Tuesday, December 27, 2005
Young and Single
No ladies, this post is not about me! It is about the younger generations purchasing real estate. I am, however, in the process of drafting another Article - this time about me - which will be published here first and that will be aptly entitled …’Obsolete and Disposable’…
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I have had the great fortune of selling a loft right before the Holiday Season to a new and young Client of mine, who goes by the first name of Michael. Michael, who must have told me ten thousand times to call him Mike, has taken me for a tour of all miniaturized condos and lofts available in Downtown Vancouver. In fact, I must confess that this was one instance where it was the Client that showed properties to the Realtor and not the other way around as it is customary in the business. Such was the case because the Realtor (myself) viewed investments – to put it the way Mike did – as “just not cool enough”. I must say, before I go on and not to give the wrong impression to anyone, that Mike is an accredited computer animator in his early twenties and that he has a gross annual income hovering to on or about CAD $100,000. He ultimately ended up purchasing his loft for about CAD $400,000.
Michael is the typical example of what we refer to in the business as the ‘Digital Generation’. Kids of the Digital Generation grew up in the suburbs with computers at home and in the classroom, shopping malls down the block and swimming pools in the backyard. Now they are young adults, aged 18 to 26, eager to move out of the parental nest but not willing to give up everything they had as kids. These young buyers are smart: they know it costs the same, if not less, to buy as it does to rent. But their taste is remarkably different. They do not hold the traditional axioms of real estate – view, location and space – in very high esteem. In fact, the opposite is true. I was shocked (terrified might be a better word) when Mike took me into this apartment on the fourth floor of a medium-height concrete building in a questionable area of the Downtown, with the balcony and the bedroom window opening up ... right on to the main railroad tracks of the Canadian National Railway. “Cool!” exclaimed Mike “You get to see the train every day”. Yes, every hour too.
But then and again, this is typical of the Digital Generation: they speak a different real estate jargon. Rich in cash and spendable income, with no problems at all qualifying at the bank for a loan, these young professionals of the Twenty-first Century are filling up the downtown cores of large metropolitan centers throughout North America. Or, in the alternative, they lean towards the purchase of heritage homes and bungalows built in the 1950’s that they can retrofit to their taste, and in neighborhoods where they have friends. They almost invariably choose locations with tennis courts, parks and theaters at a walking distance away. They adore having restaurants and cafes just outside their front door and markets nearby that cater to their working lifestyle.
Space is generally not a problem, in light of the requirements of their almost totally non-existent furniture. Mike’s biggest hurdle was to find a living room large enough to accommodate his top-of-the-line computer hardware, a must that he uses for work at home, together with his top-of-the-line … pinball machine, a must that he uses for ‘transcendental meditation’. Bed, living and dining room sets and loveseats and chairs, not to mention wall pictures and frames had no bearing whatsoever on his decision to purchase – all household items of past eras and age and definitely ‘not cool’.
Developers are particularly eager to target the Digital Generation. With retail prices for Downtown condos in Vancouver past the CAD $450 per square foot benchmark, it is becoming a balance of trading off space for affordability. A survey conducted by Ipson-Reid has shown that a whopping 61 percent of young buyers rate home ownership as very important and that a further 47 percent say they are likely to buy within two years. Pretty much the same proportions, however, rate square footage at the bottom of the ladder of interest. It is also an issue of culture, customs and mentality. In the past, people had first to wait and get married and then bought together. Not anymore with the Digital Generation: they are buying on their own. As not all of them, of course, can sport a CAD $100,000 income like Mike’s, new developments come with smaller units making them accessible to singles with only one income sufficient enough to pay for the mortgage.
The alternative very much sought after by these new buyers is to live in refurbished warehouse spaces the likes of lofts. Lofts are none other than stratatized light industrial space rezoned for residential use. In fact, in many instances rezoning has not been undertaken at all: it is just the highest and best use that has switched from light industrial to residential – a consequence of the price levitation of recent times. Modeled on the New York style lofts, they typically consist of a main floor and a mezzanine accessible through an internal iron stairway, all surrounded by brick walls. Very rustic in appearance, they do not feature fireplaces, closet space and even ceiling clearance is skewed with a characteristic 14 to 18-foot clearance on main and a 7-foot clearance at mezzanine level, taken from the overall floor-to-ceiling height of the strata unit. Modern, stainless steel appliances are the only notable residential touch.
And, finally, these youngsters do not cherish their privacy as much as ‘old-timers’ do, as reported by the same survey. Just less than 50 percent, in fact, rate privacy, quiet and silence as not very important factors in the scale of their preferences. This was certainly evident in Mike, who is also a drummer in his spare time. And, moreover, they like to congregate. Friendship is important, and not merely for showing off: these kids value each others’ opinions and thrive to build bonds sealed through sharing common visions, pre-concepts, experiences and lifestyle. Mike, in fact, had no trouble at all meeting this young girl at Possession Date, who also owns a loft in the same building. A pretty girl wearing a chemisette a little too tight, either because it was the wrong size or because it had shrunk in the washing machine, it revealed a portion of this otherwise conspicuous tattoo strategically positioned – I might add – beginning at the same level of the last two lower vertebrae going downwards. She was sporting also this earring which, by whatever law of physics or other vicissitude of life, had somehow detached from the ear lobe and gotten pinned right on her left nostril.
It must have been love at first sight, because the girl was with us for almost one hour helping exploring the newly bought loft and giving Mike suggestions and advices as to where he should position the pinball machine. As I was just about to leave, on my way to the door Mike took me on the side and exclaimed half-jokingly (and, then, also half-seriously): “Luigi, no wonder you never got married – you are just not cool enough”.
Ouch! That hurts …
Luigi Frascati
Real Estate Chronicle
