Withered dreams of young, well-paid
New research says housing costs may be crushing financial goals of high-achieving millennials
They are the young professionals the Toronto region covets — highly educated and already earning good incomes in their 20s and 30s.
They are also the canaries in the coal mine when it comes to the region’s challenging housing market. If they can’t afford to live here, who can?
New research from the Toronto Region Board of Trade shows the high cost of housing may be crushing the financial goals of high-achieving millennials.
A survey for the business group shows 83 per cent of young professionals believe high rents and home prices are impeding their ability to save for retirement.
Sixty-five per cent say their shelter costs are preventing them from paying down debts.
The findings come a week after new census data highlighted the Toronto region as the country’s least affordable housing market, trailing even Vancouver.
Young professionals are increasingly discouraged by the state and the cost of housing, said Board of Trade CEO Jan De Silva.
She said that concerns from the business community about talent retention and the supply of appropriate housing for workers — rental as well as ownership housing — prompted the board to survey young professionals.
It’s not a crisis yet. But it’s an issue that demands attention if Toronto is to continue attracting and retaining global employers.
De Silva says millennial workers are wondering how they will ever get ahead.
“We’ve all grown up in a generation that says housing ownership is a good thing, it’s how you create a financial future for yourself. What we’re hearing from our young professionals is, that whole cost of getting into the housing market just feels really far beyond reach,” she said.
“Those who are getting in are saying, ‘It’s just consuming so much of our available income that even trying to think about retirement savings, which is also a very responsible part of financial planning, is being impacted by this.”
The young professionals in the survey said they planned to buy a house with a 20 per cent down payment. But, on average, they had saved only 14 per cent.
Fifty-two per cent of those who rented said that being unable to afford a down payment was the main reason they couldn’t afford to buy.
Among the 803 survey respondents, aged 18 to 39, 42 per cent owned homes and 58 per cent were renting. Thirty-nine per cent of the homeowners lived in detached houses; 34 per cent in condos and 27 per cent lived in semi-detached or town homes.
Among the renters, 41per cent lived in highrise condos; 24 per cent in midrise buildings and 31 per cent lived in a detached, semi-detached or town houses.
A third of those surveyed said they expect help from family or friends to buy a home, with younger respondents, 18 to 29, most likely to look for that kind of assistance to buy a condo.
Sixty-seven per cent of those still renting said they expect to pay less than $750,000 for a home.
The average price of a resale home in the Toronto region in August was about $732,000. In September, it was $775,546, according to the Toronto Real Estate Board.
The average price of a newly constructed condo was $661,188 and a new-build, detached house in the Toronto region cost $1.6 million on average last month, the Building and Land Development Association said.
The region needs to do a more robust job of collecting housing data, said De Silva. The glut of one-bedroom-plus-den condos that don’t accommodate families will eventually drive millennials farther afield.
The challenge is not a foreign buyers issue, it’s a supply issue, she said.
“There’s a lot of international talent that’s choosing to live in Toronto and we want them to be part of this community. So the (Ontario) foreign buyers’ tax was just the wrong approach and there was no data to support it,” she said.
The Board of Trade study included responses from among its own 1,100 young professional members, CivicAction’s Emerging Leaders’ Network, the Toronto Youth Cabinet and the Toronto Public Library’s New Collection. The email survey by Environics took place between June and August.