A generation on the move
With millennials entering prime home-buying years, the effects their lifestyles and housing wish lists will have on the real estate market remain unclear
They have the potential to be the biggest home-buying cohort in history — even bigger than their baby boomer parents.
But where Canada’s millions of millennials will end up living, and how they will impact the real estate market, has just started to play out.
The first wave — boomers’ kids who range in age from 15 to 34 and make up about one-quarter of Canada’s population — are just moving into their prime home-buying years. Many live in Toronto and Vancouver, where job growth has become a major magnet.
Already, those fortunate enough to find a decent, dependable job, rather than just contract work, have been helping drive competition for starter condos and single-family homes.
“Affordability will play a huge factor in who buys what,” said Dana Senagama, principal GTA market analyst for Canada Mortgage and Housing Corp., which has surprisingly little data so far on how the might of the millennials is being felt so far.
“They’re going to be a force to be reckoned with over the next decade, especially as they move into their prime childrearing years and will need more space.”
Even the Toronto Real Estate Board, which assesses the state of the GTA resale market twice a month, seems to know little about the buying intentions of millennials. It’s set to launch surveys of the sector in the new year.
One thing is clear so far: Millennials have had a huge impact on the rental sector in Toronto and surrounding communities because of their willingness to pay a hefty price — on average about $1,800 a month — to rent sky-high new glass-and-granite condos an easy walk from work.
"They’re going to be a force to be reckoned with over the next decade."
DANA SENAGAMA CANADA MORTGAGE AND HOUSING CORP.
The Townhouse Option It’s a pleasant fall evening and a crowd is crammed into a Roncesvalles storefront for what looks like an art gallery opening.
Wine is flowing. Finger foods are flying off the plates and a security guard has been hired for crowd control.
Canny and Nicholas Ng, both 28, are among the many millennials, some accompanied by their parents, who are here for what is, in reality, one of the oddest lotteries of their life — a chance, if their name is drawn, to buy a yet-to-be-built condominium townhouse in one of Toronto’s most up-and-coming neighbourhoods.
There is a buzz in the room until
The Plus-Sized Condo Option Daniel and Emily Teo are among the many millennials who have done the math. They consider themselves lucky to have bought their two-bedroom, two-bathroom condo near North York’s burgeoning Yonge and Finch neighbourhood for $280,000 back in 2008, before prices climbed completely out of reach.
Now, two kids later — their 3-yearold son and infant daughter share the second bedroom — the Teos plan to stay put, probably for five more years. They debated moving to a smaller town to get a house they can afford, but both grew up in suburban neighbourhoods and prefer life closer to the city. They’ve gone through the gut-wrenching experience of touring open houses in neighbourhoods like Leslieville, where bidding wars have pushed even row houses out of reach.
“We went to some properties that didn’t even have working kitchens. Or we got there early and the open house was just packed,” says Daniel, 31, a chemical engineer.
The couple would consider a bigger condo, if it was in a lowrise or midrise building that was walking distance from parks, libraries and shops. But they are hard to find, given that the average new GTA condo has shrunk the equivalent of a bedroom in size in just the last decade — from an average 908 square feet to 767 square feet — a move developers claim is aimed at keeping costs down in the face of escalating land values and word starts getting around that some 2,000 folks have registered for the first crack at just 57 homes.
“Only in Toronto would you have a lottery to buy a condo,” says one woman who’s among the first in line, but leaves less than 15 minutes after the doors open.
The big crowd is understandable, given that prices — on paper at least — start at just $477,000 for stacked townhouses with about 750 square feet of living space. But prices climb quickly to the $800,000-and-up range for a more livable 1,000 square feet, especially when upgrades like a $7,500 locker and a $45,000 parking space are factored in.
The fact that a detached house in increased government fees and taxes.
Developer Mortazavi is striving to break that trend with midrise projects that his company has planned for neighbourhoods such as the Beach. He believes that the very notion of home ownership is changing, and that young buyers are looking less for quantity than quality, and within “complete communities” or urban villages with parks and other family amenities.
“We need to be building the right types of units and not just singlefamily homes. Throughout much of the world, kids grow up in flats. We the city now averages more than $1 million has made townhouses and semi-detached homes the hottest tickets in the GTA for young buyers hoping to escape highrise condos.
The Ngs have just started visiting new-home sales centres, hoping to move up into a house from a downtown condo. But, like many millennials, they still have a basic debate to settle.
Nicholas thinks the suburbs offer better value. Canny prefers the shorter commute times in the city.
“We’re fighting a bit about where to live . . . struggling . . . discussing,” says Canny with a laugh.
The couple take a pass on the lottery and continue their search. are the anomaly in terms of thinking that kids have to grow up with a backyard.”
TAS has upped unit sizes in newer projects like Kingston&Co to about 800 square feet, and is looking to build rental housing in more familyoriented neighbourhoods outside the busy core. That notion appeals to the Teos.
“We would like to move closer to the city. But with the market as it is, and after our experience house hunting, we’re going to hold out here as long as we can, or until the impending crash that everyone keeps talking about,” says Daniel with a chuckle.