We asked Dragon on CBC’s Dragons’ Den Michele Romanow and co-founder of WE Developments Odeen Eccleston for their thoughts on how young people can navigate Toronto’s housing market as part of our spring market update with the Rotman School of Management. Here’s how that conversation went.
STREETS: Michele and Odeen, young people can’t seem to win. House prices came down but interest rates went up. Work from home is now three days in the office, making buying outside of the city a challenge. What are you hearing from this cohort, and what advice would you give them?
ODEEN ECCLESTON: Well, it’s interesting that you mentioned the young people, because about a year ago, of course, as we all know, we were at this peak where it was really unsustainable. It was nonsensical, and it was downright scary in some ways, especially for young people in terms of affordability. And my heart goes out to the young people who decided to jump in at that time. Fast-forward to now, things are more balanced, but for young people, they need the right team. They need to be open to collaboration, and they need to be, frankly, open to sacrifice.
I often encourage my client base to team up young people. I represent sometimes two and three young people at a time, you know, just really dabbling in fractional ownership. It’s just get in wherever you can fit in, I tell them, and then sacrifice, it’s really about — we’re in a world-class city, right? — a lot of young people, if they want to get in, they have to start saving from very young. They might want to be in a particular neighborhood, but just to start investing, maybe invest in the 905, which I’m a huge proponent of.
MICHELE ROMANOW: I think it’s gonna be very difficult for young people right now. You are 100 per cent right. It feels like every piece has converged to make it more and more difficult. I think, in the stats that we’ve seen, almost all young homebuyers have come with parents that have helped them with down payments or family money that has helped them to do that.
But at the same time, I’m an entrepreneur and a founder. Life is always kind of difficult and moving against you. It’s one of those things where you have to look where everyone is not going, right? It might not be your perfect dream area. It might be, you know, making a lot of sacrifices to save up. It might be buying a place with other people. It might be airbnb-ing your place when you leave for the weekend. All of those, I think, are very real now for young buyers because interest rates are in very different places. Prices are down hopefully a little bit, but we haven’t seen supply come back up.
JAY PITTER (principal placemaker of Jay Pitter Placemaking): I just wanna disrupt the sacrifice narrative for just a moment, because, as stated by my colleague here, really, if you’re a young person, you can only really get into the market if you come from a family with intergenerational wealth. I was able to, as a young professional and a young single mother, purchase my first home at 30 years old.
My story is not possible in today’s market, regardless of sacrifice. I understand the sentiments of sacrifice. I made those sacrifices, again as a single mom at 30 years old, and the fact that within my lifetime that option with sacrifice and hard work is no longer possible that really undermines the promise of the city and our status as a world-class city.
MICHAEL KALLES (president of Harvey Kalles): Just to talk a little bit about the marketplace. The press is having a field day with real estate right now, right? It’s an unfair comparison. I think it’s important to focus on where we are now. Since January 25, when we received the smallest increase from the Bank of Canada, I believe it was from 4.25 per cent to 4.5 per cent, we’ve had 34 per cent of our listings sell at or above asking. So you’re seeing buyers are coming off the sidelines.
But we also have to focus on population. We’ve talked about numbers between 500 and 1 million new Canadians’ need for where to live, where to eat, and we need to focus on infrastructure. There’s a great anecdote. There’s a tower that was built, Aura, 80 stories high at Yonge and College, took eight years from conception to completion, and today houses 1,800 people. That population is almost equivalent to how many people move to Ontario every 24 hours. So it gives people an understanding that prices have nowhere to go but up. That’s really where we are right now. Even the slightest uptick in demand is going to drive prices up.
BRAD LAMB (founder of Lamb Development): Can I just make a quick comment about young people?
When I was 24 in 1986, a long time ago, I got the idea that I wanted to get into real estate. I didn’t have any money. I was an engineer. I was making $20,000 a year. My brother worked for IBM, he was making $30,000 a year. My younger brother was finishing his last year of university. So I convinced my brothers to buy something. We couldn’t afford anything in Toronto. We lived in Oakville.
