Soaring housing prices refill empty nests
Daunting price tags push young adults to move back home, while staying put affects supply
Janet Barber does not dwell too much on the view from her driveway.
Many of her longtime neighbours up and down the block have cashed in on the area’s soaring house prices and moved away. Where their modest wood homes once stood, much larger architect-designed houses of stone, steel and glass fill the lots. Across the street, a big sign plastered with “Sold” stickers means that one is probably next to go.
But no matter how much Barber and her husband, Michael, might now be able to get for their own three-bedroom bungalow, they are not about to join the rush.
Why? Although they are old enough to be emptynesters, their nest isn’t empty. Their 29-year-old daughter, Sarah, has been living with them since she finished a graduate degree in 2013, because she cannot yet afford a place of her own. Her older sister, Jennifer, did the same for six years.
The more house prices rise, the longer it will take Sarah to save up enough to move out. But the longer she and thousands like her stay with their parents, fewer houses are put up for sale — and that scarcity is a big reason prices are soaring.
It is a paradox of the red-hot realestate market around Toronto: Some owners are not selling because prices are too high.
Oakville, where the Barbers live, has been transformed by the property boom in the Toronto area. Last month, the average sale price in Oakville hit $1.4 million, 30 per cent higher than a year ago. Prices are climbing into seven figures across the region, and rentals are expensive and difficult to find.
Those daunting figures have driven thousands of young adults back into their childhood bedrooms. An unusually high 56.5 per cent of people in their 20s in the Toronto area still live with their parents, compared with 42 per cent nationwide. Like Sarah Barber, many of them appear to be trading some independence for the chance to turn what otherwise would have been rent money into savings for a down payment.
It can make sense financially for them, but it also makes the affordability problem worse. Basic economics says that high prices ought to entice more owners to sell, with the added supply helping to relieve some of the upward pressure. But that is not happening in Toronto, where, despite intense demand, the rate of new listings has been stagnant for several years and even fell12 per cent last month.
There may be several reasons more Toronto-area homeowners are not doing what the economics textbooks predict. Some analysts believe that parents who might otherwise sell, but are staying put to accommodate their adult children, are a significant factor.
“It’s the only gift we can give them,” Janet Barber said. “We can’t give them a $200,000 down payment on a house. So what can we do? We can house them.”
Prices are stable or rising slowly in most other Canadian cities, but Toronto is booming, fuelled by rapid population growth, and builders cannot hope to meet all the demand. A similar frenzy took hold in Vancouver for a while, but a series of measures, including a tax on foreign buyers, seems to have cooled it off for now.
Dana Senagama, principal market analyst for the Toronto area at the Canada Housing and Mortgage Corp. said experts were just as taken aback by the price explosion as the general public.
“I think it’s crazy,” Senagama said. “We all, as an industry, just need to be careful and make sure we’re not getting in over our heads.”
She said low interest rates, Toronto’s status as the top destination for affluent immigrants and foreign investment in Canadian property all played a role in heating up the market.
But so does the relative reluctance of homeowners to list their houses in a city where existing homes account for 80 per cent of sales.
Not every young adult still at home is saving for a house. Nadia Nassar, 25, lives with her parents in the Wedgewood Creek neighbourhood of Oakville just to get by.
She went to college in New Brunswick to study sociology and anthropology, and came back for a graduate program at York University, planning to stay with her parents as she completed the 18-month program.
“If you had told me that four years later, I’d still be here without any kind of a full-time, permanent job, I would have been shocked,” she said, sitting at her parents’ dining table.
Nassar has gotten half a dozen jobs in her field at universities or in government departments, but all were short-term and ended when the funding ran out. Business cards for one of them arrived on her last day of work.
Like the Barbers, Nassar’s parents said they were delighted to have their daughter at home and did not mind staying on the sidelines of the real estate market.
“It is nice to have them back and have that dynamic again,” said Nassar’s mother, Jane Mitchell. And after a bit of adjustment, Nassar said, the arrangement seems to be working well.
She did not have to work things out in isolation. Several of her friends have also returned to the nest in Oakville.
One of them, Victoria Sherman, said12 of her close friends had moved back home even though many had steady jobs.
Sherman said she and her mother were happy with the arrangement.
“We tell the real estate agents who knock on our door that we’re not tempted to cash out,” she said.
All three families’ harmonious experiences run counter to common assumptions about the frictions and disappointments of adult children living with their parents. Nancy Worth, a geographer at the University of Waterloo, said she had seen the same in interviews and surveys of several hundred back-at-home adult children around Toronto.
“Parents recognize how difficult it is and they are happy to give a hand,” Worth said.
The children, in turn, “challenge that stereotype of the lazy millennial who lives in the basement, playing video games and sponging off their parents.”
“They’re making a smart, strategic choice,” she said.
Sarah Barber said she hoped to save enough to buy a house in Hamilton.
Prices are rising there too, though — perhaps faster than she can put money aside from her job at a nonprofit educational organization.
Janet Barber, 61, who largely grew up in Oakville, said she and her husband bought their bungalow 27 years ago, in a neighbourhood that was built for workers at the Ford Motor plant.
They paid about $250,000 for it — “Unreal,” their older daughter said with a laugh.
Even as a teardown, the bungalow likely has a value of more than $1 million. But selling would mean moving away to find someplace affordable.
That would not only cost Sarah her rent-free home, it would also separate the couple from Janet Barber’s 88-year-old mother, who lives in town.
The Barbers originally hoped to stay in their bungalow through their retirement. “We wanted to be old here,” Janet Barber said. “We wanted to be the old grandparents with the pool.”
But the hot market has drastically changed the neighbourhood. And now, she said, “I don’t necessarily want to be here, to be the last little house at the end of the day.”