10/12/2016 03:00 EDT | Updated 10/12/2016 03:01 EDT

To Millennial Home Buyers: Keep Driving Until You Can Afford It

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Smiling couple embracing in front seat of convertible

by Lydia McNutt

Home hunters are well acquainted with the seven-digit price tags attached to houses in Toronto, but the latest data from the Toronto Real Estate Board (TREB) shows that the 905 is quickly catching up. According to the Board's September housing sales and price stats, the average detached home in the GTA (which includes Toronto and the surrounding 905 areas) is now $1.01 million.

It wasn't that long ago that the headlines screamed, "Average Toronto detached home reaches $1 million!" This is hardly news anymore, unless it's a story about how little you actually get for this considerable sum. But in most cases, it's the land that's worth the money, not the actual home on it.

Dream home? More like "pipe dream."

A detached home in the 905, (excluding Toronto, which is believed to skew the price of homes in the GTA) is now $928,414. The proverbial gap between 416 and 905 is getting smaller and smaller. What was once a haven from inflated Toronto prices -- and a hot spot for first-time home buyers -- is now pricier than ever. Dream home? More like "pipe dream." Have the suburbs officially become "move-up" territory?

There's an old saying in the real estate industry: Drive until you qualify. Can't afford a home in downtown Toronto? Maybe look a little further from the core -- perhaps Etobicoke, or Mississauga, or Milton, or... Just how far are young home buyers willing to drive?

Not very far, according to a recent TD survey which revealed that millennials have a YOLO (you only live once) attitude when buying a home.

According to the survey, millennials are unlikely to:

  • Move into a smaller house than they initially desired (68 per cent)
  • Sacrifice urban amenities (81 per cent)
  • Compromise on their top choice of neighbourhood (80 per cent)
  • Give up a car (89 per cent)

Sounds like the new generation of home buyers wants it all. So, what gives?

"Of course we want it all when it comes to finding our dream home," says Pat Giles, associate vice-president, Real Estate Secured Lending at TD. "But it's important to know what trade-offs you're willing to make based on what you can afford and where you are willing to live. If an urban location is paramount, then saving for a large down payment is important. If you can accept a longer commute time, you may actually be able to afford more 'you only live once' moments, like vacations, over time."

If history has taught us anything, it's that real estate prices are rising -- and fast. What the future holds is anyone's guess. In the meantime, whether you're looking to purchase property in the 416 or elsewhere, know that prices are continuing on their upward trajectory, and so is demand. Supply, meanwhile, is getting slim in those established hot spots - which now include the 905.

Here's some sound advice for those thinking about buying a home: get in while you still can, buy what you can afford and be willing to compromise. You can't always have your cake and eat it, too -- or you might bite off more than you can chew.

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