Not all millennial renters have an inheritance parachute

A response to Rita Trichur’s opinion article in The Globe and Mail.

Dear Rita,

Today began like any other day. I was waiting for my class to start, drinking a $4.51 Starbucks drink and procrastinating on my laptop, when I stumbled upon an opinion article written by you, Rita Trichur, titled Don’t worry millennial renters, there’s an inheritance windfall coming your way, published in The Globe and Mail. Since the title seemed to shout out at me, a millennial renter, I was compelled to read your thoughts on my unexpected inheritance.

Like many of my peers, the prospect of owning my own home is far in the future (my faith has yet to be dashed). On one hand, I hope the housing market loses its steam and prices become more affordable. On the other hand, my presupposed inheritance greatly depends on the maintenance of my parents’ net worth. Like many other Canadians, my parent’s home is their largest asset and largest debt (in 2016, 61.7% of families reported their primary residence as an asset of which 57.3% have a mortgage). This creates a problem that is faced by many millennials, and a lot of us are not sure what to hope for anymore.

So when I read your article on The Globe and Mail, which I was fortunately able to afford because of my student discount, I was left with a feeling of incompleteness. Moving past your remarks on our angst and spendthrift nature, there lies a deeper issue I have with your arguments. I would like to start by agreeing with you, those “self-serving shills” (or the Ontario Real Estate Association for those who can’t get pass the pay gate) are incentivized to fight against the new legislation which seeks to reduce risk associated with uninsured mortgages and more stringent stress tests. It would reduce the number of eligible homeowner candidates and is in their interest to downplay the importance of this stronger regulation. However, I don’t believe my fellow millennials honestly believe a conspiracy against them is a foot. Like you said, as a highly educated bunch, many of us understand the need of tighter rules to dampen the overheating housing market.

Then beyond this simple misunderstanding, what seems to be the problem? One trillion dollars is about to break through the dams of pension plans and sock drawers in the next two decades, raining onto us the new iPhone XVI, Tesla Model 10, and of course, condos and homes galore! So grab that Starbucks drink, sit back and wait … for our parents’ death.

It is with this new-found morbid curiosity that I did a little bit of research. According to the World Bank, the average life expectancy of a person living in Canada is 82.14 years (2015). So most of us on the younger side of the millennial bucket will, luckily, still enjoy the company of our parents for many more decades to come. This means a significant group of eager young people on the wrong side of thirty won’t benefit from this inheritance payday. In regards to employment, things are looking good, according to the latest StatsCan report (LFS, Dec. 2017) unemployment rates have been continuing to fall and is now at the lowest rate of 5.7%, although youth employment rate has remained fairly stagnant. More surprisingly, December saw a decrease of 37,000 full-time workers which offset most of the part-time gains (31,000). Then it is only with cautious optimism that we can hope for the job market to remain easy into 2018.

Most importantly, many households will not see the benefits of upper-middle class Canadians. The median net worth of Canadian households was $295,000 in 2016, a significant increase of 14.7% from 2012. However, the average household net worth is $669,300 which is significantly greater, representing the increasing wealth gap in the country. As you mention in your article, more than a third of us (those between the ages of 20–34) are still living with our parents. Sometimes, they are the lucky minority who have found jobs that are a commutable or drivable distance from their parents’ home. There is a growing number of recent graduates and young workers who are only able to find jobs in large cities like Toronto or Vancouver (where the rent is astronomical), and do not have the luxury of their parents’ basement. In a recent article by Jessica Mach, the cost of living in Toronto is estimated at $32,885 annually ($2,740.48/month) which is a $400 per month increase from last year’s estimate. This means that before taxes, you will need to make $40,583 which is more than you would make at the proposed minimum hourly wage of $15. How much more? well $4.51 more or that Starbucks drink from earlier. All of which, will leave a person with nothing to save and living pay cheque to pay cheque. There is little chance in this scenario for her to save up for even the modest of homes.

This is the reason I disagree with so much of your article. It leads readers to trivialize the multi-dimensional issue of rising house prices (rent prices too). And that’s the problem since many people, not just millennials, do not have the safety net of an inheritance or the fancy degrees from a university or college to rely on for the dream of home ownership. This is why it is important to consider policies that address the needs of the younger generation, acknowledging the struggle of achieving goals previously thought to be achievable by the middle-class (like owning your own home and freedom from heavy student debt burdens). I believe you had the best of intentions when you wrote your article, but simplifying a complex problem only serves to hinder the potential for progress towards affordable living.