At any given time there’s hundreds of thousands of Canadians who are approaching retirement age, and for those who are in vicinity of 60-65 now it’s quite likely that a considerable part of what has you able to retire soon is the equity you’ve built in your home. For many of them that accumulation process started when they purchased their starter home at a young age, often with a new life partner and plans to start a family in it.
For people who are at that stage of their lives now, that same ideal small, detached home in a suburb just outside the metro is an unattainable dream for the most part. There are all sorts of different levels to the overheated housing market that has made these types of homes unaffordable for this generation. This creates a different working environment for realtors who work with these young buyers who are entering the market and becoming homeowners for the first time.
Nowadays it’s more likely they’re only able to afford a condo rather than a house, and that affects all sorts of other major life choices that are made at this time. It also means different realities for the realtors with fewer qualified buyers chasing fewer desirable properties for this buyer demographic, but if new clients of any sort are few and far between then our online real estate lead generation system here at Real Estate Leads may be exactly what’s needed to change those fortunes.
We’ll focus on this new reality for young prospective homeowners who are looking for a yard to go with their home, and why that’s increasingly unlikely.
Unrealistic Aim
Realtors themselves all across the country are echoing this sentiment, that the traditional idea of the starter home is completely dead. Starter homes around 2,000 square feet in size was where families laid down roots and then made the progression through life as it relates to the homes they’ll live in from that point right up until they’re senior citizens and beyond. But now in the large cities in Canada where most of these people will choose to live these types of home are now unaffordable for the vast majority of them.
The latest March data from the regional real estate boards of Toronto and Vancouver show the average price of a detached house hovered around the $1.8 million mark in each city, and then with condos averaging somewhere around $740,000. Ask those same people who are about to retire what $740k would have bought in the mid to late 1980s and they’ll tell you it would have bought pretty much any property anywhere that wasn’t a mansion with acreage.
What we’re also seeing now is young buyers who have some type of fortune to their finances – an inheritance for example or parents who’ll pick up the down payment – skipping the starter home and going straight into a home that’s a more permanent one for them.
This again connects to a generation of parents who are now in their 60’s or older and have accumulated so much wealth from their purchases real estate and equity growing with those purchases over time. They see the possibility of having this same solidity of investment for their children. However, many times when these younger adults start house hunting they realize they aren’t going to get a detached property, at least certainly not in big metro regions of the country.
Impact of Shrinking Starter Homes
The first impact of these much-smaller starter homes being then norm is that some couples are having to delay starting a family because they can’t imagine having children in such a small space. The next one is where leaving B.C. or Ontario altogether and heading to provinces with more affordable housing like Alberta. This again leads to the logical suggestion of having the ‘missing middle’ of housing built in these areas, but municipal governments continue to prefer the unaffordable housing given the fact it means more in the way of property taxes for them.
A connected and related issue is also keeping talent in the city. Successful young professionals who are making significant contributions to cities are often the same people who are getting married and looking forward to starting this very important progression in their lives. As of now, the real estate market in Canada doesn’t have enough supply to allow them to be able to do that without assuming way too much debt.
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