“Millennials make up the largest concentration of Guelph residents and they’re aggressive in pursuits of a home” say Beth and Ryan Waller, Guelph real estate agents. In most cases, they need to know that starter homes are not forever homes.
Guelph real estate softened again in July 2022, both versus July of 2021 and 2020. It’s expected because summer months are slower than spring and fall. Overall though, the market is still up significantly.
But more prevalent this year was that real estate wasn’t top of mind like it was in early 2022, because getting outside and enjoying the nice weather has been the priority. And, of course interest rate hikes and high inflation play a big role in spending.
Millennials, broadly categorized as those born between 1981 and 1996 are now between the ages of 25- 40. According to the latest census, they represent the largest cohort of the Guelph population at 23%. Compare this to the Baby Boomers, who represent 13% and it’s clear that millennials have clout.
Entry level homes disappearing
The challenge millennials have in respect to housing is that they face a low supply, high demand market. This has previously resulted in runaway housing prices. In particular, this has impacted detached houses.
For context, in 2019 homes under $400K were 21% of the total Guelph real estate market. For 2021, homes under $400K represented less than 3% of sales.
In 1980 it took 2x the household income to buy a house in Ontario. In 2020, that number increased to 10x the household income and has increased further in 2021. Boomers had it easier, no doubt about it.
With increasing home prices, we’re seeing a dramatic increase in the prices of rentals in Guelph. Now, not only are millennials dealing with higher home prices, they’re dealing with higher rent.
Millennials should just get into the market with a 3-5 year plan. Buying forever homes isn’t necessary at a young age, you can get there in time. Just getting into the market to build equity is the key.
Condo sales and development rising, literally.
Guelph has seen significant condo development in recent years, mostly around the downtown area, but with numerous developments in South Guelph as well.
“This high rise supply for housing in Guelph is welcome, and needed” says Beth Waller. “However, millennials will also find a challenge here, as they’re competing with downsizing baby boomers who are mortgage free. They’re also competing with speculators and investors. It’s not easy.”
Condos offer a wide range of sizes, bedrooms, amenities and price points that meet many of the needs of millennials. Sales of condos in Guelph are at new highs for 2021 and make up roughly 22% of the total sales in town.
Many speculate that the work from home movement has brought more 416, 905 and 437 area code buyers and investors into Guelph. This may be true.
The other challenge: less forever homes available
On the other hand, we have Baby Boomers who are living healthier lives for longer. They’re not retiring as early as they used to. They enjoy gardening and are often mortgage free- why should they rush and sell? They’re the ones living in the forever homes that millennials wish to buy.
The Boomer demographic represents the oil in the real estate engine: with this grouping often comes two transactions: both a new purchase and a sale, providing much needed inventory for others. Boomers are often credited with tying up the real estate market.
But where are they going to go? Many boomers have been considering moving out of the 519 area code altogether. This means travelling the world, moving to Eastern Canada and doing things that they’ve always wanted to do!
For the Boomers that decide they are going to move on, they’re often aiming to make this their last move. That means careful considerations of maintenance, mobility and size weigh more. To meet those goals, Boomers have zoned in on condominiums and bungalows for sale in Guelph.
The problem? Millennials want these forever homes, too.
But as millennials have shown, they’ll roll with the punches.
Millennials are thinking outside the box for non-traditional ways of buying a house. Buying a property with an accessory apartment to help with the mortgage ( House Hacking), creating multi-generational living arrangements. Lastly, advances on family inheritance to fund a down payment.
It’s not uncommon to see a first time buyer millennial purchasing a detached home in the $600- $750K range in Guelph. They also prepare in more ways than previous generations, using apps such as HouseSigma that provide them with market information not available ten years ago.
“They’re savvy, they prepare and they’re aggressive. Bully offers”. As much as millennials get bullyed in their sterotypes, we like their style”, says Ryan Waller (a Gen- xer himself)
Beth and Ryan Waller are Guelph Realtors with Home Group Realty and can be found here!
Source: GDAR 2021 year to date, single family residential sales. Statistics Canada and Canada Census (2016) data used for demographic information.