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A sign sold outside a house in Toronto on May 20, 2021.
CHRIS HELGREN / Reuters
I immediately thought of Alberta-based Bridget Casey when I set out to include Millennials and Gen Z perspectives on the housing market in the newsletter. Ms. Casey, founder of the site Money after graduation, throws incisive opinions like hand grenades. In this Q&A we did recently by email, she fully answers. Prepare for a candid talk about housing affordability.
Q: How do you feel about the anger young adults feel about not being able to afford a house?
A: It’s more desperation than anger, to be honest. They are certainly frustrated, but the tone is more desperate than angry. Millennials and millennials are stunned by house prices and hope the math will work one way or another, but doubt it. Older millennials just feel defeated at this point if they haven’t been able to enter the housing market and reluctantly resign themselves to never having a chance.
Q: What makes young adults hungry to own a home?
A: It’s still the parents of the baby boomers, and now the parents of Generation X, but there is also a problem with the banks growing more than ever. I receive emails every two weeks about mortgage offers from each financial institution. My brokerage is now offering mortgages. Interior design and house flipping are also major trends on social media. I’m as guilty as anyone of using TikTok, Pinterest, Instagram to browse home renovations. It all sells you to making a space your own. There is a ton of pressure from all sources.
Q: What, if anything, should the federal government do to help young adults enter the housing market?
A: Ironically, the answer is to stop helping them get started. Raise the RRSP for first-time home buyers from $ 25,000 to $ 35,000, introduce the First-Time Home Buyer Incentive, keep interest rates low – all of these things hurt to young people in the long term, even if it helps them get a home in the short term. People keep thinking about buying a house. They never think about the costs of owning one.
Q: Renting is the obvious alternative to expensive housing, but rents are going up in some cities. What’s the solution for young adults who need a place to live?
A: There is no magic trick that will make housing more affordable in your area. Your choices are to increase your income or to relocate. I hope that so many companies moving to remote work have opened up the possibility for more people to work from home. This would give young people the chance to choose a more affordable neighborhood, or even an even more affordable city or town. I have friends who work remotely for big tech companies like Shopify and Facebook. They earn excellent paychecks and choose to live in small towns where that income goes a long way.
Q: Do you have any ideas on the ideal age to buy a home? I ask for two reasons – one is that young people in their twenties seem very eager to tie up to a home, and the other is that buying later seems possible given the long lifespan.
A: In hot real estate markets where prices are rising rapidly, it might seem tempting to buy when you’re young and lock yourself in for a lower price, but they forget that it locks you in this city. I moved between cities in my 20s for graduate studies and job openings, and I’m glad I had the flexibility as a tenant to get up and go so easily. Every time I moved, my annual income increased by $ 15,000 or more. I can’t imagine if I had turned down these opportunities to stay in one place and “build equity” in my home, or continued to seek them out, but had to deal with the hassles and the costs of selling and buying new homes every time I moved. I would say your late twenties to early thirties are great for buying a home, when you have settled into your career and know where you want to raise your family if you are considering having one.
Q: What is your housing situation and where do you see yourself in 10 years, on the housing side?
A: I am still a tenant, but I will probably buy in one to two years. I thought I was unique, but it turns out I’m part of a measurable Millennial demographic that skips the startup house and goes right to splurge on a luxury house. Leasing always gave me extra money to put on the stock market, and I ended up with more equity in securities than most of my friends have back home. I won’t buy as an investment, but just to have a nice place for my daughter and I to live. Now that I’m in my mid-thirties, I’m less likely to move, I’ve hit my career pace, my retirement is supported, and buying a home no longer seems to stretch or strain my budget.
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Rob’s Personal Finance Reading List
The pre-pandemic scholarship is not coming back
An important read if you think the youngsters who got into stock trading in the past year will retire, bringing a comeback to markets that trade on old-fashioned fundamentals. According to this article, it is their purse now.
If the accommodation is out of reach, should we just wait?
Some point of view here in the booming US housing market, where prices are out of reach in some cities. An economist who predicted the 2007 real estate crash: “It’s so hard to say without knowing the city, but in general, if you’re in a market where you constantly have to spend way above the ad, I don’t know. ‘would not buy at the moment’
The best online brokers
A list of best brokers and stock market apps compiled by the Young & Thrifty blog. Questrade takes it. I like Questrade, but I rank it lower.
18 things to do with leftover pasta sauce
A lot of Good ideas here for that half used pasta sauce jar. Or, you can let your sauce sit in the fridge until it becomes a moldy farm. Enough with the waste of food.
Today’s financial tool
The My Own Advisor blog features a list of online calculators and spreadsheets.
The cashless zone
Make me feel alright is the second song I performed from Robert Finley’s new album, Sharecropper’s Son. In case you missed it, the first one was Souled Out on You. Soul, rock, blues – Finley does it all.
Check it out
Introducing the My Money, My Future: Canadian Financial Literacy Challenge, where teens aged 14-18 were asked to create a new resource of all kinds to teach others about money. here is a highlight coil of the 10 finalists. Both hosts are great.
What i wrote about
- Four ways to prepare your portfolio for the bubble burst
- 2021 vs 1992: I couldn’t afford my house in Toronto if I had to buy in Canada’s current real estate market
- These moves can reduce your ETF commissions from hundreds of dollars a year to zero.
More Rob Carrick cover and money
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