Millennials vs. Baby Boomers: How Buying Your First Home Has Changed over the Years
“Ok boomer” is a phrase that has become popular among the younger generation when older people, mainly the Baby Boomer generation, don’t seem to get that things have changed. One of those areas where we’ve seen major change over the last several decades is the real estate market.
Point2 Homes wrote an interesting article last year on how buying your first home has evolved over the years. In this article, I’m going to take a closer look at some of the more interesting findings of the article.
It shouldn’t come as a big shocker, but buying a home in big cities in Canada is more challenging for the Millennial generation than it was for the Baby Boomer generation. That being said, mid-size cities like Halifax actually have similar conditions today as they did 40 years ago.
For the Baby Boomer generation, the real estate dream was to buy a big home on a spacious lot in the suburbs. Not so with the Millennial generation. Millennials value being closer to urban centres and being within walking distance to amenities, such as restaurants, shopping and entertaining.
It’s not that all Millennials enjoy condo living. The high price of homes in the suburbs has made the dream of owning a detached house out of reach there for most homebuyers. This has resulted in many Millennials choosing condo living in the suburbs.
Despite the fact that many Millennials would rather live in a condo in the downtown core, the price is simply out of reach for a lot of single first-time homebuyers. The low housing supply and the mortgage stress test certainly haven’t helped with affordability either.
While speaking anecdotally helps, let’s take it a step further and go through some actual examples with numbers. To do that we’ll borrow the profiles of first-time homebuyer neighbourhoods that HuffPost Canada built in two Canadian cities: Halifax and Toronto. We’ll look at profiles 40 years ago versus today.
The housing situation hasn’t changed much in Halifax over the last four decades. If you’re a first-time homebuyer with an average income, you should still be able to afford a detached home.
In terms of home prices, home prices have only doubled over this time period in Halifax, whereas in Toronto home prices have tripled. With an average annual salary of $58,000, you should have no problem affording a detached home with an average selling price of $297,000 in Halifax.
That’s a different story than Toronto, where homebuyers there have to settle for less space. As mentioned, home prices have tripled in Toronto. That means that first-time homebuyers can only afford a third as much home as their parents were able to.
In the 1970s with an average salary of $73,500 (in today’s dollars) you could afford the average home price of $247,000 in Toronto. Today an average salary of $82,500 only buys you $505,000 worth of home. With the average selling price of a home at $794,000, this is forcing many first-time homebuyers to settle for a lot less.
Brought to you by Sean Cooper.
