Where will the next generation live?

You would think someone who had worked 30 years in housing would know better. But it was really not until my children were almost grown that I began to ask the question I now believe is central to Toronto’s success.

Where will the next generation live?

It’s a question that can easily pit the interests of parents against those of their children.

Many people in their 50s and 60s – including me – see their home as part of their retirement strategy. We may not have the pensions that our parents enjoyed. But at least we foresee a mortgage-free home as we enter retirement. And when the time comes, we aim to sell our house for top-dollar.

For people in my generation, this isn’t just a retirement strategy. It’s a long-term care strategy as well. The Ontario Government’s solution to the looming care problem seems to be summed up in five words: “Keep seniors in their homes.” The longer we stay out of hospitals and long term care facilities, the further public dollars – and our own – will stretch.

But what do our plans mean for our children?

If family-sized homes are filled with seniors, where do the real families live – the young couples who can’t squeeze children into their 400 square foot condos? And if my generation demands top dollar for their homes, who among our children can afford to buy?

Just for a lark I searched Payscale for the jobs held by 20-somethings I knew. The typical salaries made for depressing reading, with many jobs hovering around minimum wage. The 2006 Census showed the median income of 25 – 34 year olds in the Toronto CMA was $29,961, and I’d be astonished if it’s much higher now.[1]

Even the success stores – the young couples grossing $100,000 – don’t have the run of the housing market. If they graduated debt free and mortgage rates stay at 4% and they can pull together $20,000 for a downpayment they can afford up to $400,000.[2] But they’ll still struggle to find even a small two-bedroom on my Leslieville street. And if one of them loses a job, or goes on maternity leave, or interest rates rise, they’ll be in real trouble.

Is renting the solution?

Renting has always been the natural alternative for the younger generation. But it may not be such a money-saver.

The average rent for a two-bedroom rental across the GTA is $1,124 per month – 45% of the median income of adults 25 to 34.[3] In the former City of Toronto, the latest figures show an average two-bedroom rent is $1,395, and a whopping $1,554 in the downtown.[4]

Compare that to the bargains established homeowners are getting. In 2005 (the last year I have figures for), the median monthly payments for rental housing in Ontario was $914; for owner-occupied housing, it was $1,175.

I’ve seen the same phenomenon on my own street. A dismal basement apartment – one where 5’4” me needs to duck to clear the ceiling – rents for just $200 less than the carrying cost of my lovely three-bedroom house.

Does the solution lie at home?

A couple of week ago I was bemoaning the sorry prospects of my children and their peers to an Iraqi friend. She said, “Why do your kids need a home of their own? In my culture people live with their parents until they are married. They don’t pay rent. They don’t even do housework. But when the parents get old and need support, the children are there for them.”

It’s not the ethos I grew up with, where moving out was a mark of adulthood. But the Iraqi solution – a solution found in many other countries as well – would work for families like mine. We’re in commuting distance of universities and jobs, we have the room and l enjoy having my kids around. It costs us virtually nothing to give my son and daughter a nicer home than they could afford on their own. And if unemployment or disability strikes any of us, we will have four adults at home to manage the blow.

Would it work on the larger scale?

It is already happening. The percentage of 25 – 34 year olds Ontarians living with their parents doubled from 8.3% in 1981 to 17.9% in 2006.[5]

But who gets left out? Everyone who, for whatever reason, cannot live with their parents:

all newcomers to Toronto, whether they come from Delhi or Durham Region

anyone whose parents don’t have the room, or the money, to keep a grown-up child at home

anyone whose parents are abusive, or where relations are so strained that living together is impossible.

I’m not expert enough to imagine the economic impacts of such a social shift. Would all those tiny new condos sit vacant? Would we have a rental surplus that would forced rents down? Would the demand for family-sized houses sky-rocket? (Another reason for hanging on to those 700+ TCHC houses!) Would parents pass their houses directly to their children, shutting newcomers completely out of the house market? Would a divide between “the landed” and “the tenantry” extend from one generation to the next – a sort of neo-feudalism?

And if this isn’t a palatable solution for the next generation, what else is out there? Over the next couple of posts I’d like to look at some of the options.

In the meantime, if you know anyone doing research in this area, let me know! It could be a very different future from the one we imagined.