Did you know that there are fewer renters in Alberta than ever before? More and more young Albertans are choosing to stay home and save up before investing in their first property. Check out the conversation between Chloe McAra and Meryn Severson and Michelle Maroto to learn more about Millennial Buying Trends.
Did you know that there are fewer renters in Alberta than ever before? More and more young Albertans are choosing to stay home and save up before investing in their first property. Check out the conversation between Chloe McAra and Meryn Severson and Michelle Maroto to learn more about Millennial Buying Trends.
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Speaker 2:in your area, a podcast designed by area to update, educate and refresh realtors, brokers in industry, stakeholders on topics that matter most to you. Listen on the go in your car at a coffee shop wherever your day takes you. This is a podcast designed with today's busy realtor in mind.
Speaker 3:Welcome to in your area a podcast where Alberta realtors on the move podcasting from boardroom at the Alberta Real Estate Association. I'm your host Chloe McCarren. Welcome to this episode, millennials buying trends. I'm the south office manager at Cir Realty and an instructor with Kreb area and Nar joining me today are Marron Sieverson of Capitol Regional Housing and Michelle Moroto from University of Alberta Marin along with her thesis supervisor and Michelle Moroto authored a research paper on the topic we are discussing today titled Stability Of Life Course predictors in leaving the parental home and ownership based off research completed for Marin's undergraduate. These, this, thanks for being here. Do you want to tell me a little bit about your paper and research that went into it?
Speaker 4:Uh, yeah, for sure. Yeah. So this is an expansion of brick that we started during my undergraduate thesis at the University of Alberta, um, where I completed a BA in human geography and sociology and Michelle, uh, supervise this research and we've worked on it together. Um, yeah, and it's a work that we've completed outside of my role here at CRH. Really the motivation for this, uh, research was that there is lots of international research on, at declining rates of homeownership for young adults and uh, what's largely referred to as the delayed transition to adulthood where we're seeing a later age at leaving the parental home and longer time in post secondary education. And so, uh, there's, yeah, there's lots of research particularly on declining home ownership rates in the US and the UK and Australia, but we didn't find much recent research in the Canadian context. Uh, which is particularly interesting because Canada as we know, has got a large variety in, has where get across Canada, lots of deer, you graphic differences as well as there's been a lot of teams in the past 10 years and in how the housing market, uh, or how with the housing market really looks like. So we conducted this study where we looked at Statistics Canada data from 2001 to 2011 from three waves, I should say from 2001, 2006 and 2011 which was the most recent data and still is the most recent data available. And then using a life perspective, we explored the relationship between housing transitions of leaving their parental home and moving into homeownership, um, and the, the relationship between these transitions and a variety of variables including demographic factors and socio economic variables and other life course transitions such as completing education and, um, marital status. And then we looked at how this, uh, changed over time and across Canada. Um, some of those key findings from this study that we kind of found over the 10 years of data was that fewer young adults were living independently of their parents over the 10 years. But that, uh, of those young adults who moved out of their parental homes and increasing number of them moved into homeownership. When you look though at the total amount of young adults, we still see that a homeownership isn't increasing. Um, when we include the young adults who are still at home.
Speaker 3:So you guys talk a lot about life course theory in, in the academic research that you guys did. And for us as agents who are not in the academic world that you guys are, can you explain what that means in everyday words?
Speaker 4:So basic idea behind this is that individuals have these different trajectories through the life course that involved different areas of life and they have different transitions at different points in time. So one of the big ones that we often think about in this idea of transitioning into adulthood are things like completing education. So graduating from high school or university, depending on how far you go along finding a fulltime job, getting married, finding a partner, and also having children. And many of these transitions we find are very much connected to your transitions in terms of housing. So whether or not people are gonna move out of their parents' homes and whether or not they're going to actually move into home ownership. So basically we're just looking at these trends over an individual's life and how they're all connected.
Speaker 3:Oh, okay. Interesting. So what did you guys find that there were any main differences between Canadian millennials and, um, other countries? Because I know that one of the reasons, main reasons that you guys conducted this was to research Canadians specifically because there's a lot of research on the other countries and what their millennials are doing. Did you guys find that there were any large differences between Canadians and other other countries? Millennials?
Speaker 4:I think the overall trends were very similar. So we see across most rich industrialized countries that young adults are living at home for longer and have lower rates of home ownership. The one thing that is a slightly different was that we found that once people left their parents' phones, they are more likely to move directly into home ownership. So they were kind of iffy. Matt renting phase.
Speaker 3:Do you guys think that there is a difference between the triggers that move millennials out of their parents' home into rentals versus the triggers that move them into homeownership?
