January 14, 2021 Optimism and Alternatives for Millennial Real Estate Investors

In Canada, and especially in B.C., real estate surprisingly but easily proved that it’s pandemic-proof. Over the last few years, real estate unaffordability has become an increasingly hot topic, especially for millennials now in a property-buying demographic. The difference is that many millennials don’t have the capital that previous generations had at this point in their lives. The pandemic has hit millennials hard economically, but the future is looking more optimistic than it did just a few months ago.

Canada’s housing market didn’t flinch

In April 2020, the Canada Mortgage and Housing Corporation said that due to COVID, prices could fall up to 19% in 2020, with sales likely dropping. Then looking back at the year that felt like a decade ended, real estate went in the complete opposite direction with a 20% jump in prices and a record year for sales. A main driver of this being the Bank of Canada dropping interest rates.

B.C. employment bounces back

This year, B.C. saw the largest increase in the unemployment rate, with a staggering 400k jobs lost in March and April. But since then, we’ve seen 350k+ jobs regained. Minister of Finance Selina Robinson told the CBC “After seven months of consecutive growth, B.C. has the highest job recovery rate of Canada's four biggest provincial economies.” With vaccines on the way, Canada’s economic activity is expected to start returning to pre-COVID levels by the second half of 2021.

A Scotiabank survey in September found one in five Canadians aged 18-34 have accelerated their plans to purchase either a home or investment property to take advantage of lower interest rates or home prices. They also found one in five Canadians have put plans to purchase a home on hold due to COVID. The same survey also notes 77% of Canadians who are renting say they have no plans to purchase a new home in the next one to two years.

While the job market and economy are already recovering, the optimism towards homeownership still lies more with those who already have the means to invest in real estate. The future may look brighter than we thought it would, but many were still hit hard financially by COVID, on top of the already high cost of living.

Modern alternatives to capital-heavy real estate investing

What about people who want to take advantage of Canadian real estate but don’t have the capital for private property ownership? Micro-investing and crowdfunding have democratized investing for the younger crowd in recent years, thanks to being tech-forward and not capital-intensive.

We’re now seeing this same democratization coming to real estate investing with two Canadian start-ups: Vancouver-based addy and Toronto-based Willow.

Addy takes the crowdfunding concept to let people benefit from real estate but without the need for a large amount of capital or risk involved. Via addy, you can invest in residential or commercial real estate starting at $1. With investments managed and properties vetted by addy’s team of experts, you don’t need to rely on one real estate advisor or yourself to be that expert. You also skip the work and risk needed to be a property owner or landlord. Addy currently features commercial and residential properties in Metro Vancouver, Calgary, and Toronto.

While addy is up-and-running, Willow is set to launch Spring of this year with a similar concept and what looks like a focus on the Toronto market. Like addy, Willow lets investors profit through rental income and property sales.

The thought of putting a down payment on a place can feel too out of reach, so why bother investing time into learning about real estate? Such as the daunting task of achieving big goals, breaking them down into smaller ones can help.

On top of letting you get into the real estate world earlier, it also offers an advantage seen by people starting on their investment path through micro-investing or crowdfunding. By having some cash invested into a tangible asset, it puts your head in the game. Starting small, you’ll be motivated to learn more, as well as invest more. With platforms like addy and Willow, it could be your opportunity to grow both your portfolio and knowledge of real estate investing. Then you’ll be on your way to having both the capital and knowledge to confidently buy a home of your own one day.

MLA Canada Contributor: Simon Gerard