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rob carrick

The ongoing housing boom has made home ownership a daunting prospect for the millennial generation.Maridav/Getty Images/iStockphoto

If housing stays hot, we're going to have to start counselling our young people to help them deal with the disappointment of not being able to afford to buy.

Millennials are playing along with rising house prices so far. Poll results consistently show they're eager to buy, and they seem okay with having their anxiety about declining affordability trivialized as an example of the social media phenomenon of FOMO, or fear of missing out.

But how long will it be until their fear about missing out turns to anger at being shut out? My sense from following social media is that this sentiment is starting to bubble up in Vancouver and Toronto, at least. And that was before reports this week that average resale prices were up 16.8 per cent in Toronto in June over the same month last year and up 32 per cent in Vancouver.

Now is the time for an early intervention to help aspiring first-time buyers prepare for disappointment ahead. To start with, let's recognize that feelings of resentment are natural when you're excluded from the housing market. There's a sense of being a have-not and of having missed out on a lottery win shared by others. If you always wanted to have kids and pets running around a house with a yard, you've got even more reason to be bitter.

Young buyers, don't lose hope entirely. Price gains are steep in some cities, but in no way are they permanent. We have not created a permanent floor for housing at current prices. Prices will fall at some point because all financial assets have their ups and downs over the decades.

The timing and magnitude of the decline ahead are not known, so don't expect immediate results. Meantime, start thinking about Plan B in case prices never find their way into your personal affordability zone. Would a condo work for you instead of a house? Could you share a house with family members or friends? Are far-flung suburbs and their mega-commutes an acceptable alternative? Might the freedom of renting work for you?

Do not expect the government to rescue your home ownership dream with dramatic measures to contain prices. Municipal, provincial and federal leaders understand that young people are being priced out of home ownership in some cities, but they're constrained by two things. One, housing is a huge support for our under-achieving economy. Two, triggering a big decline in housing prices will anger the key voting block of boomers who are sitting on a fortune in house price gains.

Rules to curb the purchase of homes by foreign buyers are possible, but the biggest reason why house prices keep rising is low interest rates. Raise rates, cool housing. The only thing stopping the Bank of Canada from doing this is that the overall economy is too weak to bear it right now.

The sense of a lost financial windfall is right up there with frustrated lifestyle aspirations in making millennials resentful about missing out on home ownership. Wealth seems to be piling up day by day in Toronto and Vancouver. The average Toronto resale home price increased by $107,237 on a year-over-year basis last month to $746,546.

But these numbers have no real-life application unless you sell a house and either rent or move somewhere with much cheaper housing. Otherwise, you end up selling your own expensive home and buying someone else's.

Millennials who bought homes in the past few years have made out quite well in a few cities if you judge by price increases alone. But if you want the full picture on ownership, ask your friends who own homes these three questions: What financial sacrifices have you had to make, what debts have you taken on in addition to your mortgage and how much have you been able to save?

Renting is a sound financial alternative to ownership if you diligently save and invest the savings you realize by not owning a house. But for lifestyle reasons, as well as family and peer pressure, a lot of young people will find it hard to give up their home ownership aspirations.

Here's how to keep the ownership dream alive, even if the market seems to be pulling away from you. Start a down-payment savings plan so aggressive it hurts. That will train you well for home ownership. Keep saving until you can either afford to buy something that suits you, or you give up on ownership. Either way, the money you put away will set you up well for what's ahead.

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