Speaker 4:So generally we see that some of the same predictors in terms of what's going to influence whether someone who's out of their parents' home and whether they move into home ownership are very similar. So there's those connections to those like four stages. However, one of the bigger differences, which wasn't necessarily in our paper, but some of the broader research is that millennials who have parents that can help them out a little bit. So if mom, dad can help you with a down payment or even help you with they, some of your education costs along the way, that tends to help people move directly into home ownership because they have more resources that way. I think one of the big things that we're seeing now is that young adults simply don't necessarily have that savings for a down payment on their own to move into a home
Speaker 3:that way. I guess this kind of moves, moves the discussion into the affordability question as far as, um, what is the real issue with housing affordability in Canada, US, wherever. There's a lot of talk around that right now and maybe we can talk specifically to Alberta if it's possible, but do you, are you guys seeing that, you know, is there a breakdown that we can do here? Is it just that homes are far more expensive than they used to be or that wages aren't increasing at the same rates as home homes are increasing in value? Is there an inventory inventory problem? Um, what do you guys think that affordability problem is
Speaker 4:really, it's all of the above. So home prices are increasing, but we also see wages stagnating, so people in the middle and the bottom of the wage distribution aren't making as much money as they work comparatively in previous years. And what's really happening is that wage gains are going to the top of the distribution, which tends to increase inequality overall. So those wealthy people are able to pay more for houses, which helps to drive up housing prices and it leaves other people out of the housing market. So it's a lot of things going on at once. Yeah. Recent from CMHC in 2018. Look at some of those factors that are driving escalating housing prices, uh, us, uh, the country and something that's specific to Alberta context is that, uh, our history of, um, economic booms and busts. And so I want, that's kind of what that's done is that there is also more, um, single detached dwellings in another places as well as more higher end, uh, buildings and fewer rental properties. And few are kind of a, what we would think of as entry level housing. And so that has a kind of additional, um, specific Alberta, um, in that for young adults specifically, the stock looks different than it does in other places and it's not, uh, not, uh, probably the, the most conducive to health information.
Speaker 3:Do you think that's an Alberta specific problem or are you seeing that trend across the country? Like the, the lack of availability for the more affordable product? Awesome.
Speaker 4:A trend everywhere. I think there's some specifics in terms of Alberto related to urban rural divines as where people are buying housing but you've portability issues and the lack of affordable housing, the lack of federal funding for affordable housing is definitely across the country.
Speaker 3:I think Marianne, you mentioned earlier that one of the issues with the affordability is the difficulty to save a down payment and that um, young adults are more likely to purchase a home if their parents are able to help them with gifting them a portion of that down payment. Do you think that is, uh, this generation specific thing or, um, has, have you guys seen that in previous generations to, is it new I guess is what I'm asking.
Speaker 4:So it's not necessarily new, but it's definitely more extreme now. So traditionally parents always help out their kids in different ways. Pass down wealth passed down savings helped them out with different gifts. But I'm thinking now is that often young adults need that help. So before it might've been an extra gift from parents, but now it's something that they necessarily, they need to actually move into the housing market. Whereas earlier generations when say young adults weren't necessarily paying as much for university costs, they were able to see about that money sooner and move into housing themselves. Yeah. And then the other research that I've done with a doctor, Damian Collins at University of Alberta, we conducted three exploratory focus groups with young adults in Edmonton looking at their perceptions of housing and how it's connected to adulthood. And uh, the difficulty of saving for a down payment while paying back education debt was something that was identified by participants, um, as, as a barrier for sure.
Speaker 3:Just as a side note, it's interesting to think about, you know, what, how that is impacting the parent's generation and their financial capabilities of moving up, moving down whatever in, in their own real estate or their own financial positions because they're now having to step in for their parents. And there's not really a question there. Just kind of an interesting thing to think about. I guess
Speaker 4:I see a big area of my other research, so I'll keeping young adults, children at home with their parents in packs, parental wealth. So generally parents who have their adult children living with them have less than assets and they
Speaker 2:also have higher household debt levels as well. So we do see that kind of getting passed up that generation to the parents as well.
Speaker 3:So what do you guys think are the main differences between today's young adults and their parents generation as far as like the socioeconomic differences they're affecting their homeownership? I know you've talked about, um, having that student loan debt and that kind of thing. Do you think there's any other overwhelming differences between the two kind of generations in their home buying trends?
