Where will the next generation live?
You would think someone who had worked 30 years in housing would know better. But it was really not until my children were almost grown that I began to ask the question I now believe is central to Toronto’s success.
Where will the next generation live?
It’s a question that can easily pit the interests of parents against those of their children.
Many people in their 50s and 60s – including me – see their home as part of their retirement strategy. We may not have the pensions that our parents enjoyed. But at least we foresee a mortgage-free home as we enter retirement. And when the time comes, we aim to sell our house for top-dollar.
For people in my generation, this isn’t just a retirement strategy. It’s a long-term care strategy as well. The Ontario Government’s solution to the looming care problem seems to be summed up in five words: “Keep seniors in their homes.” The longer we stay out of hospitals and long term care facilities, the further public dollars – and our own – will stretch.
But what do our plans mean for our children?
If family-sized homes are filled with seniors, where do the real families live – the young couples who can’t squeeze children into their 400 square foot condos? And if my generation demands top dollar for their homes, who among our children can afford to buy?
Just for a lark I searched Payscale for the jobs held by 20-somethings I knew. The typical salaries made for depressing reading, with many jobs hovering around minimum wage. The 2006 Census showed the median income of 25 – 34 year olds in the Toronto CMA was $29,961, and I’d be astonished if it’s much higher now.[1]
Even the success stores – the young couples grossing $100,000 – don’t have the run of the housing market. If they graduated debt free and mortgage rates stay at 4% and they can pull together $20,000 for a downpayment they can afford up to $400,000.[2] But they’ll still struggle to find even a small two-bedroom on my Leslieville street. And if one of them loses a job, or goes on maternity leave, or interest rates rise, they’ll be in real trouble.
Is renting the solution?
Renting has always been the natural alternative for the younger generation. But it may not be such a money-saver.
The average rent for a two-bedroom rental across the GTA is $1,124 per month – 45% of the median income of adults 25 to 34.[3] In the former City of Toronto, the latest figures show an average two-bedroom rent is $1,395, and a whopping $1,554 in the downtown.[4]
Compare that to the bargains established homeowners are getting. In 2005 (the last year I have figures for), the median monthly payments for rental housing in Ontario was $914; for owner-occupied housing, it was $1,175.
I’ve seen the same phenomenon on my own street. A dismal basement apartment – one where 5’4” me needs to duck to clear the ceiling – rents for just $200 less than the carrying cost of my lovely three-bedroom house.
Does the solution lie at home?
A couple of week ago I was bemoaning the sorry prospects of my children and their peers to an Iraqi friend. She said, “Why do your kids need a home of their own? In my culture people live with their parents until they are married. They don’t pay rent. They don’t even do housework. But when the parents get old and need support, the children are there for them.”
It’s not the ethos I grew up with, where moving out was a mark of adulthood. But the Iraqi solution – a solution found in many other countries as well – would work for families like mine. We’re in commuting distance of universities and jobs, we have the room and l enjoy having my kids around. It costs us virtually nothing to give my son and daughter a nicer home than they could afford on their own. And if unemployment or disability strikes any of us, we will have four adults at home to manage the blow.
Would it work on the larger scale?
It is already happening. The percentage of 25 – 34 year olds Ontarians living with their parents doubled from 8.3% in 1981 to 17.9% in 2006.[5]
But who gets left out? Everyone who, for whatever reason, cannot live with their parents:
- all newcomers to Toronto, whether they come from Delhi or Durham Region
- anyone whose parents don’t have the room, or the money, to keep a grown-up child at home
- anyone whose parents are abusive, or where relations are so strained that living together is impossible.
I’m not expert enough to imagine the economic impacts of such a social shift. Would all those tiny new condos sit vacant? Would we have a rental surplus that would forced rents down? Would the demand for family-sized houses sky-rocket? (Another reason for hanging on to those 700+ TCHC houses!) Would parents pass their houses directly to their children, shutting newcomers completely out of the house market? Would a divide between “the landed” and “the tenantry” extend from one generation to the next – a sort of neo-feudalism?
And if this isn’t a palatable solution for the next generation, what else is out there? Over the next couple of posts I’d like to look at some of the options.
In the meantime, if you know anyone doing research in this area, let me know! It could be a very different future from the one we imagined.
