Millennials have been called the renter generation, but a new report by Ryerson University dispels that myth.
Today’s younger generation wants to own their home, not rent it. An overwhelming majority (90 percent) of millennials say homeownership is important to them, yet the lack of affordable home options in big cities means that the dream of homeownership could be fading for some.
The report finds that over the next decade, 700,000 millennials in the Greater Toronto and Hamilton Area (GTHA) will move out of their parent’s home in search of a place to call their own. This will represent the single largest source of housing demand over that time.
Millennials Prefer Homes with Backyards over Condos
Contrary to popular belief, not all millennials want to live in the box in the sky. Many younger folks would like ground-level homes with backyards. However, unless supply catches up, the demand won’t be met, with 70,000 fewer ground-related housing units than needed.
With baby boomers not expected to downsize in a meaningful way until mid-2040, the housing supply will have to come from the new housing market. But with developers more interested in building condos than townhouses and detached homes, there’s likely to be a shortfall.
If the lack of supply isn’t addressed soon, it could have dire consequences. Millennials could go further into debt to buy homes in the city, add to traffic gridlock by moving out to the suburbs, or leave the GTHA altogether. This could result in brain drain with the province’s brightest minds leaving in search of somewhere more affordable to call home.
And the problem isn’t that millennials aren’t saving enough, choosing avocado toast over homeownership. It’s that entry-level homes remain out of reach for many. With home prices growing a lot faster than wages over the last two decades, a single-family home now requires 6 times the income of an average millennial.
The bank of mom and dad and low interest rates have helped keep the dream of homeownership alive – for now. But with interest rates rising and the new mortgage stress test, it’s making it that much more challenging for millennials to afford starter homes in the GTHA.
What’s the Solution?
It’s easy to point fingers, but what’s the solution? All this can be avoided if policymakers act quickly and address the problem now.
Policymakers seem to be focused on the demand side of the equation, when it’s housing supply that they should be focusing on. That means increasing the supply of starter homes and the so-called missing middle. By building more duplexes, row houses and stacked townhouses in the GTHA, it could help relieve some of price pressure from the increased millennial housing demand.
To give millennials a voice at the upcoming provincial elections, Ontario Real Estate Association (OREA) has launched the Keep the Dream Alive campaign. The campaign is aimed at helping ensure that affordable homeownership remains a top priority in the provincial election. Millennials don’t just need affordable housing, they need housing that they can afford. By joining the campaign, you can do your part to ensure homeownership remains within reach for future generations.
As the saying goes, the squeaky wheel gets the grease. MPPs are bombarded with constituent issues on a daily basis. Let your voice be heard loud and clear in the provincial election on June 7, 2018. Ask your local candidates how they plan to address the lack of affordable housing for millennials. Hold the government accountable for its actions.
Sign up for the Keep the Dream Alive campaign and send a strong message to your local candidates that housing affordability for millennials truly matters.
Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians, available now on Amazon and at Chapters, Indigo and major bookstores, and as an Audiobook on Amazon, Audible and iTunes.