Toronto Millennials are the most educated group in Canada, but high housing costs are keeping some of the country’s most qualified workers in their parents’ basements or pushing them out of the province altogether, a new report suggests.
The study, released Tuesday by the Ontario Real Estate Association in partnership with Ryerson University, raises alarm bells about the future of the region’s housing market, which researchers say won’t meet the demand of Millennial home buyers as they start families.
Millennials are often portrayed as the antithesis of Baby Boomers, with disparate opinions on everything from politics to brunch. But according to the research, which analyzed census data and surveys of Millennials, the two generations want similar things from life: a spouse, kids and a ground-level home with a backyard.
The problem, researchers say, is that there aren’t enough affordable ground-level starter homes in Toronto, and developers are more interested in building condos and apartment units than townhouses and detached properties.
To make matters trickier, Baby Boomers won’t begin downsizing from their houses until 2040, keeping a large swath of resale properties off the market.
Over the next 10 years, researchers expect 700,000 Millennials will move out of their parents’ homes. As they enter the housing market, the demand for ground-level homes won’t be met, with 70,000 fewer ground-level homes than needed, researchers say.
If that demand isn’t addressed soon, there could be several major consequences. Millennials may go into deep debt to buy a house, abandon the city for the suburbs – thereby adding to traffic congestion -- or leave their jobs in the Greater Toronto Area to test the job market elsewhere.
The problem isn’t because Millennials aren’t saving enough, says report co-author Diana Petramala, a senior researcher with Ryerson’s Centre for Urban Policy and Land Development. She says assets among Millennials are growing faster than any other cohort over a 10-year period, and Millennials are taking on less debt.
Regardless, entry-level houses are still far out of reach.
“A single-family home now would require an income that is six times that of the average Millennial. So it definitely is becoming more difficult,” Petramala told CTV News Channel on Tuesday.
Younger Millennials have turned to the condo market for relatively affordable starter properties. Part of that demand came from Millennials who moved to Ontario from western provinces when oil prices recently dropped.
But that short-term boost doesn’t offset the long-term trend of Millennials leaving Ontario.
“We do see more people leaving the province than staying. So we do think that Millennials are at that age where they’re more mobile, they’re moving quickly through the housing cycle. And if we don’t offer them the type of jobs and housing that they would like, there’s a good chance we could lose a bunch of them.”
That projected Millennial exodus may be avoided if policy makers address the problem now, says Tim Hudak, CEO of the Ontario Real Estate Association and the province’s former Progressive Conservative leader.
The organization has launched a campaign, Keep the Dream Alive, calling on the three candidates vying to become Ontario’s next premier to address the reported lack of affordable detached homes in Toronto.
But the issue isn’t just limited to Toronto, Hudak says.
“Whether I’m in Toronto, Niagara Falls, Ottawa or Simcoe, they all say the same thing – realtors have that young couple, they did all the right things. They got their degree, they got the job, maybe they’re expecting a kid – they can’t find a house to move into,” Hudak told CTV Toronto on Tuesday.
“So this is all about helping Millennials escape mom and dad’s basement, move on with life and boost the economy.”
Policy makers may also want to consider tax incentives to help Millennial home buyers reach their dreams, Hudak said.
“We need more supply, greater choices and giving them a bit of a tax break when they try to buy their first home. That would go a long way too,” he said.
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