Remember when Millennials were called out? Starting with Tim Gurner on Australia’s 60 Minutes saying, “When I was trying to buy my first home, I wasn't buying smashed avocado for $19 and four coffees at $4 each.”
It’s fair to conclude Gurner was seeing this trend on social media, seeing students and young adults in vegan restaurants and hot brunch-spots. But what Tim seemingly failed to account for? How, at least back then, social media is hardly ever the metric for ‘the whole truth.’
What people posted was the avocado toast and flat white. What people didn’t post? The amount of increased tuition every year, the rising cost of living with today’s lifestyle in major cities, and how wages have not kept up. With a pandemic now in the mix, let’s revisit this bigger picture.
Life is different now: the job market is uncertain
Even pre-Covid-19, young adults are stacked with barriers to their earning and investments potential. It used to be that you get an education and were guaranteed a job and comfortable adult life. Now with a 4-year Bachelor’s degree, there is no such guarantee. And if you do get a job, you often work an entry-level salary that means more than 30% of your monthly income (before tax) is going towards your Toronto rental (because living in the city is ex-pen-sive).
It’s often those in certain industries or with inherited wealth, who can start saving at an earlier age. Living with your parents is also a saving tactic shamelessly recommended by Christine Romans of Smart is the New Rich: Money Guide for Millennials. But not everyone is afforded that privilege. It’s been flagged that Gurner even got a 34K loan from his grandfather when he was 19. I bet our chances for home ownership would be higher if we all got that familial support…
Now we’re living in a time where unemployment rates surpassed that of the Great Depression. There will be residual effects, while automation will replace jobs and require higher-skilled candidates to qualify for the added jobs.
Many millennials also work in the gig economy, or switch their employer or position every 2-5 years due to a priority in living a purpose—rather than pay—driven life. This all contributes to how much people consistently earn, save, and when a long-term investment can be made.
Cost of city living hijacking your savings
Let’s go back to how living in the city is NOT cheap. Finding a place that’s not sketch because of roommates, or location, or quality of space in general...is hard. I remember a friend saying in Toronto – there’s 3 things – location, roommate, price – pick 2. I also wanted a fourth: a nice, comfortable place. But with luxury condos being built left-right-and center, and the housing market’s spike this July despite pandemic times—with an average housing price of $943,710—if you’re not a foreign investor, young millennial with inherited privilege or wealth, older millennial or boomer with accumulated capital, you’re being pushed out. And let’s not forget other basic expenses such as transit (now at a whopping $3.25/trip), gas, car insurance, health insurance, etc. Stable mental health and saving to buy a home in the city? Pick one…
Here’s hoping the City of Toronto’s affordable housing action plan 2020-2030 comes to fruition and makes a difference in the future.
Cost of ‘good debt’ holding you back from buying your first home
Because there’s also debt to be paid. For every bundle of money paying back your student loan, is every bundle of money out of your property investment fund, or retirement savings, etc. Your loan repayment can be the difference between being a first-time home buyer in 5 years, 10, or however long...
Gap in house price to income ratio biggest in Canada
The house price to income ratio is exactly how it sounds: a measure of whether the median income is keeping up with the median housing price. Better Dwelling reports with stats from OECD:
“Canada’s gap between home price and income growth dwarfs any other developed country. Over the past 3 years, Canadians have seen prices soar over 20% faster than incomes have been able to grow.”
Considering inflation—adding in the record levels of unemployment from Covid-19, the demand for more educated candidates today, the increased costs of education and subsequent debt, high housing prices despite a pandemic, later two-income households—buying a house today is not the same as it used to be. And it shows the gap between younger local millennials and older millennials, richest seniors, and foreign investors who have a better hand in the competitive real estate pot.
It’s harder for female homebuyers
And if we’re talking about house price to income ratios, then we mustn’t ignore our strong, independent ladies. People are marrying later; even with couples where women out-earn their male counterpart, dual-income for homeownership is happening later or not at all. And women are still not earning their rightful keep (which in turn affects the gender pension gap and social security benefits for women down the line).
Yes, businesses over 250 staff must legally pay their male and female employees the same wage for the same work, but a gender pay gap persists. In Canada, women earn $0.87 for every dollar men make. This gap occurs for several reasons, seldom reported or otherwise, and affects female minorities the most, with black women bearing the brunt of it.
They include, but are not limited to, unequal ratio of men to women earning bonuses, the disparity in those bonuses and 401(k) matches between men and women, the disproportion of men to women in senior and higher earning roles, as well as salaries negotiated and accepted for each gender.
Lower salary and bonus pay means more of your monthly income towards rent, debt, transportation, food, internet, phone, and so forth, and less towards a down payment on a mortgage. This means for women, affording an investment property can be later, harder, and could reap a lower return compared to male homebuyers.
So, what can you do? Well, while we wait for the government and businesses to catch up…having a lower monthly rent and a good living situation for your mental health, can significantly help you become a first-time home buyer, sooner.
Ryna to help women live in a home, while they save for a home
The transition from beginner career woman in the city, to investment property owner, requires strategy—and support. That’s why Ryna exists, a property rental company to help you in your transition. Our Founder, Sheryl, wished she had this when she was in transition.
Because the odds are stacked enough, Ryna is here to give Toronto women the 4 things: location, roommate, price, and a nice, comfortable place. For you to live in a home, at an affordable price, while you save up to buy a home of your own one day. And with a community of women, across the different rentals, #dointhedamnthing too!
If this sounds like a great fit for you – keep an eye out for our Toronto rentals coming this October. Our goal is to turn this city grind into the fond adventure our younger selves imagined. Let’s have a housewarming (sans avocado-) toast to that. clink!