They typically go for condos with amenities, but those who want a family are leaving the city and going as far as the Niagara region.
Many millennials can’t afford a home but William Cole, 27, sold one and is on the cusp of owning three others.
Cole balanced his studies at a Nova Scotian business school, with making campus walls tremble as a DJ. He also juggled other odd jobs before he started managing artists, all with his eyes glued on Toronto’s real estate trends. Looking for the perfect opportunity to get his foot in the door.
After three years of guarding every dollar he earned, Cole bought his first home in Toronto’s Bloordale Village at the age of 24.
“You kind of have to be cheap for a bit,” he says.
That condo, with exposed brick and high ceilings, made him one of the 40 per cent of millennials who own homes in the city.
For Cole, the savvy purchase netted him a cool $250,000 when he sold it two years later — and it helped him put those earnings and savings into buying two more places while to start looking for a third.
These days, he lives in his condo by High Park, which comes with a mix of amenities.
But developers need more than party rooms and architectural touches to reel millennials like Cole into the market. While affordability is the top criteria for young buyers in the GTA, this cohort has needs and desires that are distinct from previous generations.
Jared Menkes, executive vice president of highrises at Menkes Developments, says projects like Mobilio in the Vaughan Metropolitan Centre are attracting the younger crowd; offering a direct TTC connection to downtown, more square footage than condos in Toronto and prices starting around $380,000. Plus, the development offers common spaces to match millennial lifestyles.
“We design amenities that appeal to a younger demographic, such as co-work spaces, which provide a place to work outside of your suite and also help to maintain a better work-life balance,” Menkes writes in an e-mail.
“This is becoming increasingly popular with more and more millennials venturing into the entrepreneurial space.”
He adds that millennials, who are age 25-34, care about community building, mixed-use neighbourhoods and being close to transit. The developer emphasizes that condo gyms are also popular with the group, which like to keep fit without paying for memberships.
Christopher Alexander, executive vice president of RE/MAX’s Ontario-Atlantic region, says condos aren’t necessarily what millennials are looking for, but are all they can afford since most of them are first-time homebuyers.
“Developers want to cram as much product as they can into a given site because the more units that are available, most of time, the more money they can make,” he says.
“Condos in Toronto and the suburbs are really small spaces and they understand millennials are willing to do that.”
Places new… and old
Dino Capocci, a realtor and partner at the Stewart and Capocci Group, says Yonge and Eglinton remains a hot spot for that age group. As it has for other young generations in the past.
“We had 11 offers on one property… at least half or more were from millennials,” he says.
“The reason is, you have the Yonge subway line, but also the Crosstown Parkway extension. It’s got lots of amenities and that area is really changing.”
Sky-high city prices have funnelled the flow of millennials into high-density downtown neighbourhoods like Liberty Village, City Place and King West Village. The cohort has also reshaped the older west end of the city in recent years. According to a February report from RE/MAX, millennials have helped gentrify “tired neighbourhoods” such as the Junction, South Parkdale, Bloorcourt and Dovercourt Park as they snapped up affordable resale homes.
Neighbourhoods such as Oakwood-Vaughan and Dufferin Grove have also perked up as millennials moved in and bought up smaller, affordable freehold properties. But as those properties have become scarcer and prices start climbing again after a pause in 2018. The millennial trend to affordable condos and townhomes and high-density neighbourhoods will continue, RE/MAX says.
There are almost 500,000 millennials in Toronto, about 40 per cent of whom own a home according to an RBC report from February. As they get into their late 20s and early 30s and start having families, they start competing with other demographic groups for affordable, roomier housing. Consequently they start moving farther out to areas like Peel, Waterloo, Simcoe, Durham and Hamilton.
“Hamilton is still one of those places that is undervalued,” says Jesse Melo, a real estate agent with RE/MAX Escarpment Golfi Realty Inc.
“You can still find a detached home for under $500,000 in a good area.”
Despite a longer commute to Toronto, Melo says Hamilton’s urban core charms the younger crowd; who always ask about the closest coffee shops and restaurants. But prices won’t stay low forever, prompting a millennial ripple effect to spread even farther out.
“There was a wave of buyers towards Hamilton and it’s still coming, but the next big spot is St. Catharines and the Niagara region in general, with Welland and Grimsby,” Melo says.
He adds that condo developers are getting their shovels in the ground near Grimsby’s waterfront and the QEW highway. Giving buyers access to lifestyle amenities, as well as commuting options to Toronto.
Challenged as they are for affordable housing, millennials have been forced to get creative.
“They go to great lengths, like buying cottages, moving outside of the urban centre, commuting in or even finding a new job in a different city to afford the type of home they really want,” says RE/MAX’s Alexander.
“They want to buy homes, want to start building equity and they believe in real estate as a safe investment over the longer term,” Alexander adds.
These days Cole is eyeing one property in Montreal and just bought another in Los Angeles. The business grad has come a long way from the days of paying rent and tuition.
“Minimum wage was like nine or 10 bucks an hour when I was in university, which is crazy to think about. Now… you have to do something exceptional,” he says.
For Cole, “something exceptional” meant work — lots of it — to get to home ownership. After building up a savings account, he began shuffling from bank to bank, shaking hands with as many people as it took to find someone who would take a chance on him and guide him to a mortgage.
“It’s really like a low-risk savings account that you can benefit from in your daily account,” he says.
RE/MAX’s Alexander says while new mortgage rules make it harder for first-time homebuyers to be approved, it looks like the Bank of Canada won’t be changing the interest rate for the rest of the year. Which means millennials shouldn’t wait around.
“People get caught up in, ‘is it the right time to buy,’” he says. “It’s about time in the market, not the timing of the market.”
Written by: Bobby Hristova