Millennials Can’t Afford a Home in Big Cities — But We’re Not Out of Options

At this point, many millennials have accepted that buying a home in one of Canada’s biggest urban centres just isn’t feasible. Like, at all.

If you’re a Torontonian like me, you might remember that story about the “tiny and filthy” hovel listed for $1 million this year. (*screams*)

The reality is that if you want to buy into the housing market as a millennial, you’ll probably have to get creative or get out of the city. Sometimes both.

Instead of renting a tiny one-bedroom in The Six, one of my friends is joining forces with her boyfriend and another friend for a down payment — even if it’s in a smaller town, like Hamilton.

I was surprised — no one else I knew wanted to move into “the middle of nowhere,” as she joked — but her plan makes a lot of sense, given the circumstances.

As for me? I’ve got my own reasons for staying put.

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Prices keep getting more outrageous

In August, the average price of a home in Canada was up 13.3% over the same month last year. That is bleak. How can your savings hope to catch up?

A recent study by Borrowell — a company that offers free credit monitoring — shows just how rare it is for young people to succeed at buying in a big city. 

Among people with a credit score above 600 (the bare minimum for most people to buy a home), young Canadians are five times less likely to have a mortgage than someone middle-aged.

In expensive cities like Toronto and Vancouver, they’re six times less likely. 

The odds are better in some smaller cities, but not all of them. In fact, Hamilton — yep, the city where my friend is looking — has the lowest rate of home ownership for 20-somethings in the country. Halifax isn’t much better.

So where are young people finding a foothold? The Prairies — places like Regina, Edmonton, Calgary and Winnipeg. 

That’s not to say these cities haven’t seen price surges. Thanks to the pandemic, people of all ages are seeking bigger square footage and greener spaces, even if it’s out of the way. 

But at least these prices are surging in the six digits instead of seven. The average home price in Edmonton is under $400,000 — less than half of what you’d pay in Toronto or Vancouver.

Remember, buying a home is just one option

It’s tempting to fixate on what you can’t have, but your housing decisions should depend on other factors beyond affordability.

Sure, my friend would rather move to a smaller city, pool money with two other people and work to snag a great mortgage rate than rent in a cramped, overpriced condo. And that makes sense for her.

She doesn’t work in Toronto, so living there isn’t a necessity, and she doesn’t enjoy the commotion downtown. Her monthly mortgage payments in Hamilton might be the same (or even smaller) than her rent payments in Toronto. Plus, she sees home ownership as an excellent investment opportunity.

People who work remotely or have flexible jobs don’t have the same priorities as someone who would endure an unspeakable commute if they lived outside the city: i.e., me.

As someone who works in person in Toronto, I’d prefer to rent an apartment there to save on travel time and costs, even if I can’t afford a larger space. It’s a convenience thing. 

And I can use the money I would have spent on a down payment and property taxes and home insurance and mortgage interest to invest in the stock market. Housing may be on a tear right now, but it’s not the only investment option out there — and stocks have historically been much more profitable than real estate.


So, if you’re thinking of moving …

If the pandemic’s made you long for a space of your own — instead of renting or living in your parents’ basement — you’re not alone. But it’s important to consider the where, the how and the why first.

Do the research (and the math). Look into the costs of renting in a bigger city compared to buying a home or renting in a smaller one. That means comparing mortgage rates, rental costs and any other additional expenses you might face. 

Weigh all the extra pros and cons too, like your commute to work and how much space you need. And never forget that renting can be a smart strategy if you use your extra cash to invest.

Even if you can’t afford a nice three-bedroom bungalow in Toronto (honestly, who can?), there are always other options.