Condo living may just be a phase for millennials in the GTHA, new research from Ryerson University’s Centre for Urban Research and Land Development (CUR) suggests. And it’s a phase they’re expected to outgrow in the coming decade as many follow in the footsteps of their baby boomer parents, getting hitched, having kids and purchasing homes, albeit at later ages.
Millennials in the Greater Toronto and Hamilton Area: A Generation Stuck in Apartments? found that as young adults born between 1981 and 2001 reach major milestones later, they’re also leaving the childhood home and progressing from renting to owning later. However, the Ontario Real Estate Association-sponsored report forecasts significant movement along this housing life cycle in the next 10 years as members of the demographic cohort finish school and see their employment stabilize and incomes increase.
The report also finds that millennials in the GTHA hope to own homes, and they covet ground-related homes in particular. Some millennials have already realized this aspiration, while others continue to live in apartments, either rented or owned.
However, younger members of the demographic cohort may have an increasingly hard time securing ground-related homes as they decamp from their childhood homes in large numbers in the coming decade. The report notes that baby boomers are expected to remain in their homes during this time, while the development pipeline is poised to deliver more apartments than semis, detached and town homes. All things the same, the report projects worsening affordability in the next 10 years, as millennials face the prospect of competing for 70,000 fewer newly built ground-related homes than will be sought by the demographic cohort.
“We’ve got these millennials, who are going to be the biggest force in the marketplace, who’ve got preferences as they age for ground-related forms of housing, and we’re not producing those housing units for them,” said Frank Clayton, co-researcher on the report and senior research fellow at Ryerson’s CUR. “What we’re doing is producing apartments.”
Acknowledging the role of provincial planning policies in promoting this intensification, Clayton called for the construction of more townhomes than single-family homes. He said townhomes, which have stagnated over the last 20 years, would deliver a higher-density version of the ground-related homes millennials want within the confines of environmental restrictions aimed at preserving green space.
The report concludes that the risks of staying the current course are even higher house prices, more traffic congestion and possible brain drain. Amid worsening affordability, millennials intent on securing their preferred housing type will have two options: either move farther and farther into the suburbs or uproot for another city altogether.
“If they can’t find they housing they want, the kind of lifestyle they want, they have alternatives,” said Clayton. “If you’re a highly educated millennial, you don’t have to stay in Toronto.”
Speaking on a panel following the report’s release, Michelle German, senior manager of policy and partnerships at Evergreen, suggested that providing a variety of housing options, not just ground-related, will be key to retaining a healthy population in the GTHA. To that end, she advocated taking a broader view of the “missing middle,” which planners use as shorthand for low to mid-rise housing options.
“I actually think it’s about income level, so talking about middle-income earners; it’s about unit size, so getting beyond a one-plus-den and into a two- and three-bedroom territory that’s built for families, not just built for students or for investors; and it’s also about reimagining out housing typology, which includes mid-rise and stacked townhomes as well as secondary suites such as laneway homes and granny flats,” she said.
Ben Myers, president and owner of Bullpen Consulting, said he sees a role for larger condos units in the mix of the estimated 40,000 to 50,000 new homes that will be required every year to absorb millennial-driven population growth in the GTHA. However, he added, there are barriers to building this type of product, including price per square foot, which is rising alongside land and construction costs.
Myers said he expected condo prices to continue to rise as development charges double and the Ontario Municipal Board gets dismantled and replaced with local appeal tribunals intended to give communities greater power in planning decisions. As it is, he said that developers are having a hard time building in some of the areas tapped for intensification by the province due to either opposition from local residents or lack of infrastructure.
“We either have to continue to promote that supply and allow developers to move from acquisition to completion in a much quicker time or make some of these suburban intensification areas easier to build as well,” said Myers, speaking on the panel following the report’s release.
Even without these roadblocks, challenges remain in meeting the housing wants of millennials. Speaking on the panel following the report’s release, Brian DePratto, senior economist at TD, pointed out that the lands available for ground-related development are largely located on the fringes of the GTHA. He said this puts prospective buyers in the difficult position of deciding whether to sacrifice livability for affordability as they weigh long commutes against lower prices.
“I think there needs to be a more holistic planning discussion — not just where the houses are going to be; how people get to work, how will services be delivered, where will childcare be, where will the employment lands be,” said DePratto. “Living downtown is great because everything’s right at hand, but again, [because of] the costs, we know people are going to shift out and that aspect needs to come into that 10, 15, 20-year planning.”
Michelle Ervin is the editor of CondoBusiness.