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Millennials + Housing Affordability

January 30, 2019 | Share:


Toronto’s housing affordability is one that’s affecting millennials in a big way. As Toronto housing prices have risen, this has been great news for those already with an investment in the market. For would-be millennial buyers though, not only has the buy-in price increased but there are new barriers to procuring a mortgage in Canada with the mortgage stress test introduced in 2018.

Evidently, there’s a lot to criticize regarding how a young person in Toronto can ever afford to save for a down payment on a home. At the same time, every few months, we’ll read another article in Macleans, the Globe and Mail, or some other Canadian publication that details how millennials who have sacrificed and worked hard have been able to afford their own home. Needless to say, it’s false to think, ‘If a millennial sacrifices and just were to work hard, they too could own a home.’

Although these examples exist, reading these stories, you’ll notice a handful of things. First and foremost, nearly all young people who’ve been able to do this have done so by staying at home with their parents for a long period of time – something which is not possible for everyone. Secondly, a lot of them are university-educated and with high-pay employment – something which, again, is not the reality for every millennial.

Considering all this, can a millennial afford to buy a home in Toronto – yes, but it comes with conditions. A lot of millennials have sought to purchase a Toronto condo first, which is more affordable than a semi-detached, single-detached, or townhouse. For a millennial, this is an easy way to get some skin in the game in the Toronto real estate market. For those willing to start with a condo, they can often renovate and re-sell four or five years down the line, and take what they’ve invested to purchase something more in line with what we could call a real home.

Also, if you’re a millennial and are looking to buy a home in Toronto, the only people who are going to be able to afford to do so are those who can limit their spending, increase what they save, and do what they can to improve their income. If you’re single, it’s also going to be a lot harder to find a home than if you were saving with a partner. Dual-income university-educated households have spending power you won’t find in very many single-person living arrangements.

We don’t want to give anyone false hope. It’s incredibly difficult to save for that first down payment, if you’re a millennial living in Toronto. For anyone working minimum wage and who aren’t afforded the luxury of staying with their parents rent-free, it’s near impossible. Taking all this into account, if you’re serious about investing in Toronto real estate as a millennial, focusing on income and spending is a must.

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