Toronto millennials turn to parents to pay for homes
When it comes to home ownership, there aren’t many places in Canada tougher to do it than Toronto. For many of the city’s young professionals, home prices are simply out of reach on their own, but that doesn’t stop them from becoming homeowners.
A recent survey for Bank of Montreal has painted a picture of how Toronto millennials plan on dealing with the city’s hot housing market. The short answer: parents. Approximately 66% of Toronto’s millennials believe they will be able to buy a home in the city even as average prices for shoe-box condos are touching on $400,000 in the city’s hottest neighbourhoods.
It also turns out about half of these young people are banking on sizeable donations from the Bank of Mom and Dad to afford their down payments.
Many parents would do anything they can to ensure a good life for their offspring even if it jeopardizes their retirement. The expectation is that if they invest in their kid now, they will be able to take care of them when they’re older.
People can argue whether making such a decision is a smart move or not, but the reality is that parental support is often the only way a young professional making an average $34,700 can be expected to afford property at current prices. Even if two people partnered up to double their income it would still be difficult considering that most millennials have high cost lifestyles thanks to student loans and ever increasing costs of living. Meanwhile wages have failed to keep up with those costs.
It doesn’t look like prices in the city will come down anytime soon, so it’s good that people are finding solutions to deal with the high cost of housing. However, is it a bad idea to support adult children at the cost of your own savings? The case has been made before that home ownership isn’t actually a necessity and you can live a great life and build good investments and savings while renting. Considering how many Toronto millennials are dedicated to buying a home it’s worth wondering if everyone is simply drinking the same kool-aid the population has been fed for generations.