Speaker 2:Definitely. So if we think about connecting this to economic security, you see that young adults today are very much less so economically secure. And then their parents were, so they have lower wages, there's fewer available jobs, there's higher rates of unemployment and work is a bit different now. We don't see people necessarily moving into companies that they work for for many, many years. We see more for clarity there. We see people doing more in terms of independent contracting and this definitely, it definitely leads to some economic insecurity. And then with that we also see extended levels of education, which is good. More people are going to universities staying in school longer, getting that higher education, but it also comes with a cost. So a lot of people are also taking on high levels of student debt and those two things are definitely affecting the housing market for them.
Speaker 3:Yeah,
Speaker 4:yeah, yeah. Some other kind of trends do we see, is that a later age at marriage or cohabitation? So people partnering up later in life. And that's a particularly significant in terms of homeownership as having that second income or having two incomes. This is uh, important in making homeownership, uh, work financially or having really household formation and renting work financially as well. And so that later, that later age also we see that translating into longer time spent in the parental home as well. Interesting. Do you, do you think
Speaker 3:the needs have changed for what the home provides? I know, I know that one of your papers was more of a qualitative exploration of like the thoughts of home ownership and um, how millennials see that process. But do you think, and we'll we can come back to that too, but do you think that the needs for the physical property itself has have changed at all?
Speaker 4:Yeah, that's a really interesting question. And that was something, uh, yeah, something, something that did kind of come up in our research with, uh, with, uh, when we did those exploratory focus groups. But yeah, in those, in those focus groups that we conducted with young adults, um, space and the need for space as kind of households grow. So do you add a partner and then as you potentially add children, that was something that was identified by young adults now. And that is something that has also been shown in, in previous research, um, as a, in why folks kind of move through the housing, like make housing prices is as their, their need for space increases. Their need for larger housing increases. So that isn't, that isn't, I guess, super different. But, uh, there is, uh, other research in Canada that shows that, um, actually research done with developers and planners and homebuilders across Canada that shows that there's, um, increasing steps I would say in the housing kind of life cycle. So as opposed to going maybe from an apartment to a single detached dwelling, now there's more of that kind of middle density housing that developers are building as they recognize affordability constraints. And so we're seeing more of townhouses and duplexes being built as well. Um, kind of as a response to affordability concerns. And so that, that's other research done in Canada looking at that from, from 2011 but
Speaker 3:so you think that this generation is more likely to do step up moves more often than their parents' generation. Like perhaps the parents' generation was, you know, moving out of their parents' house and then more quickly moved into their forever home or the family home or whatever that looked like. But maybe this generation is more willing to move several times. So they may be their first move out would be to an apartment and then to a townhouse and then to a detached. Does that kind of what you're getting at?
Speaker 4:Uh, yeah. So that, that's part of what this, this other research in Canada is showing is that because of the increasing cost of housing, it's not necessarily so linear anymore for folks to move through a kind of housing types. And so, um, it's partly also a factor of the housing stock. And so now that we have increasing variety and their housing stock and less, um, single detached dwellings make up less or smaller proportion now than they used to have housing stock. Um, then there's more options also for folks to move through the housing stock differently.
Speaker 3:Hmm. Do you think these trends are going to continue with the next generation? Um, as far as things that are more difficult to purchase, the affordability is more difficult. They might have to do more transitional moves before they get into their forever home. All these kind of things that you're putting together for this generation, what do you think the trends are going to be moving forward?
Speaker 2:That really depends more broadly on the economy and policy as well. So if we have policies that actually support workers, support, housing affordability, support, things like, you know, immunization and minimum wages, so we can actually increase the wages and they don't stay at this theme level. They've been since the 1970s that could actually help future generations moving house and more quickly and have income that they can use this way. But if we continue to grow in a similar direction where we're cutting social safety nets, cutting support for people, I'm putting business owners above workers were probably going to have an even worse situation in terms of housing affordability and access to home ownership.
Speaker 4:Sorry for the gloom and doom by the way. That's okay. Yeah. The reality check is good. Yeah. Uh, yeah. Again, in in the focus groups that I did in[inaudible], um, definitely amongst the young adults there, there was definitely a feeling. I think that, um, housing the housing market is, is very much in transition right now. And there were, there were young adults for sure who were still, um, expecting homeownership in their future and that was still something that they, that they want it to do when they thought was attainable. And then there were, there was also, you know, groups of young adults too. So at that watershed was unattainable. And even though they thought that it was, um, uh, an expectation of them from many people that they should move into home ownership. It was something that he did that they didn't think was possible. Uh, and then there was also groups, uh, kind of, uh, groups who didn't, didn't want some water ship and they, they were choosing not, they're choosing to rent or to look at other tenure forms, um, for a variety of reasons, including mobility as well as like the mobility in terms of geographic mobility, moving from moving around more frequently as well as they, they didn't trust actually the financial investment of housing is, it's become more risky. And so I think it's definitely I trends, yeah. Transitional Time right now. And the housing market is what it seems.
