A recent ranking of the top “millennial hot spots” in Canada had some surprising results. The country’s biggest cities — Toronto, Vancouver and Montreal — didn’t make the top five, despite their standing as employment and cultural hubs.
To determine the best Canadian cities for millennials, research by Point2Homes looked at nine factors: housing affordability, unemployment rate, life satisfaction, low crime rate, healthcare, climate, education (the percentage of the population with a bachelor’s degree or higher) and the percentage of millennials in the total population.
Quebec City was named the No. 1 city for millennials out of 85 cities examined. It ranked high in housing affordability and enjoys the third-lowest unemployment rate in the country, along with an above-average yearly income and a low crime severity index.
Second was Victoria, B.C., which many people think of as a retirement destination rather than “a magnet for young, educated Canadians” as the Point2Homes research found. Victoria “boasts the second-highest percentage of millennials in the country, many of whom have a bachelor’s degree or above. Aside from having a low unemployment rate, this city also holds top position for climate,” says the report. Victoria took the No. 1 ranking for life satisfaction for millennials.
Third is Guelph, Ont., where the average house sells for less than half of Toronto’s prices. “This peaceful city is the ideal destination for those looking to combine the benefits of a strong job market with a thriving living environment,” says the report.
Rounding out the top five spots are Halifax, “an attractive destination for young professionals” and Ottawa, which provides a good economy, well-paying jobs and “a thriving cultural scene,” says the report.
Ranking dead last as a destination for millennials is Langley (Township), B.C. Despite having the second lowest unemployment rate in Canada, it has a high crime rate and a low percentage of millennials living there.
Although housing prices are much lower than in Vancouver, affordability is still a problem, says Point2Homes.
Kawarthas Lake, Ont., Brantford, Ont., Chilliwack, B.C. and Sault Ste. Marie, Ont. also make the bottom five spots on the list.
A recent market report by Re/Max confirms that many people are leaving the big cities for more affordable locations. “These move-over buyers leaving the Greater Toronto Area and Greater Vancouver have contributed to increased demand and considerable year-over-year average price increases in Kelowna, B.C., London-St. Thomas, Ont., Hamilton-Burlington, Ont., Barrie, Ont., Durham Region, Ont., Niagara Region, Ont., Kingston, Ont. and Ottawa,” says the report.
Statistics Canada says that “younger adults aged 20-34 — those often referred to as the millennial generation — are slower to get into the housing market than was the case for the baby boomers at that age.”
Comparing the homeownership rate of baby boomers at age 30 in 1981 with millennials aged 30 in 2016, Statistics Canada says, “At the age of 30, among millennials who lived in their own home, just over half (50.2 per cent) were owners in 2016, compared to 55.5 per cent of boomers in 1981.”
About one-third of millennials aged 20 to 34 still live with their parents, “a share that has been rising since 2001,” says Statistics Canada.
“Young adults in 2016 were also more likely to live in apartments than their 1981 counterparts,” it says. “This is one example of how the housing landscape has changed across generations because of housing trends such as urbanization and increased apartment building construction.”
A survey commissioned by Royal LePage last year found that although 87 per cent of those aged 25 to 30 (called “peak millennials” to describe the largest cohort of the millennial demographic) believe that homeownership is a good investment and that 69 per cent hoped to own a home within the next five years. But only 57 per cent of those surveyed thought they would be able to afford one.
“The pent-up demand for housing from millennials is enormous,” says Phil Soper, president and CEO of Royal LePage. “Facing challenges their baby-boomer parents never encountered, peak millennials are confronted with significant obstacles that vary depending on where they live,” noting that while finding employment in the largest cities is relatively easy, high house prices are shutting out some buyers.
“For the large cohort of millennials establishing their own households, renting may be the only option if they choose to reside in Canada’s highest-cost urban centres,” says Adrienne Warren at Scotiabank Economic.
“In Toronto, the cost of mortgage debt servicing, property taxes, fees and heat as a share of median household income to purchase an average-priced condominium is already pressing up against the maximum gross debt servicing ratio qualifying threshold of 30 per cent. In Vancouver, it exceeds this level by about 10 percentage points.”
Adding to the affordability problems now are increasing mortgage interest rates and strict “stress test” requirements when applying for a mortgage at a federally regulated bank.
Royal LePage is calling for a co-ordinated federal, provincial and municipal government approach to help make housing more affordable, “with a keen focus on the supply side of the equation in the country’s most populated regions, where housing shortages have put immense upward pressure on prices.”
Soper says, “The future of Canada’s urban centres will rely heavily on getting the housing stock mix right. As condominiums continue to grow in demand and importance in Canada’s cities, it’s becoming increasingly imperative that real estate developers and policymakers support the creation of housing that addresses demographic trends, particularly as millennials start having children in increasing numbers. This creates a need for larger condominium units that are livable for families.”