Opening the Window 
It will be very interesting to see where the next generation lives. One answer and a hopeful one is that they will start living in the relatively inexpensive inner suburbs where I live. In 1970 when I first moved out of my folks’ house, the idea that the downtown core would gentrify was inconceivable. I felt badly for my high school friends who hailed from what is now called Leslieville. Real estate guys offered $10,000 cash for a detached house and $7,500 for a semi in that area in 1964 when a Scarborough house went for $20,000. Now it is totally reversed and I spent 40+ long years watching it happen.
They can’t go north of Steeles because the price just rockets once you hit the Markham border for reasons we all know too well…..
So bring on the gentrification of Scarborough and Rexdale and then hopefully we have a decent anti-poverty program for those that we displace in this fun three-sided city!
A conversation I have had a number of times recently (being in the 50-60 yr old category thinking about our future housing prospects) is the idea that a group of good friends would pool our real estate assets and find (or build) some kind of collective living arrangement. Our vision often includes rooms for each of us (separate but lots of common space), common food preparation and access to social and health care supports as we age gracefully. The collective living arrangements of “friends as family” feels like a great way to go. I wonder if we could l look at some real models where this has been tried. I know of one example on Shaftesbury Ave in TO started by a group of musicians. Could we find new solutions by combining what we know – (ownership, rental, co-op) – into new kinds of hybrids that could help us support each other and keep things affordable without heavy public investment?
Liz, that sounds like a great idea especially with the uncertainty surrounding social security/pensions. I’m 45 yrs old and am also thinking what’s going to happen to me and my husband in the next 15 to 20 years in regard to housing. We both rent at the moment and I’m wondering if it’s even worth it to buy at this point in our lives.
Perhaps in the future, builders will use this community type living concept in the design of some of the units in their buildings or construct entire buildings like this.
Seniors simply are not going to stay in their homes. That’s an assumption that’s been made that is entirely realistic. Why? Maintenance.
At a certain age, people are not going to have the capability or desire to clean and maintain a large home. They want a smaller home, and will downsize – just as generations did before them. I watched this with my grandparents twenty years ago, and I am watching my parents beginning to struggle with this very same issue.
What’s going to be interesting is market prices over the next….10-15 years or so. There is suddenly going to be a flood of large homes on the market as boomers try to liquidate their assets and downsize to a more manageable home, but most of the younger generation will not yet be in an acceptable financial situation to buy a home, let alone a large home, at least at current prices. Meanwhile, there’s going to be added demand from their children’s generation looking for “starter homes”, smaller, cheaper homes – the very same homes that are going to be in demand from the boomers.
Simultaneously, the added supply of larger homes and increased demand for smaller homes will cause a great deal of market upheaval. The question I ask is – could we even see a market inversion – where a smaller home costs *more* than a larger home? Or will the increased price on smaller homes artificially prop up the price on larger homes? Will the lowered price on larger homes artificially depress the price on smaller homes?
This is an issue that extends far beyond the geographical boundaries of the “center of the universe”.
Several years ago I attended the Tri-County Housing Conference. The British delegates were frankly dismissive our moaning about the lack of affordable housing. “Canada doesn’t have a housing crisis” they said, “Come to England and we’ll show you a housing crisis”. One of the things that stuck with me was that the high cost of housing had resulted in young people not being able to move out of their parents homes limiting family formation. The families hit hardest were the middle class – a group that always expected their children to be able to own a home. Suddenly middle class voters were affected (indirectly) by the lack of affordable housing. Housing became an issue and the government introduced funding for affordable housing. Even a conservative government couldn’t give housing assistance only to the middle class, so funds were also made available for low-income rental housing. Housing isn’t an issue at the moment, but middle class kids staying at home might be the only way to get (middle class) voters and the governments they elect to support funding for more affordable housing.
(In the meanwhile those of us with adult children still living at home will have more time to teach them to clean and cook. However on a more practical level, I’m very lucky that my son and daughter-in-law got a townhouse in Riverdale Co-op with enough room to raise their three children. In Sweden co-op members often put their children on the co-op’s waiting list at the same time as they register for daycare; we should be encouraging our kids to apply for co-op housing when they are still in high school.)