Housing Affordability a Key Political Issue for Millennials
Last week I attended the first annual Ontario Housing Summit. The summit was created to address the increasing importance of housing on the political agenda. The event featured panel discussions on a number of real estate topics, including “Deconstructing Ontario’s Fair Housing Plan,” “The Future of Housing,” and a Fireside Chat on “Ontario’s Approach to Housing Affordability” with Ontario Finance Minister Charles Sousa.
A big focus of the event was housing affordability. This shouldn’t come as any surprise. With a house in Toronto costing about 12 times the median total family income, first-time homebuyers are increasingly feeling like homeownership is out of reach. To put this into perspective, it takes an average of 15 years to save a 20 percent down payment on an average priced detached home in the GTA, according to Generation Squeeze.
Housing affordability is a key political issue heading into next year’s provincial election in Ontario. Sean Simpson, Vice President of Ipsos, kicked off the day by sharing some interesting poll findings. 37 percent of Ontarians strongly believe housing affordability belongs on the upcoming provincial election agenda, with 30 percent saying that they’d be more likely to vote for a party that takes on the issue.
Housing affordability especially matters to millennials and first-time homebuyers. The poll found that 60 percent of first-time homebuyers strongly agreed that they would be more likely to support a political party that promotes housing affordability.
“Generation Screwed?” — Millennials and Home Ownership
There was an entire panel dedicated to “Millennials and Home Ownership.” I had the privilege of speaking on the panel alongside Ben Myers, senior vice-president of Fortress Real Developments, and Brian Kelcey of State of the City Inc. We discussed a number of topics that matter to millennials, including renting versus owning, the “missing middle” and the social economic impact of millennials not entering the housing market.
An interesting point was raised about the importance of millennials managing their home-buying expectation (a topic I discuss at length in my book, Burn Your Mortgage). Many millennials are used to growing up in a spacious home under the roof of their baby boomer parents. It can be a rude awakening to discover that in many cases an average detached home is out of reach.
But that doesn’t mean that millennials should give up on the dream of homeownership. It all comes down to setting realistic home buying expectations. You may not be able to affordable a detached home right away, but you can probably swing a condo or townhome. By choosing a more affordable housing option, you get the best of both worlds: you won’t find yourself stretched financially and you can start building up equity for when you’re ready to eventually move to your dream home.
FOMO, short for “Fear of Missing Out,” was also discussed. It’s a major motivating factor for millennials entering the real estate market before they’re ready. Many millennials fear that by sitting on the sidelines, they could be priced out of the market. While there’s always the chance of being priced out of the market, what’s worse is buying a home before you’re financially ready.
Far too often I see millennials buy homes sooner than they should. If you’re a millennial fresh out of university, rushing out to buy a home can be a costly mistake. If you’re precariously employed and not ready to put down roots, you’re probably better off renting for the time being.
But that doesn’t mean you have to give up on the dream of homeownership. Maybe just put it on the back burner for the time-being. Start saving toward a down payment, so when you are ready to settle down, you’ll be financially ready.
Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians, available now on Amazon and at Chapters, Indigo and major bookstores, and as an Audiobook on Amazon, Audible and iTunes.