Some people hear the term “millennials” and they tune out whatever comes next. It’s a buzz-word for sure, but I feel as though the older generation doesn’t want to admit that the newer generation is about to take over.
There are 1,500,000 “millennials” living in the GTA, and how and where millennials decide to live over the next 3-5 years might have a bigger impact on the Toronto real estate market than anything else.
Let’s pick up where we left off on Monday, and talk about what millennials seem to want, and more importantly, where they seem to want it…
I decided that I would use the very first photo that a Google Image search would produce, given the search query, “millennials.”
I took one look at this photo and rather cynically drew the following conclusions:
1) They’re all extremely good-looking (except maybe the kid at the back left, and the girl second from the back left only shows half her face, but that’s good enough for me!)
2) They’re all dressed as though they didn’t try to look good, and yet they do.
3) They’re all in shape.
4) They’re all stylish (even the kid back right, although ‘only’ wearing jeans and a t-shirt, is wearing designer jeans; although the guy in the guy in the front should really hem his pants)
5) 11 of the 12 of them are white.
It’s an American photo, which might explain why it’s so white, but that’s a topic for another day…
We as a society love to typecast people, name them, and group them.
So it comes as no surprise that after “Baby Boomers,” we named the next generation “Generation X” (really original by the way), and now “Millennials” are upon us.
I think “millennials” and I think about the young adults that were kids at the turn of the millennium. I was 19, going on 20 – not a kid by historical standards, but perhaps “kids” are those folks in their early 20’s by today’s standards.
I think “millennials” and I think about the folks who don’t really remember what the world was like before the Internet, and never took a book out of a library. But maybe I’m just way too far ahead? Maybe I’m off by about a decade?
Perhaps I’m trying to associate myself with Generation-X, and trying to group those born in the late-80’s with the next generation, which has yet to be named. I call them “The Fingertip Generation,” as they’ve had everything they’ve ever wanted at their fingertips. They never had to ride their bikes around the neighbourhood to find a friend, since everybody had cell phones, ICQ, MSN Messenger, or text messages. They’ve never had to go to the mall to look around in various stores for clothing (with their mothers…), since there were photos of everything available on websites.
And so on, and so on…
But already, I’m seeing this play out in the real estate market, and there’s potential here to have a significant impact.
I’ve said this before, but I’ll say it again now: I used to see a pattern whereby kids out of university would rent a 2-bed, 2-bath condo with a friend for a couple years, then find a place to rent on their own, then eventually buy a starter condo around age 26 or 27.
Today, I’m getting calls from kids right out of university, 22-years-old, who have $30K and want to buy a condo downtown, rather than rent.
As I said, that’s the result of this “Fingertip Generation,” and I can only imagine what today’s 14-15 year-olds will want in 7-8 years.
In any event, I’ve been told as I sit here and write this that I really am blending together two generations, so let’s put the future generation on hold for a moment, and come back to the 24-35 year-olds in Toronto in 2016.
Where are these people going to live over the next few years? And are they going to own the properties in which they reside?
Money is obviously going to impact every single millennial’s search, but I believe that the ultimate decision of where to live, and how much to spend is a cross-section of the following:
2) Desire For Space
3) Ability To Commute
4) Family and/or Upbringing
Let me expand on these a bit…
How can this not be at the top of the list?
But it’s a trade-off, really.
The more you spend on a home, or the more debt you go into, the less you have to spend in other areas of life. Max-out on a home, and you’re “house poor” for the next decade or more. Less travel, less entertainment, and less perks in every area of your lives, and your kids’ lives.
You might be able to afford an $850,000 house in Toronto, but if it’s not what you had in mind – according to “desire for space,” and “lifestyle” on our list above, you might be inclined to look elsewhere.
2) Desire For Space
My wife and I are currently streaming “The Good Wife” in lieu of anything else right now (ideas are welcome!), and in one scene, Alicia’s cheating dog-of-a-husband asks her, “Do you miss the old place?” He’s surprised when she immediately answers, “No.” He says, “But this apartment is one-fifth the size of the house.”
Maybe total square footage isn’t everything?
