I hear this phrase a lot, “Millennials (people born between 1981 – 1996) have a rough time being priced out of the housing market”. At first I was slightly dismissive of this as I came from an era that simply told us to “Work hard and you will get what you set out to achieve”. However those people telling me this also remembered WWII and to them every day should be valued for simply being free.
A child growing up between 1950 – 1970 was not the parental priority, but they were expected to be grateful. So why are house prices and millennials so intrinsically linked and is it indeed true, are they getting a rough ride with the high priced property markets or are they being cosseted somewhat? Surely they just need to work harder and things will happen, right? Let’s consider the following before we pass comment.
I want to explore with you how emotionally disruptive the impact of lack of housing choices and a fractious rental market is on young and growing families; and in particular how this issue is beginning to deeply impact local communities across the globe.
What’s the challenge?
One could answer this question with trusted metrics that indeed do show property prices in places across Canada and around the world have risen exponentially, creating a chasm for 1st time home buyers. Delve further and you can look at not only the increases in the price of the houses but, as important, the minimum deposit required by lenders. If we take this opinion in isolation it makes for depressing reading. This diagram provides an example of the impact Canadian house prices have had on the minimum deposit vs the period needed to save.
First time home buyers now have to wait between 8 to 22 more years before they can afford to put down the required deposit for a home. This alone means that younger Canadians, particularly in large urban centers like Toronto and Metro Vancouver, have little if no opportunity to buy a home.
Not only have housing prices increased almost every year for the past few decades, the current Canadian lending criteria has conspired against the average millennial and made generating the required down payment on their first home almost impossible.
However this is one metric that means so much more than just the challenges of home ownership. A lack of housing options relegates young families to a generation of renting and a realistic probability that many younger Canadians will be renting for their entire lives
The negative impacts of rental instability
To better understand the negative impact of a lack of housing choices, we need to dig a little deeper into the way our well-being is affected by prolonged levels of emotional disruption caused by housing challenges.
Today’s high-cost of housing and a lack of purpose-built rentals forces families to make difficult financial and emotional trade-offs that can lead to serious negative consequences. If people in our communities can’t put down roots, their day-to-day lives are impacted in many ways. Lack of connection to neighbours, frequent school or daycare changes, and the expense of moving puts tremendous stress on families and wider communities.
The traditional rental market has a way of dealing with tenants/renters in a very cavalier way. There are some great landlords out there, but we are simply discussing the social impact of a rental market that does not provide secure long term and affordable housing opportunities.
Here is a very short list of highly disruptive conditions renters face every single day:
- Minimum rental term – 12 months fixed term contracts with no guarantee for renewal
- Damage deposits and pet deposits – up to 2 months plus
- Rent review – annually or when new terms agreed
- The financial cost and disruption of moving
- The challenge of finding appropriate housing in a competitive housing market with few purpose built rentals
The basic needs of a young family renting
Young families renting for prolonged periods will be challenged by the demands of their landlord and their own basic needs of being in a settled environment. Now imagine that you were a young family who:
- Has a reliance on local schooling and community
- Are geographically linked to local work and/or care needs
- Have limited funds for rental
- Are living in a region where there are few purpose built rentals and even fewer that can accommodate growing families
These needs alone totally conflict with the disruptive rental terms and conspire to make stable home occupancy unattainable. While the family could, with good fortune, bumble along for many years in the same place, the always “not knowing” is emotionally debilitating. Now add to this the impact such a scenario has on the young and fragile world of a child. Stability and consistency are the cornerstones for young peoples well being, alongside love and care. Remove or disrupt any of these, over a long period of time, and you risk creating a deep rooted emotional shift in our young people they will take into their adult life.
The butterfly effect of secure rental
If parents can create a rental home life of stability that starts with a secure roof over their heads, does it not make for a better family structure? Does it not contribute to families staying together and enjoying their home and community space for longer? Would that not then increase the social value that fosters a better sense of community in individuals? Of course it would.
Is there a solution? There is always a solution; we just need to look at things differently.
In Metro Vancouver, for example, we have land, lots of land in fact. We have builders wishing to build and we have local and provincial governments recognizing that all people need secure housing options. So why is it these key pieces of the delivery chain cannot solve the problem of affordable and stable rental homes? I can offer two main reasons why:
- Builders cannot afford the cash-flow demands and long-term investment of building purpose built rental projects.
- Local governments often have land available, but have limited funds to create rental homes and come up against pressures from developers for increased density and the general public’s lack of support to go along with alternative housing options.
So let’s consider the “what if”
- What if there was a mechanism that allowed people, you and I, to place some of our hard earned $$ into real community housing?
- What if this community housing supported the needs of young families of renters and removed the anxiety that a disruptive rental market creates?
- What if your investment in purpose built rentals generated annual $$ yields and also allowed you totally liquidity?
Blockchain enabled Fractional Property Investment has arrived
Zooky’s crowdfunded Fractional Property Investment solution delivers positive social mobility within the housing market while creating quality purpose-built rentals for families.
How does this work and why is it better than the conventional landlord/rental process?
Zooky has utilised the security and trust of blockchain technology to enable a crowdfunding approach to fractional property investment. Zooky is bringing people together to develop purpose built rentals. This approach will pay each fractional investor annual yields and allow each property token holder liquidity should they wish to move in or out of the investment. All while creating a stable, affordable place for people to put down roots. It is a highly engaging investment that comes with the upside of social responsibility.
Fractional property investment removes financial barriers and provides an opportunity for everyone to invest in property.
We know that the current unstable rental process leaves young families, and renters in general, in a tough position. To manage this, Zooky’s new model focuses on creating housing stability through investment in purpose built rentals. This ensures that young families who are renters have access to long term stable housing in their community. Zooky will remove individuals as landlords by spreading the property investment across many investors. This model will ensure long term stability through rental agreements that last five years, ten years and longer. Additionally, through the removal of banking fees, Zooky will be able to offer rental housing at lower than market rates.
The Zooky Fractional Property Investment solution provides a unique approach to addressing the real needs of growing families and people wanting to invest in the housing market.