The popular picture of adult millennials as urban-dwelling, rental or condo- living, car-eschewing hipsters is being challenged by several research reports. According to Barry Gollom, vice president of mortgages and lending at CIBC, it’s a myth that millennials don’t want to own their own home. CIBC commissioned a survey in March The survey shows 86 per cent of millennials view home ownership as important even though 42 per cent of them are renting and 21 per cent live with their parents. Overall, according to the poll, 85 per cent of Canadians consider home ownership a priority. Of those, 63 per cent say it makes financial sense to build equity and save for retirement while 59 per cent of millennials in the 18-34 age group say home ownership provides a sense of personal freedom. Only, 15 per cent of Canadians say home ownership is not important, with nearly half saying it’s too big of a financial burden. The survey, conducted March 14 and 15, queried 1,517 randomly selected adults who are Angus Reid forum panellists.
As to the choice of urban living versus suburban living, Pulte Group, the United States’ largest home builder released a study that concluded that ” For all the differences and diversity of this generation, affluent millennials views on homeownership and their purchasing intentions are very similar to previous generations – in fact, they are acting just like their parents. 70 percent of millennials saw themselves in the suburbs with their next home, while 30 percent plan to live in an urban setting if they can find a product that fits their needs and their cheque book. Student loans are hindering millennials’ ability to purchase a home, but it’s not the only reason purchases are being delayed. 67 percent say what they want is currently out of their price range. What they want they can’t afford. Writing in the Globe and Mail last month Margaret Wente said “Neither immigrants nor millennials who are starting families want to raise their kids in apartments.”
A factor adding to the difficulty of Millennials finding housing is the surprising trend of older generation baby boomers to stay in their homes. Up until recently the conventional wisdom was that the baby boom generation aged 55 to 70 would start abandoning their large single family homes for smaller houses or condos, but it is not happening in significant numbers, meaning resale homes are scarce and as a result becoming more and more expensive. For a senior whose mortgage is paid off, the prospect of paying taxes and hefty condo fees, coupled with increasing construction costs for condos are a disincentive to moving. It is cheaper to spend some of their equity retrofitting their homes so they can “age in place.”
Suzanne Mammel, the Executive Officer of the Hamilton Halton Homebuilders Association says affordability is going to get worse if the Ontario Government implements its new higher density targets for cities like Hamilton. Under the new scheme, population density targets will be increased by over 60 percent. In the case of Hamilton it would mean shoehorning the equivalent of nearly 600 high rise apartment buildings into the existing built area. “We will end up with a ring of high density residential units in the suburbs on the perimeter of the core” she said. “Condo living is a lifestyle choice,” she added. “If people don’t want to live in a high rise they will drive until they can afford a home they want,” referring to the current migration of home buyers to Brantford, Woodstock and Cambridge, and the attendant pressure on the road and transit system.
A similar view was expressed by Tim Hudak, former PC leader now head of the Ontario Real Estate Association. “The bad news is that government policy is the main driver of lack of affordability,” he said; “the good news is that government policy changes can help relive the situation. He recommends increasing the first time home buyers tax credit and then revisiting the density targets the government is proposing. “People at some time in their lives want a choice,” he said. “Recognize that they want a back yard which means more detached, semis and town houses.” Globe columnist Wente suggests the planners who came up with these density targets “should be required to raise their families in an apartment block in Oshawa and take the bus to work. They’d find a better way soon enough.”
Written by: John Best