Housing prices making it difficult for millennials to buy East York home

But realtor says it's still a good investment for young families

Houses in East York often sell close to the $1-million dollar price point.  DANIELLE CLARKE/TORONTO OBSERVER

With sky-high real estate prices, millennials are wondering if they will ever be able to afford to buy a house in East York and a vacation or two at the same time.

“I would prefer to purchase in East York because this is where I grew up and this is where my family lives,” says Christopher McHugh, 34, a payroll manager from East York.

He has been renting in the area for 10 years on and off. “My dad lives in the area, and he’s also renting,” he says.

With strong ties to the community, McHugh and his wife have been saving to buy a home for themselves and their young daughter.

Like many millennials looking to buy their first home they have been forced to consider buying outside of the city in hopes that he will find something more affordable.

“That may be the solution, just looking at the prices in East York, the low end of what you can get for a house is probably around $800,000,” McHugh says. “To afford that, I would have to save up $55,000 for the down payment — that’s the minimum.”

McHugh is currently working in Etobicoke and is considering buying a home closer to work.

One of his biggest concerns is having his daughter grow up far away from their relatives.

“If we move across the city, babysitting becomes a lot harder,” he explained. “We would also have to figure out a new daycare plan because getting daycare spots is very difficult.”

Semi-detached homes are among the more affordable options for millennials looking to purchase property in East York. (DANIELLE CLARKE/TORONTO OBSERVER)

The expensive cost of childcare makes it that much more challenging to save money. Not to mention how tedious it is to secure a position for your child.

“For daycare, when we initially enrolled our one-year-old child we paid $1900 a month up until she was 18 months. That’s average cost around East York,” McHugh says.

The price of daycare goes down when a child reaches 18 months, but not by much.

“We’re currently paying $1,700 a month. That will continue until she turns three,” he says.

The cost of rent doesn’t make saving any easier.

“Our current place is a semi-detached with 2 bedrooms, main floor and basement, small backyard and a garage and we have neighbors above us,” he explained. “We pay $2150 a monthly, plus electricity.”

The average costs to rent something similar in the area is considerably higher.

“If you’re looking to rent a three bedroom or a full house, you’re looking at $2,700 to $3,000 plus utilities.”

Not your parent’s housing market

Realtor Nasma Ali has a different experience with millennials buying houses in East York.

Ali works for Keller Williams Advantage Realty and she has assisted clients in buying and selling homes in East York, even millennials.

“I sold a house to a millennial last week,” she says. “The average cost of houses in East York is about $900,000, which translates to $3,600 a month. For a one-bedroom condo in East York, the average is about $500,000.”

Her advice for those who are hoping to make their way into the housing market, “Get what you can, because you may not be able to save up as fast as the market is going.”

Ali believes millennials should aim to own something, even if it’s not their dream home in the perfect location, because they will eventually make a profit.

The average cost of houses in East York is about $900,000, realtor says.  (DANIELLE CLARKE/TORONTO OBSERVER)

“When you’re renting you move out with nothing. When you buy you gain the value of your home, which gives you more freedom later in life.”

And contrary to popular belief, there are millennials who are buying in East York.

“Half of my clients are millennials who are buying,” she says.

But millennials are finding creative ways to afford the house in their ideal location.

“You’d be surprised at how many people don’t buy a house or condo to move into, but instead have bought an investment property,” Ali says. “Many will buy a condo while they continue renting, then rent out the condo which pays off their investment property.”

The trick is to buy in cities where prices are more affordable.

“They either buy it in Toronto, preconstruction or outside of the city,” Ali explains. “I have a lot of clients that go to Waterloo, Hamilton and other university cities. The great thing about those areas is that you break even because the prices are much lower.”

And where are millennials getting the money from to buy their homes?

“A lot of them have saved money by living with their parents, and don’t have to worry about paying rent,” she explains. “There are young people who have also saved money by investing in stocks.”

In order for most millennials to afford a home in this economy, saving has to be a priority.

“If you have an average salary, you’re renting, dining out often and going on vacation multiple times a year buying is going to be impossible, Ali says. “You have to choose one or the other.”

Ali, a millennial herself lives close to the East York area, prior to that she bought a house Leslieville for $430,000 in 2008.

“At the time we were embarrassed that we paid that much for the house,” she says.

She now lives just outside of East York and has an investment property to help her with her mortgage.

“I rent my basement out, and that’s the only way I’m able to afford the house that I live in, she says.”

Ali breaks it down.

“The beauty of real estate is that you’re leveraging the loan,” she says. “When a house increases in value it doesn’t increase in whatever down payment you put down, it increases based on the value of the house. If you put a down payment of $20,000 on a $430,000 home, you’re making a profit off of the full value of the home, not just the down payment.”

What are Ali’s predictions for the Toronto housing market for the future?

“Just like with inflation and the cost of living, everything is going up,” she says. “Even if the housing market goes down, it will never go down to what it was 10 years ago.”

About this article

Posted: Oct 31 2018 9:02 am
Filed under: News