An Investment for the Future - Issue 363

Investing has always been a little overwhelming and can often be surrounded by questions - where should you put your money? Which holds the best ROI? How risky is it?

Common choices of investments for generations past have often been things like stocks, bonds, or mutual funds like a Registered Retirement Savings Plan (RRSP) - but this could quickly be changing.

Real Estate has always been a popular choice of investment, but it is becoming even more popular with young Canadians. Property investors are no longer limited to the stereotype of older, richer real estate gurus (although this may still be true for some). The demographics of investors are changing.

According to an article from CTV News, Canadians 35 and younger averaged 5% of total property investors in 2020 - a shocking number considering mortgage rates - and this number is only growing.

The article suggests that this could be the result of generational wealth, financial cushioning from families, and lifestyle shifts for younger investors. Younger investors may be getting financial backing from parents or partnering up with other investor friends to be financially able to break into the market.

Young Canadians are increasingly eager to invest in real estate. They are looking for investment opportunities that will give them passive income and invest in their futures - and real estate fits this criteria perfectly.

Millennials understand that there is an increasing shortage of homes - especially homes they can afford - and realize that the sooner that they can break into the market, the better. People are realizing that getting into the market is becoming more difficult. Buying a home has never been an easy or simple purchase, but gone are the old days where you had a variety of homes to choose from that were both available, as well as affordable.

Investing in real estate allows young Canadians more opportunities for the future - maybe they’ll eventually move into that investment home, or sell it to buy their first family home. Buying a small $300,000 investment home now will only make it easier to purchase a spacious $800,000 family home in the future. Not only are investment properties a very visible & tangible investment, but also a great long-term investment.

There is also an increased drive for knowledge surrounding how to buy your first home, whether that be an investment property or not. People want to be educated on the financial details of purchasing and maintaining a home, hungry to learn how they can be successful in their real estate investments.

This changing demographic of investors can be chalked up to what has been going on in the market the last couple of years. With rising mortgage rates, as well as the spike in the prices of homes during COVID, Canadians are realizing the value that Real Estate can hold for young investors. Canadians have seen the market fluctuating and realize if they can get their foot in the door, there is an opportunity for wealth building and an investment in their future. For many younger Canadian investors, that may mean buying a small fixer-upper to rent out while they are still living at low cost in their parents home - a far cry from buying their dream home, but still allowing them to break into the market and begin working towards that dream home.

While this certainly isn’t an easy investment, younger investors are embracing Real Estate at an increasing rate. Often the conversation surrounding young people revolves around how difficult this market is to break into, the struggles first time homeowners are facing, and the rising age of first time home buyers. This can turn into a doom & gloom conversation - how will our kids ever be able to afford living in this market?

But looking at the rising percentage of younger investors, it is encouraging to see that there are still young Canadians who are finding opportunities for themselves in this market. Young investors have realized the importance of Real Estate and for having property of their own, no matter how small.

For millennials that are able to seize this opportunity, whether that be through generational wealth or through their own efforts, they are able to make an investment in their future and maybe even push back against the stereotype surrounding the impossibility of young investors being able to break into the market.

One of the best things you can do when looking to break into the world of Real Estate is to have a Realtor® on your side. Our Realtors® know their way around the market, especially when it comes to investment properties. Our agents are experts in Real Estate investments, as well as helping first time homebuyers find a home that fits their needs. Reach out to anyone on our team if you are looking for help navigating the world of real estate or if you’d like to learn more about how to make investment properties work for you.

Thanks for reading & have a great weekend,

Paul Fitzpatrick

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