like my kids to rent longer, or to rely on parents to buy.
This is normal in the world.
Canada has arrived ! It is not super cheap anymore as it used to be when I came here.
Canada has arrived? Most people came here because Europe sucks.
“arrived” in that house prices and/or condos are not cheap anymore .. and also social spending or taxation is similar to Europe .. albeit a tad better since GST+PST is only 12% and not 20%+ like in Europe .. although of course with an NDP government or a Liberal federal government we will go closer to Europe, too .. i.e. more social spending, higher taxes, bigger governments ..