Speaker 3:That's a really interesting point that you just brought up about the perception that real estate is a more risky investment. Where does that come from, do you think?
Speaker 2:Definitely looks you that 2008 recession hit Canada as hard as he did to us. But everyone sees the same news here pretty much and sees what's happening. They saw a lot of people losing their homes, going into foreclosure. People who thought that housing would be an investment for that, but it didn't quite happen will last a lot of money. And I think that definitely influences a lot of young adults today cause maybe they saw that happen to their parents or their friends as well.
Speaker 3:That's fair. Yeah. Yeah. So do you guys think that the dream of being a homeowner is still, you know, that the Canadian dream, um, for this generation, the millennials as it was for their parents' generation? Yeah, there's, uh, there's kind of a movement in the political world about, you know, bringing that dream back to life. And, um, the older generations, that was just something that they are, that they just always believed in that, you know, owning a home was their future and that's the path that they were going to be taking. And it seems like this generation has moved back a little bit from that. And you know, reading your research that some of them, I almost believe that it's unattainable or like it's unlikely. Um, and that's sort of mentality. Do you feel like with the people that you were speaking to, uh, from the millennial generation that the dream of home ownership is still alive and well?
Speaker 4:Yeah, that's, that's an interesting question. I think, uh, yeah, kind of going back to the point about it being this kind of transitional time, I think for the expectation of homeownership at the young adults that I spoke with were, were very aware that of that the idea of the Canadian dream and that, um, homeownership is that kind of end goal is very, is still a very normative expectation for a lot of young adults and something that they recognized. But, um, within this context is changing socioeconomic context where we are seeing longer times in education and increased Labor precarity and economic precarity and uh, and then changing patterns of mobility, um, as well as folks there. Yeah, there were really those, that kind of different perspectives on how ownerships of some, some folks still got that homeownership was something that they, that they expected to attain and that and um, was something that they wanted. And then some groups who, who didn't think that it was something that they would be able to attain. A, because of PR, a lot of those economic factors and then young adults who didn't watch homeownership because of the, uh, it felt, I think it was incongruous as well with some of these larger socioeconomic factors. And so, um, I would say that it's really a time of transition right now and when we kind of see how these larger socioeconomic trends and see where those go, then I think that will further impact the expectations on home ownership going forward.
Speaker 2:Yeah, I think that's a good point where we, most people still want to be homeowners eventually. Nothing that ID is beaten into us in many ways. We hear that the ownership is a good investment. You should move into a home, you should own, you should build that equity. So most young adults are saying, okay, they do want this, but a lot of them realize that it might not necessarily be on an attainable for at least a long period of time. So that's where in our other research we see people living with their parents longer. Yeah. Saving up, getting help from their parents and then moving into homeownership instead of having that renting phase beforehand. So the goals are still there, it's just that there are these other outside pressures that are keeping people from being directly into home ownership.
Speaker 3:Okay. I have one last question. What do you think the real estate community could do to maybe change the perception that home ownership is unachievable for this generation of young adults?
Speaker 2:So well, I'll bring back some more of the, come do here a little bit because there are many things that are making this much less, much less achievable, not necessarily unachievable, but less achievable or young adults today. And if we look at broader trends, especially in terms of economic inequality, where we see greater and greater divides between the wealthiest people and the people who have the least, these things are definitely impacting people's ability to buy homes, to go out and get good jobs and all that kind of important stuff. So in terms of what the real estate community could do, I would generally advise to start paying attention to these broader things as well. Because all of this impacts your ability to sell homes if you don't have people with the money to actually go out on my own. So I think paying attention to some of those broader social and economic issues, um, could be a good start.
Speaker 3:What do you mean when you say that? When you say broader economic issues, what, what is an actionable item there for an agent that's trying to serve this group of, of potential home buyers? How can we help them get out of their parent's home or educate them or does help them move into that home, um, in a more beneficial way?
Speaker 2:Well being an educated voter, is there a really good first step? Because you can think of even all levels of government, local government, up to the federal government, all these different policies can play a role. So being educated in that way and voting based on what you know about those different issues can be really important. And even getting involved in different community organizations like that, does she for affordable housing, all those things are good steps in this case.
Speaker 3:Awesome. Thank you so much Marion and Michelle, for your words of wisdom area members, we want to hear from you your feedback and suggestions for future podcast episodes will be critical to making sure that this is the strongest resource for you. We invite you to send feedback through communications@albertarealtor.ca. Thanks for all who took the time to listen and we hope to see you the next time we are in your area.