Millennials are the largest population group in Canadian history and they are going to carry the housing market in the coming decade. But there’s a problem:
“Toronto’s real estate is not slowing down, and based on the incomes of many millennials, they are not able to afford housing and they’re being priced out of the market,” said Ron Sally, broker of record and owner of REMAX Millennium Real Estate. “Part of that is the millennials entering the housing market are compounded by high rates of student debt, higher living costs, rising property values and greater job insecurity, all of which amplify the effects of unaffordable housing in their lives.”
Toronto is estimated to need about 300,000 new units of housing in 10 years just for millennials.
Alex Balikoev, a Core Assets Real Estate sales agent, believes the Toronto municipal government exacerbates the problem by tapering building sizes in a bout of myopia.
“It all comes down to density,” he said. “City Hall needs to allow builders to build taller and denser. That will bring more units onto the market. Every time a developer proposes something, the city says ‘You can’t go that high. You need fewer storeys or fewer units.’ Instead, the city should tell them to build more: ‘You’re only building 40 storeys? Maybe you should build 50 or 60.’ Instead of giving maximum limits, they should give minimum limits.”
Strategic purchasing is also touted as a way to gain entry into the housing market. Apart from the obvious, like budgeting, planning and general financial responsibility, Sally says millennials should start thinking like real estate investors, and that a good place to start is the preconstruction market.
“They can invest in housing now and four or five years later when it’s complete, they can close,” he said. “If they require an immediate purchase and they can’t afford anything in the city, they have to invest just a little outside of the city, wait a few years, cash out and reinvest when they can.”
Sally has helped his millennial clients find reasonably priced properties on the periphery of Toronto, but a likelier scenario that’s already playing out is millennials will leave Toronto and never return.
“People will move out of the cities,” said Balikoev. “Hamilton is the new Brooklyn. A lot of my friends moved out to Hamilton because it’s cheaper.”
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