Many of us grew up fantasizing about a big house, with a lush front lawn, a sprawling backyard in which to play sports, a man-cave in the basement, and four bedrooms for our two kids.
If it were on TV, or in the movies, everybody would be able to afford this. Remember the movie Pleasantville?
In reality, our world’s population has doubled since WWII, and housing and land aren’t as easy to come by as they used to be!
Perhaps our desire for space is shrinking as fast as the very spaces that condo developers are building these days. Perhaps the ‘average’ Torontonian could make-do with a little less square footage today than those could have two decades prior.
For those that insist on a backyard with a pool, if they don’t have the money in Toronto, then they’re moving out of the city.
For those that value the location above all else, and can make do with a smaller space, the city remains an option.
3) Ability To Commute
Perhaps this should say “desire” to commute, since every one of us could, in theory, commute.
But we all know that if we want more space, and we want to pay the same amount, we have to move further out of the core. And if we work in the core, well, that means we commute!
It’s not just the commute itself that’s in question. It’s the lifestyle change that comes with it.
A friend of mine just switched jobs, and started at a new firm near Yonge & Front. He told me that in his first week, he was amazed at how hard people worked, and how they were all such “go-getters.” Many of them were in the office at 6:45am! But after a couple of weeks, and a few lunches, he realized that these go-getters just got to the office early so they could beat the traffic coming south on the DVP, and so they could put in the hours that would enable them to leave at 3pm……..to avoid the traffic going north on the DVP.
It’s a lifestyle, created by the commute. Some people get up at 5:00am not by choice, but out of necessity.
Buy a house in Toronto, avoid the commute.
Buy a house in the ‘burbs, commute, but get a bigger house.
The cross-section of our list above continues…
4) Family and Upbringing
You might work in downtown Toronto, but if your parents live in Richmond Hill, one of your siblings live in Richmond Hill, and your spouse’s circle of friends live in Richmond Hill, then perhaps buying a home in Richmond Hill and commuting to work isn’t such a bad idea.
I don’t want to sound all “Doctor Phil” here, but family and friends are probably one of the most important two or three things in all our lives. It’s one thing to see them regularly, but it’s another thing to simply have that feeling that they’re “close.” It makes it a lot easier to move out of Toronto and into the ‘burbs if you’re being welcomed with open arms.
At the same time, if you’re looking at an area in which you, your spouse, or both of you grew up in, then it’s like “coming home” again.
I had clients living in The Distillery District who wanted to move to neighbouring Leslieville. We looked throughout 2014 for something affordable (that was then, and prices are even higher now), but one day they just stopped and said, “We were both born and raised in Markham, so why the hell are we so set on living down here?”
They bought a house in “Berczy Village” that was easily three times the size of what they could afford in Leslieville. She works from home, and he drives south on the DVP to work every day.
While “money” comes first on our list, perhaps “lifestyle” is the ultimate decision-maker.
I also think it’s a cross-section of a cross-section, in that the commute, desire for space, and family, friends, and upbringing all affect one’s lifestyle.
You know your friend who is really into shoes? She has 60-pairs? I’m not going to suggest that she buys a house strictly because of her shoes, but you can you see her downsizing to 6-pairs so she can live in a condo downtown? Or would she rather have a walk-in closet in Ajax, that’s the size of your bedroom, for all her clothing and accessories?
You know your “couple-friends,” who live in the same neighbourhood as all their other couple-friends, and constantly have couple-dinners, and do couple-things? If push came to shove, would they move 10 KM away? Or would they find a way to live in a smaller or different space?
Lifestyle can be the deciding factor for many people, but it’s often in tandem with one or two of the other items on our list.
A condo was listed on Monday at 88 Colgate Avenue, for $699,000.
It’s a rare 3-bedroom condo, and it’s located in the heart of Leslieville, across from a parkette, and one block from Jimmie Simpson Park.
This is the kind of compromise, I believe, many millennials will make over the next few years.
It’s not a house, it’s a condo. But it’s in a neighbourhood where many folks dream of owning a home, and it has all the local amenities that a home would.
Bottom line: if you can’t afford what you want, you’ll either accept less, or move to a place where you can afford what you want.
And that’s the very simple logic that’s going to guide our market moving forward…