By Jackie Marchildon
If there is anything more frustrating than an entire generation being painted with the same, broad brush, it's the current housing conditions faced by that same generation.
I admit that sometimes, as a long-term renter, I do think about what it would be like to own a home. But that doesn't mean that I consider renting a stopover before buying. Renting is its own lifestyle and although currently dominated by millennial city dwellers in Toronto and Vancouver, it is not unique to this generation, nor to their respective cities.
Look at Manhattan, for example. It's assumed people rent there and that's OK. In fact, it's routine. Why shouldn't it be the same in Toronto? Let's start discussing the benefits of renting instead of the disadvantages.
Renting is convenient
My generation, stereotypically, is filled with wanderlust. We like to travel, we like to know we can we pick up and move to the other side of the country, or to a new continent altogether. Renting allows for that freedom. Two months' notice is all you need to start somewhere new.
Renting allows you to experience different living conditions
I've lived with roommates, I've lived alone, and I currently live with my boyfriend. Every apartment, house and condo had its own unique characteristics, some I loved (like the backyard bonfire pit), and some I hated (like the carpeted stairs). Each home taught me something about what I liked or didn't, and I discovered neighbourhoods as I moved. I've lived in 11 different spaces in the last nine years. Moving 11 times in such a short period isn't exactly ideal for a homeowner. Of course, moving that often isn't great as a renter either, but the point here is that I was always able to move easily enough. The costs were minimal in comparison to the costs of selling and buying a home -- let alone 11 of them.
The fact of the matter is, millennials aren't all renting by choice, but many of them are, and that's great. We've been dealt this hand, and we've settled into it. Many of us would rather pay a decent rent to live somewhere that we love than buy a home somewhere affordable that we don't.
Real estate bubble?
I know we aren't predicting a housing crash in the near future, and we continue to refute the idea of a potential real estate bubble, but the fact remains that housing prices are at an all-time high. In the city of Toronto, the average price of a detached house was more than $1.2 million as of February 2016. It's hard for any 20-something to look at a that kind of number and think, "Sure, I could easily pay that off in 25 years."
If the housing market does not continue to heat up as predicted, and home prices do drop, where does that leave the 20-something-year-old with a near million-dollar mortgage for the next 25 years?
'If buying a detached home doesn't seem appealing, what about a condo?' you might ask. The average condo in Toronto costs $435,579 according to the Toronto Real Estate Board. A $400,000-mortgage with the average national rate of 3.24 per cent interest and an amortization of 25 years will have a monthly mortgage payment of about $1,943.
Let's say a mortgage payment of approximately $1,900 a month gets me a nice one-bedroom unit with two bathrooms in a trendy neighbourhood, or even a two-bedroom unit in certain areas of the city (assuming I put down the minimum five per cent on about $400,000). It would be a nice condo, but small for two people and a dog, regardless of the number of bedrooms. A $1,300 or $1,400 monthly rent, on the other hand, gets me a cute one-bedroom apartment in Roncesvalles that essentially takes care of itself. By renting, I'm able to have more cash flow at the end of each month, which I can continue to put towards other things that matter to me -- like travel and paying off school debt.
I'm sure I could potentially find a smaller unit with a monthly mortgage payment that would be around the same amount as my rent, but that still doesn't take into account closing costs, maintenance fees and unexpected repair costs.
Personal development vs. real estate development
Millennials seem to be investing money into themselves rather than milestone possessions: education, travel and career development. Many of us spend years paying off our degrees, we work extra jobs to fund our travel expenses and we spend a couple years out of school working as interns to invest in our long-term career goals.
In my young career, I've seen three major layoffs and sadly, because of this, I've learned the value of saving in case that happens to me. I have critical illness insurance in case something worse comes along, an RRSP to plan for my retirement and a TFSA set up as a travel fund. My savings may not be going towards a home, but they are going towards my well being, both mental and physical, and I'd take that over a property title any day.
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