Millennials vs Housing

In terms of housing, Toronto is in a completely different state then it was decades prior. In the 70s you could be making $9,000 working at the bank and purchase a nice home with good square footage for $15,000. A different time now seems like a different world. Millennials are having difficulty purchasing property all across North America. The term “millennial” is rather loose, as it typically means someone born between 1981 – 1996, according to the Pew Research Organization. A 2016 census stated that 41% of people between the ages of 25 – 29 are still living at home in the Greater Toronto Area (GTA), this continues to increase each year. Housing costs continue to climb while the younger generation continues to struggle. Buying property is just not as possible for new home buyers as it was for previous purchasers. Millennials are the largest group in Toronto, but struggle the most with landing a place to live.


The amount of housing within Toronto is very problematic. It’s not solely an issue for millennials, but they are the most ill equipped to deal with this situation. A 500 square foot single bedroom downtown can go beyond $600,000. The constantly increasing birth rate and ever rising immigration make it harder for an entire generation.


Millennials are rather limited in how they can deal with this, and it’s not the simplest thing to achieve. Unless they have a high-paying job (which is rather unlikely), most will have to cohabitate with possibly multiple others. There is also the tried and true technique of living off of your parents until you can afford a down payment on a property and a mortgage. The “Bank of Mom and Dad” are a requirement for most younger folk to afford these excessive and climbing costs. Many don’t have the option of utilizing the banks or financial institutions as they have to prove a strong, stable income and years of good credit. A strategy that millennials (or people of any generation) can take advantage of is the Home Buyer’s Plan which allows people to take $35,000 of their RRSP and put that towards a property, they can also get a rebate on the Toronto and provincial land transfer tax on their first home (if applicable). Many are moving outside the city, even outside of the Greater Toronto Area for more affordable housing. We call this phenomenon “drive until you qualify.” You don’t need to live in a big home or have to walk to work, it’s a luxury that not everyone can afford. As a purchaser, you may have to sacrifice space for convenience. If you plan on having a family, increased square footage is most likely your priority over location. The key is to stay within your budget. If you want to live close to Toronto, the Durham region might be your best option, or possibly further west like Kitchener or Waterloo. Keep in mind, there are always trains and other transit you can utilize.


A common trend is millennials utilizing pre-construction condos within the city. This is typically a joint venture as this expenditure generally starts at $700,000 for 2 bedroom new builds with modest square footage. These properties generally take 3 years until purchasers are able to move in. It usually requires a 20% down payment, while the rest can be paid through a mortgage. This is likely the best route for millennials to take if they want to remain in the city while retaining a comfortable lifestyle. Areas outside of Toronto can be just as expensive, especially in Burlington or Mississauga. Research is always key, it might be best to look outside the city until you can qualify for your purchase.


How did this happen? In an interview with REC, Diana Petramala, Senior Researcher at the Centre for Urban Research and Land Development at Ryerson states that “…population took off more than anticipated, more than the region could keep pace with. We weren’t prepared for how housing demand would change for millenials as they aged, regulations that impede development and density have also slowed how the market has responded.” The provincial government didn’t recognize this as a problem until the tail-end of 2018, well after these issues arose. Supply has been unable to keep pace with demand, which had the potential to mitigate much of the problems. David Amborski, Professor at Ryerson for Urban and Regional Planning, suggests that this generation of home buyers isn’t that different from the baby boomers. Although, they had more land to utilize when they were erupting. They are now living in condos after they start families due to sky-rocketing housing prices and cultural shifts as well.


It will take years, possibly a generation to bandage this situation through extensive due diligence on the government’s part. An excessive amount of money needs to be put into the infrastructure, if we have more transit, buildings and employment opportunities we will be able to develop in a more economic way to aid those with lower incomes. Despite the lack of quantity we still continue to build to a large degree, but even that needs to be increased. The City of Toronto has approximately 150,000 people immigrating per annum, which requires around 50,000 households each year. On our best year we’ve done 42,000, well above our average of 35,000. When you extrapolate the numbers the problem becomes more apparent. Right now were at 15,000 annual deficit, over a decade this will create a need for 150,000 in the city alone. This is great for investors, but an issue for millennials.


So what is a millennial to do right now? If you plan to buy a property, the sooner the better, prices are only going up. It all comes down to due diligence, know where and what you’re looking for. Ensure you jump on a fair deal when you see it. Many should consider moving to the outer rim of Toronto to take advantage of the cheaper prices, which will also continue to increase. The best course of action is to spend less than you make so you can save, save, save. Here’s some practical advice from REC, save 10% of every pay cheque before you even see it, as most people will see it and use it immediately. Get your bank to automatically take the amount out so you aren’t tempted to touch it.


During an interview with REC, millennial home buyer Vivien H stated her struggles in buying her first property. After searching within her desired area in Markham, she realized that living so close to the city wasn’t viable. A comfortable home in that region would not fit her budget, through the advice of her broker she looked into the Durham region as it’s up-and-coming and affordable. She purchased a newly built townhouse utilizing a loan from her parents for the down payment, while also co-signing the mortgage with her boyfriend. “Buying your first house can be very stressful as there are a lot of things you have to consider. But, by doing more research, being open minded, and having realistic expectations, it can really minimize the stress.” It all comes down to doing your due diligence and utilizing what you have to problem solve.


The concern lies in the future, if this trend continues Gen Z could have it even worse. The ever increasing population will result in even smaller spaces and prices will inevitably rise. With government intervention and well informed buyers it’s not too late. Bringing awareness to this will greatly aid in the future.


To our millennial friends, you are not alone. Get to know your options, get informed. At the end of the day blaming others is not going to be the answer, you need to get educated, take this in your own hands. If you sit on this, think to yourself: what did I do?

Written by: Spencer Maxwell

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