Metro Vancouver is trying to wrap its head around a “surreal estate” problem that’s as challenging as it is fast-changing.
Vancouver has become North America’s least affordable city, according to the 2016 Demographia International Housing Affordability Survey. Dollar volume in the Greater Vancouver region’s multi-family market has jumped by 99% since 2014, and according to a report by Vancouver City Savings Credit Union, the typical millennial couple buying an average-priced property in the city has to add to its debt at a rate of $2,745 a year to do so.
“Affordability – whether it be home ownership or rental – is an acute problem,” said Rick Sielski, Vancity’s COO of member services.
Sielski said Canada’s largest community credit union is targeting millennials with services that can help them achieve well-planned financial futures.
“Some are looking to delay the purchase of a home, starting families later, living at home longer and living in smaller homes. That is the millennial situation in this market,” he said.
This year, Vancity sponsored a three-part video series with Vice Media on the “surreal estate” climate that’s having a particular impact on those aged 18 to 34. It launched a Don’t Give Up campaign that encourages video submissions – largely from millennials – on issues facing Generation Y and features a blog with posts about how to eat quinoa on a budget or how to enjoy the PNE on the cheap.
While Vancity keeps its market share figures confidential, Sielski admits that the credit union is leading in its recruitment of millennials, and that overall, it has a member base that is younger than most other financial institutions. With that, though, comes varying financial needs that require attention.
When it comes to planning for retirement, for example, younger workers are less likely able to rely on an employer-sponsored pension, a trend brought on by non-linear career paths and a generational shift toward contract or freelance work.
“Which is a significant additional burden versus someone who has worked 30 years and has a great pension plan that provides 60% or 70% of their pre-retirement income,” Sielski said. “That’s less and less the case all the time.”
Despite generational challenges, Vancity holds a positive outlook for the financial futures of younger workers, and it’s banking on hope and targeted services to turn millennials into loyal customers.
“We don’t want the millennial group in this city to give up and say, ‘I just can’t make it here, I need to leave the province,’” said Sielski. “We want to provide as much assistance so that the millennial generation can have a quality of life here without leaving the city, which is obviously a big problem as far as a brain drain and a youth drain, as some millennials decide they’re better off moving out of the Metro area where it’s more affordable.”
Today, the services and products offered by Vancity that are most attractive to millennials are its low-interest credit cards, core banking services that are fee-free for those under 25 and sessions around financial literacy. Last year, Vancity assisted 14,688 people with practical money skills, up from the 10,456 helped in 2013, and the 5,870 assisted the year before that.
While millennials may enter the credit union in search of a cheaper place to bank, five years down the road they may be looking for a mortgage loan, or to invest in more sophisticated financial products.
Last year, Vancity’s total financial investments grew to more than $1.36 billion from $1.08 billion the year before. It also issued $710 million more in residential mortgages in 2015 over 2014.
“[Millennials] happen to be a large group, obviously, that will be growing,” Sielski said. “To the extent that you have strong, loyal relationships with millennials, you can have a long-term member for the next 30 or 40 years. They’ve got a unique challenge and we’re trying to help.”
