The average Canadian family income is around $80,000/year. Let’s assume a family can save 10% of their income yearly, they would have a nest egg of about $80,000 in a decade of savings. Now let’s assume they averaged a 5% return over that time. Their investment would have grown to somewhere between $84,000 and $100,000. 

Now let’s see what would happen if they invested in Real Estate 10 years ago. With the average price for a home in Oshawa of $317,000 in 2013, growing to a current $925,000, their investment would have netted them around $675,000 before any fees. 

Real Estate has always been a solid, trusted investment and in the past 37 years, I have seen only 3 times where values have decreased. This is one of the reasons that people of all ages are looking at Real Estate as investments.

A recent survey done by Royal Lepage found that 51% of Canadians who own rental property are planning on buying another property within the next 5 years. Not only that, 31% of Canadians who do not own a second property are looking to buy their first rental by 2028. A great question would be, “Who are these people that are looking at purchasing rentals?”

This is where it gets interesting – and something I have not seen before. Gen Z’s (born 1997 – 2012) and young Millennials (1981 – 2012) are two of the groups who are leading the buying spree. With many young Canadians not in a position of home ownership, one of the largest groups of investment property owners is 18 – 34. Of this group of young entrepreneurs, 44% that own investment properties own two or more properties. Many of these Buyers are choosing not to buy a home for a personal residence, they are buying strictly for investment purposes. In fact, the survey identified that 15% of all residential investors do not own a primary residence.

When you look at the reasons behind young people becoming investors, the data is very easy to identify. Canada is encouraging over 500,000 immigrants yearly and half of that group end up in Ontario. In fact, when you look at immigration, foreign students, (many who purchase properties or need rentals) and migration to our province from other areas, the number being bantered around is upwards of 1,000,000 newcomers to Ontario. We are in a housing crisis. The Ontario Government created a task force to identify why we are in such a crisis and their report was quite shocking. Government “red-tape” and fees to get shovels in the ground, the length of time from concept to a build date and restrictive zoning is hampering the addition of new housing stock. This is causing two issues; the first is that home prices have increased at a historic rate and with few purpose-built rentals, rents are increasing all across our country. 

In the past 24 months, rents in Canada have increased by over 20% and detached homes in Oshawa, Whitby and Clarington have increased by over $100,000. Even with higher borrowing costs, it is easy to see why people see the long-term benefits of investing in property. 

I purchased my first property when I was 24, and at the time I was a tenant renting a 1-bedroom flat. The property I purchased was a condo and I ended up renting it out. My goal was to use the condo as a “springboard” to acquire a property to live in for myself. Two years later the condo (which many people shared at the time would never increase in value) had appreciated by 48% and I sold it and purchased a small bungalow with a basement apartment. I kept this property as I moved to a townhome 4 years later and it became a rental. Small beginning that kept snowballing to where I am currently. 

Young investors can see that Real Estate has a proven track record and with a long-term vision, it can be a nest egg that will outpace any savings an individual or couple can possibly make.

Getting a foot in the door is key to the beginning of creating wealth. I was driving yesterday and heard a woman being interviewed who what sharing a story about a young gal she knows who bought a condo on Simcoe St. near the University as a rental and that will help her to enter the market with a principal residence. She went on to say it was not the area that the Buyer would choose to live in, however, it would increase in value over the next few years with a tenant paying for the costs. 

I was thinking as I heard the interview what a smart move this young woman was making and then read this survey about how she fits the demographic of many of today’s Buyers.

If you need help getting into the market or are a seasoned investor looking for some guidance, I can be reached at lindsay@buyselllove.ca or 905-743-5555

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