Recreational properties gobbled up by millennials
Millennials will soon become Canada’s biggest generation and they’re starting to make their presence felt in the recreational properties market.
But they’re doing it their own way, according to a report by Re/ Max.
In Alberta, millennials born between 1982 and 2004 already outnumber the boomers (born 1946 to 1965), thanks to higher levels of immigration and Canadian internal migration to this province. Across Alberta, the average age is 37.8 and, statistically speaking, that average Albertan is at the leading edge of the millennial generation. The Canadian average age is 41, according to Statistics Canada.
“We are finally witnessing the long-anticipated generational shift of purchasing power from baby boomers to millennials,” says the Re/max report. Canada-wide, the huge, post-war baby boomer generation are retiring in increasing numbers, while millennials are now approaching the most productive years of their working lives and beginning to tip the economic scales in their favour.
“Millennials are starting to flex their muscles and really influencing every sector of our economy,” says Elton Ash, western regional executive vice-president with Re/ Max.
“They’re well-educated, financially savvy and they understand that, in the long term, owning real estate is still the way to go,” Ash says. “They’re having families and they’re very lifestyle-balance oriented. Recreational living is very much aligned with this generation’s quest for work-life balance.”
Accordingly, they’re leery of big mortgages.
With this outlook, they frequently shy away from long-term commitments to high-priced urban real estate but are increasingly seeing recreational properties as a way to enter the real estate market at a more affordable cost, he says. They’re willing to rent in the city, or own a small condo, and make a long-term investment in recreational property. The survey says 56 per cent of millennials are interested in the rec-property market.
While price is the top consideration for millennials, the report says, maintenance cost is also important. Internet connectivity, recreational amenities and proximity to towns with urban conveniences are increasingly important selling features. Smaller cabins and cottages are most attractive if there’s potential to expand. And, of course, a commute of less than two hours is preferred.
Ash says another driver in the recreation market shift is “the Bank of Mom and Dad” — the increasing transfer of wealth to the millennials from their boomer parents. This sometimes happens through inheritance but more frequently, he says, boomers help their millennial children buy properties in the mountains or at the lake.
“There are three generations at the ski hill or the lake and it’s on grandma and grandpa’s dollar,” he says. “They (boomers) are the babysitting grandparents and they don’t begrudge that because they’re the wealthiest generation.”
In the U.S., he says, this wealth transfer is expected to reach $30 trillion and traditional calculations suggest the same phenomenon will see about $3 trillion passed to millennials in Canada.