Millennials may cause the next baby boom, and that means the Greater Toronto and Hamilton Area (GTHA) needs a boost in ground-oriented, single-family housing.
The Centre for Urban Research and Land Development (CUR) released a new report, “Millennials in the Greater Toronto and Hamilton Area: A Generation Stuck in Apartments?”
According to their research, there could be 700,000 millennials looking to buy a home in the GTHA in the next decade. If the construction trend continues as it is today, the market could be short 70,000 ground-oriented units based on the expected millennial demand.
“Homeownership rates among millennials are no different than past generations, suggesting they are likely to continue to want to own. But our research shows that the baby boomers are unlikely to free up room in the housing market for millennials,” says Frank Clayton, Senior Research Fellow, Ryerson CUR. “That means there’s a real risk that housing affordability concerns could push Ontario’s millennial talent pool–the most educated in Canada–out of the province.”
If supply can’t keep up, young buyers will take on more debt and potentially move out of the GTHA’s urban centres. More than 40% of millennials surveyed are likely to move out of the region because of high housing costs.
It’s clear that supply needs to increase in the new construction market because CUR found that downsizing baby boomers aren’t expected to contribute a significant amount of units to the resale market until sometime between the mid 2040s and 2050. That’s way too long for millennials to wait for more resale options.
Baby boomers were known for getting married and having kids in their mid to late 20s. Millennials are waiting a bit longer, catching up on family-life goals in their 30s. Millennials will be 20 to 39 years old by 2021 and 25 to 44 by 2026. 70% of millennials are married or common law by 35. It’s possible that millennials will trigger the next baby boom, starting families in their 30s and 40s.
The amount of millennials in the GTHA is also growing! 32% of millennials in the GTHA immigrated from outside of Canada. The growth is the fastest in Toronto, and this demographic is actually the fastest growing since 2006.
A potential solution that we tend to favour is the idea of more families living in multi-family residences (condos). We’re even seeing big developers like Daniels and Pemberton catering to families by including children’s play areas in the building amenities.
But, a 2017 study by CUR cited a Toronto Real Estate Board (TREB) survey, finding only 23% of would-be buyers actually prefer condos. A separate Genworth survey of actual millennial buyers found that 65% purchased a single-family home in Toronto; the share grew to 90% when considering the rest of Ontario.
So, what’s the solution? We need to be building up in order to accommodate population growth and prevent more sprawl, but the largest demographic of buyers prefers ground-oriented, single-family homes.
Is it possible that some millennials only prefer single-family homes because that’s what they grew up in? Is it time more millennials embraced mid- and high-density housing as an option to raise a family? If there is a shift in demand where more millennials want to raise families in condos, then the developers will build more family sized units.
But, it’s not like every millennial in the GTHA is going to congregate and collectively decide they want to raise children in condos.
“A shortage of housing puts pressure on Millennials, their parents and roadways, as buyers move further away from city centres in search of affordable home ownership,” says Tim Hudak, Chief Executive Officer, OREA. “These highly educated and talented young people want a home for their kids to grow up in. In this election, all three Parties need to demonstrate that they’re on the side of new and growing families by committing to increasing housing supply and housing choices.”