It’s not a stretch to say that the cost of owning real estate in Vancouver or Toronto is something of a pipe dream for most young adults.
Excluding a lottery win or a seriously generous loan from parents, the average millennial will have a tough – if not impossible – time saving up enough for a down payment on any sort of downtown home.
- A third of Canadian baby boomers helping finance their children's real estate purchases (REPORT)
- Alberta out of recession, expecting 3.2% GDP growth in 2017
- The millennial dream of homeownership is possible in Calgary
On October 30, journalist Jessica Barrett wrote a personal essay titled “I Left Vancouver Because Vancouver Left Me,” for Vancouver publication The Tyee.
In her writing she shared memories of living in Vancouver, how she struggled in the city’s notoriously ugly rental market, and why she ultimately left for the
greener more affordable pastures of Calgary.
“Maybe Vancouver will figure its way out of this affordability crisis, maybe it will continue to be a resort for the rich,” she wrote when closing out the essay.
“I am curious to see what becomes of it, and I’ll be watching closely from the sidelines, but I can’t sacrifice myself to stick around and find out.”
According to the essay, she’s planning on buying a Calgary house “with a yard and everything” in the next few years.
Just how expensive is it?
According to an October 12 release from Royal LePage, the aggregate price for a home in Vancouver rose to $1,439,652, while Toronto found itself at a (somewhat) less pricey $861,397.
The Royal LePage release has the average price of a Canadian home at $628,411.
Even the suburbs of these two cities are above the average, with the Greater Vancouver regions of Langley, Surrey, North Vancouver, and Richmond seeing aggregate prices of $831,283, $796,466, $1,417,226, and $1,103,064, respectively.
Toronto’s suburbs are somewhat better, with Richmond Hill, Oshawa, Vaughan, Markham and Oakville sitting at $1,288,411, $572,177, $1,099,899, $1,108,943 and $1,145,644, respectively.
In contrast, Calgary and Edmonton find their aggregate prices at $479,211 and $389,330 – so why does a home in Calgary cost nearly three times less than one on the other side of the Rocky Mountains?
Why flee to Calgary
David Johnston, a Calgary-based realtor, partially chalks up the difference in price to Calgary’s economic hardships over the past few years.
“What’s happening in Calgary is that the vacancy rate is at a 30-plus year high, and it’s because when we had a downturn in the economy a lot of people who were renters had left,” he said in a phone interview with Daily Hive.
“People who once might have had their own one bedroom unit have now decided to team up with a friend or family member, and now suddenly two people are living in a unit instead of one, so that really affected our vacancy rate.”
However, due to Calgary’s recent economic turnaround, Johnston says that condos in Calgary are expected to shoot up in value in the coming years.
“Historically, a detached home, percentage wise, has increased at a slightly higher pace [than condos], if you took a 10 year average,” he said.
“I think that’s about to change in Calgary, however, because the condo market has become so depressed that I think that there’s going to be a more noticeable catching up period. More and more people are going to be picking up these condos, so as the demand increases, so will the price point.”
An emerging trend
Suburban housing in any city can be more affordable with the right game plan, but an hour long commute into the city is a steep additional cost for home ownership.
Johnston said that he has noticed a trend where young people are opting to purchase a condo in the heart of the city, rather than a detached home further out. He said that it’s partially to do with eliminating a commute, but also to be closer to what downtown has to offer.
“I find the lifestyle choice is starting to change [in younger people] in Calgary and becoming more in tune with what was happening in Vancouver, where the condo market has always been strong,” he said.
“Now it’s like people are realizing they’d rather have more spare time, instead of mowing the lawn they rather get out of town earlier and go to the mountains for a day on a hike.”
One Calgarian who made that decision is Mike Surbey, a 33-year-old programmer and resident at Grosvenor’s Smith off 17th building in downtown Calgary.
Surbey purchased the condo as his first home, and said that choosing to live downtown was an easy choice.
“I wanted to be downtown, I enjoy the downtown lifestyle, I used to drive down there from my mom’s place all the time, and I figured ‘why not be close to work and close to where I enjoy?'” Surbey said in a phone interview with Daily Hive.
“I figured starting with a condo might be a good way to enter the market.”
He now has a seven-minute walk to work, replacing the 25-minute bike ride/20-minute drive he used to commute daily.
He spent roughly $350,000 on a one bedroom condo in the heart of downtown Calgary, and said that he is happy with owning his home.
“It was my grandpa that told me this: ‘No matter what happens in life, you always have to have a place to live, so you might as well have somewhere that’s your home.”
A modest income
The median income of millennials (men and women aged 25 to 34) in Toronto and Vancouver was $37,600 and $38,500 respectively, according to the 2015 census from Statistics Canada.
Couple that with the rising cost of housing and the dream of homeownership in these two Canadian cities fades even further.
Calgary, on the other hand, sees a median income of $46,700 for the same age range, a significant drop in housing prices, and an increase in vacancy rates.
According to Johnston, a change in location can mean all the difference between living comfortably or constantly struggling.
“[Some] people have the same salary regardless of if they’re living in Vancouver or whether you have that exact same job description in Calgary,” he said.
Where to go from here
“If nothing is holding you there in that specific city, whether it’s family or whatever, come to Calgary,” Johnston advised.
“Your cost of living is so much less for the same income level, at least for the next little while.”
So that millennial dream of homeownership? It might be little more realistic on the other side of the mountains.
“Someone who even has an average, modest income can be a home owner in Calgary and can come up with a reasonable down payment. Because the purchase price is lower, they can actually obtain homeownership at a younger age or at a sooner point in their life,” Johnston said.
“That’s actually quite a benefit for young people in Calgary.”