Millennials have few choices in current real estate market
Sarah Stenabaugh / May 4, 2016
Canada’s real estate market has defied gravity for years and it looks like it will continue to climb in 2016. The average home in Canada now hovers around $512,621, since hot markets like Toronto and Vancouver rose at 15 and 20 per cent respectively earlier this year. Many houses in both of these cities are well over a million.
New laws for mortgage holders were put into effect this past February as a way to cool things off but one group seems to be routinely left out of the game – millennials. According to a recent report from BMO (Bank of Montreal), 29 per cent of millennials surveyed don’t think they will ever be able to afford a house.
Young people in America are also feeling the push. A recent study found that millennials have the highest move-away rate from major cities like New York, Los Angeles and San Francisco.
The growing frustration over the lack of affordable housing has spurred movements like the #DontHave1Million Twitter campaign in Vancouver, where droves of millennials are leaving the city for more affordable options.
Expert advice to delay buying, borrow money from family or move to more affordable places with precarious work also fall flat. While the Canadian Centre for Policy Alternatives warns that a 20 per cent decline in Canada’s real estate market would force many families in their 20s and 30s to lose 39 per cent of their net worth, a recent study by the Canada and Mortgage Housing Corp. found that nine out of the 15 real estate markets included in its quarterly report are overvalued. Either way – a market correction shouldn’t be taken off the table just yet since the financial health of families affects that of cities.
Recent studies have found that more and more Canadians and Americans are living paycheque to paycheque, as a result of an increase in the cost of living and expensive housing markets. Families’ growing financial insecurities can only damage the financial health of communities, according to a recent study by the Urban Institute, since income disruptions could lead to lost revenue for the city and more people seeking aid.
The Urban Institute urges cities to protect their own financial future by caring more about the financial health of the families that live in their communities. Not surprisingly, the organization highlights affordable housing developments as one major step in the right direction.