Ah, millennials. Everyone’s talking about you. Your work. Your lifestyle. Your future. And, of course, your aspirations to own real estate.
Who’s a “millennial” ???
According to Wikipedia, there is no exact age but a millennial is someone who is born roughly between the early 1980’s up until the early 2000’s. They’re the kids of the baby boomers, and older Gen X adults.
So count me in as one of them. LOL. I was born in the early periods of the millennial era.
Millennial kids have witnessed profound changes in communication, technology and media. I remember growing up playing around with a Commodore 64 in kindergarten. It was a big, beige, chunky machine… a keyboard and CPU all boxed up in one. And today, I’m typing this on a MacBook Air, with a significantly exponential amount of computing power.
They’ve also witness very profound changes in real estate. Especially in Toronto. From growing up in their parents’ homes, to trying to afford to stay here.
Right now they’re the biggest and most influential group getting into the real estate market. They want to buy Toronto homes.
But with real estate prices in Toronto at record high levels, it has become a challenge for many to afford a decent, entry level home. Even with combined family income.
And that was the reason for Emily Wilchesky’s open letter to… Toronto.
What do Millennials want?
Simple. For Toronto housing to be more affordable. Millennials can’t afford houses in Toronto. And even though they’ve grown up in the city, and now work in the city, they feel as if they’re being pushed out.
They’re passionate about living in the city.
It’s where they work. It’s where their friends are. It’s a part of their identity. And their lifestyle.
But it’s becoming more and more challenging as prices skyrocket.
And even with the recent ‘cooling’ of prices and more listings on the market, prices are still up there.
So what are they going to do about it?
Well, according to Emily, they’re moving north. Cottage country. Where housing is still affordable. And the commute still bearable. She quotes an average price for a cottage at $413,000, compared to the almost $1 million price tag associated with a home in Toronto.
Hey, my clients are selling a one bedroom, 632 square feet condo priced at… just under $460k.
What would you rather own: a Toronto, one bedroom condo at $460k, or a cottage, up north, at just over $400k?
It may not necessarily be a bad thing.
I’ve talked about buyers having to manage their expectations, especially in today’s period of high real estate prices.
But real estate prices are relative. We’re still cheaper than many world-class cities… such as London, or New York.
And many are saying Toronto is quickly becoming ranked as a world class city, and there’s so much room to grow.
So millennials have to decide what they want. And, quite frankly, have to adjust their thinking.
Do they want to live in a world-class, urban centre and pay the prices?
Or are they okay with living up north, in cottage country, where nature and lakes abound along with images of playing outside and kids laughing as they run around?
The millennial generation is competing against international money. Though initial research and studies show this is a small percentage of overall buyers in Toronto, it is still influential enough to put some effect on prices.
And some are being funded by ‘bank-of-mom-and-dad’ money. And because mom and dad bought homes years ago, and their values have since appreciated, they can lend a helping hand to the millennial to buy a home priced much higher than what their parents bought for.
We also have to remember what got this price movement started in the first place.
A limited number of homes listed in the Toronto real estate market, which only a few months ago skyrocketed.
In some areas outside of Toronto, this has caused the number of sales to drop over 60%, and prices to dip.
But Toronto real estate prices remain strong. At least for now.
You may get what you want… millennials
There’s certainly a buzz from housing market bears that the Toronto real estate bubble will pop. And there will be a massive crash in the market.
I don’t think so — unless something catastrophic happens.
But millennials will get what they want if two things happen.
- Interest rates continue to rise, in the coming year. Which would affect mortgage rates. But even if that happens, and prices dip, you’re paying more interest.
- Supply continues to increase. And I mean drastically. To the point where there’s just so many homes on the marketplace. We’re talking Richmond Hill… Newmarket… Keswick levels. But in Toronto….?
Should you wait?
Popular Toronto neighbourhoods continue to remain… well…. popular. And the price growth has been sustained. Time will tell if lofty real estate prices return to reality (if that’s what you want to call it).
But who’s to say prices won’t stay at this level? Or even go up a little bit more? Or a lot more?
If you want to live in Toronto, get real about what you’re going to get.
Living in a starter condo, whether a one bedroom, one plus den, or two bedroom, isn’t a bad thing.
Renting is not shameful if you don’t know what to do with your life at this point. Seriously. Don’t feel bad about it.
And if you really want to move up north to cottage country, go for it.
But Toronto will be the fierce city that it is. Because the value is there. And unless the real estate market falls because of external factors we can’t control anyway, the only thing you can do is make a choice.
So, millennials, make a choice about what you want. Don’t blame Toronto for its high real estate prices.
Either adjust your expectations… or sit back and wait to see what happens.
Ask your parents what they did. 😉