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Young Adults

If the supply imbalance does lead to a price correction in Toronto’s housing market, there may be a ready supply of buyers waiting in the wings.

Almost half of young adults in Toronto live with their parents, the highest ratio in Canada, according to last week’s census figures. Pent up demand from these so-called basement kids may quickly emerge to take up any pricing slack.

Diana Petramala, an economist at Toronto Dominion Bank, says the high proportion of young adults living with their parents is slowing the formation of new households.

After all, faced with the challenges of buying a home in Toronto, where the average price was running at about $746,000 in July, younger adults are more likely to defer decisions on starting families and less likely to take on the burden of ownership.

“I think household formation looks low given population estimates and the age structure of the population,” Petramala said in an interview last week, estimating household formation would typically have been about 16,300 higher over the five years.

Young Families

The age analysis, released in May, offers some insight into another impact of rising home prices in Toronto. The city was once the place young families went to start a life, but that’s no longer the case.

In 2001, more than 30 per cent of Toronto’s population was in what can be described as the young family cohort (those aged between 0 and 9, plus those aged between 30 to 39). That was the highest share among the country’s largest urban centers, and compares to 28 per cent in Montreal.

While the share of that cohort has since fallen across the country, Toronto has seen one of the largest drops. The census data show the young family cohort now accounts for 24.9 per cent of Toronto’s population, placing it in the middle of the pack among major cities and half a percentage point below Montreal.

To date, Statistics Canada has released 2016 census data centered around household formation, age, sex and dwellings. Data on income, immigration and mobility is due in the coming months.

Bloomberg.com