So, we went out to London to look. And the three of us, I had saved $1,200 in two years of working, and I lived at my parents’ house. My older brother had a rental apartment, he was actually married, and he had $1,200 in savings. And my dad kicked in $1,200 from my younger brother. And the three of us scraped together $3,600 to buy what seemed like an impossible task for us, a $24,000 townhouse in London, Ontario.
Now, we couldn’t afford to live in the townhouse because we didn’t have enough money. So, we rented the townhouse for $700 a month. And we kept that townhouse for two years and we sold it for $50,000. And then we had capital of about $30,000. Still couldn’t afford anything in Toronto. We bought four townhouses together in London. And that’s how I started my real estate career from that one transaction. And it was as exceptionally difficult to do as it is today.
So it’s BS that young people cannot get in the market. You can get in the market. It’s lies, OK? You can’t buy your dream home at 24 years old. You can buy a tiny box apartment in a small town like Welland.
BRIAN GLUCKSTEIN (principal of Gluckstein Design): Don’t hold back. Tell us what you really think.
ODEEN: I think that I land somewhere in the middle between Brad’s perspective and Jay’s perspective here. Because I was going to say that it’s difficult, but difficult isn’t impossible, right? So I agree with you. I think there’s a sense of entitlement sometimes with young people, but the bottom line is I’m representing these young people, right? And I know that it’s difficult, but it’s possible. And yes, sacrifice is just the nature of it. And in theory, that perhaps shouldn’t be the case, but that just … it is what it is.
JAY: Hey, listen. I grew up in public housing, so I know a ton about sacrifice. My grandmother came to this country as a seamstress, worked in a horribly hot hotel laundromat, bought our family’s first home in Little Jamaica, as a matter of fact. And then my family ended up moving into public housing.
I definitely understand sacrifice, and I think that you’re absolutely correct that there’s a generation that may not be willing to make some of the sacrifices that our parents made and our grandparents made.
But what I’m saying is that it’s not about giving up that latte and the kinds of sacrifices that need to be made. Even what Brad said about the fact that they couldn’t afford to live in that house where they purchased. Some people don’t have a family home to live in and have a secondary home.
So there is still a degree of privilege and family support and intergenerational wealth and knowledge and spatial entitlement even to understand that you have a place in the market. Some of that perspective, that anyone can do it, it’s highly privileged and it is not … it doesn’t relate to on-the-ground realities in many racialized communities and people who’ve been intergenerationally poor.
BRAD: First of all, that’s an amazing story and it’s very aspirational. I’m not suggesting that every person in this country can own a home. Every person in any country cannot afford a home. There are some people that are never gonna be able to afford a home. And there’s a responsibility for us as citizens to try to help them through taxation and building affordable housing. I’m not denying any of that. It’s not a realistic illusion to believe that 100 per cent of Canadians can buy a home. There’s always gonna be some, probably 50 or 60 per cent, that rent. And we need to do the best we can to provide all kinds of rental housing.
But if you’re a young person today and you’re willing to work hard and you have a job and you have a reasonable education where you can make reasonable money, expect your income to grow. I’m saying any Canadian in that category can buy a home in this country and eventually get the home of their dreams. It took me 20 years to get the home of my dreams.
BARRY COHEN (president of RE/MAX Realtron Barry Cohen Homes Inc): But you also have these homes. If you look back to when my grandparents and parents bought, they were building houses with side entries, side doors. They were rented out, and they subsidized the buyer who could now afford to buy a house and rent out the basement. And, hey, the home became affordable. I think we need to mandate that. It also provides quick shelter for renters who can’t get into the city.
This is an excerpt from Post City’s 16th annual Real Estate Roundtable in partnership with the Rotman School of Management. Click here for more excerpts from the panel. Special thanks to our incredible sponsor The RE/MAX Collection.
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