In Monopoly for Millennials, the tag line reads “Forget real estate. You can’t afford it anyway.” Now Environics Analytics’ Wealthscapes survey confirms that many millennials are investing outside of real estate due to lack of housing affordability.
“When we look at these younger households, they’re choosing to rent a little longer, not hopping into the housing market either by choice or financial circumstance,” said Peter Miron, senior vice president of research and development at Environics Analytics, in an interview with HuffPost Canada.
“But it’s not like they’re blowing their money. They’re actually saving up those liquid assets, and finding other ways to save their money.”
The survey also showed that urbanites retain more household wealth than their neighbouring suburbanites. Why the disparity in household wealth? It’s not more job opportunities. Predictably, real estate played a huge role.
Since house prices in city cores outperform suburban real estate, the average net worth of urban households grew by 0.6 per cent to $959,946 in 2018, while in the suburban 905 region, net worth actually fell by 0.6 per cent to $997,012 (figures include property value). So, those who do own a home have seen their investment double in many cases.
“Canadians are increasingly choosing the convenience of the urban lifestyle and effectively that’s why we’re seeing house prices creeping up in downtown cores while they’re more stagnant in the suburban areas,” said Miron.
Miron added that the stock market decline at the end of 2018 also had an impact on suburban household wealth. “Since suburbanites tend to be older, a lot of their finances are invested in stock portfolios.” Environics reported that stock portfolios lost 14.5 per cent on average in 2018.
So real estate is actually the more secure investment?
It’s tough times for millennials.