COVID-19 has led young Canadians to reassess their home ownership strategies

Open this photo in gallery:

Before the pandemic, Adam Silverman, 22, imagined himself buying a detached home in downtown Toronto. When the pandemic caused prices to soar, he quickly found himself changing his plans.

“It’s hard living in a city like Toronto. Rent prices are just so insanely expensive,” said Mr. Silverman, head of media at a Toronto-based gaming company. “The pandemic was a reality check.”

Indeed, housing affordability marked its sharpest deterioration in 27 years in the second quarter of 2021, with the median house in Canada costing $89,000 more than a year ago, according to a recent study from the National Bank of Canada.

For some, remote work may be the solution. Mr. Silverman has decided to forego downtown living in favour of cheaper cottage country real estate. “As long as I can get good quality WiFi up north, there’s really nothing holding me to the city,” he said.

Young Canadians such as Mr. Silverman have seen their attitudes toward real estate reshaped by the pandemic. Rising prices and the feasibility of working remotely have many considering the alternatives, which include renting for longer, moving back home or even moving outside of the expensive urban centres. For others, forced to work from home in cramped rented space and lured by low mortgage rates, the pandemic prompted a sooner than expected leap into home ownership.

Among prospective homebuyers, millennials and Gen Z are the most likely to consider alternative regions and communities, according to a report by research firm Leger commissioned by Re/Max.

When Oindrila Hazra, 34, and her husband found themselves working remotely from small downtown Toronto condo, they took advantage of low interest rates to make an offer on a house in Etobicoke, sooner than expected.

“Had it not been for the pandemic, then we would probably still be in our rental condo,” said Ms. Hazra, though she now worries about the potential for higher mortgage rates down the road.

According to a recent survey by research firm Abacus Data for the Ontario Real Estate Association. 46 per cent of prospective Ontario home buyers under the age of 45 are considering moving out of the province in search of an affordable home.

Josh Young, 23, from Barrie, Ont., is taking it one step further: he’s looking at properties in the United States.

“The cost of housing down there is ridiculously cheap,” he said, noting that he had seen properties in small American towns selling for less than $100,000. He said he grew up wanting to own a ranch in Alberta - now, he is looking at similar properties in Wyoming, where there are no state income taxes. He hopes to buy property outright and later rent it out as an income stream.

Young Canadians are also considering alternative ways to get on the real estate ladder.

For Avi Grondin, a 24-year old entrepreneur, that meant taking advantage of new deposit structures to start paying for a new condo currently under construction. He will contribute around $30,000 annually until the building is complete in 2023, he said. Until then, he is living at his parent’s home in Toronto. Before the pandemic made remote work possible, he said, he would not have considered waiting.

For others, alternative home ownership also means renting out a portion of their residence. Arlin Otto, 26, an engineer from Guelph, Ont., recently purchased her first home with significant help from her family. She is currently renovating the basement as a rental unit to help pay the mortgage. While she had initially planned on living in the smaller one-bedroom apartment herself, she decided to take the larger – and more expensive – space upstairs to accommodate work and grad school needs.

Estimates of how many young Canadians get help with down payments from their parents ranges – figures show from half to three-quarters depend on what has become known as “the bank of mom and dad.”

Deepening economic inequality means those who can depend on the “bank of mom and dad” are seeing their head start growing. Job losses were concentrated among young and low-income workers, a disproportionate amount of whom are renters, according to a May, 2021 report from the Canada Mortgage and Housing Corporation (CMHC). According to Statistics Canada, high-income families are more likely to work from home.

For young Canadians without financial support, the pandemic has exacerbated existing inequalities, according to Nancy Worth, associate professor of geography at the University of Waterloo, who has studied young people’s perspectives on housing.

“When we look at who is able to get into the housing market right now, it’s unlikely that it’s just because of individual saving,” Prof. Worth said. “Family wealth is really becoming a larger and larger factor – but we don’t all have grandparents that are going to leave us an inheritance.”

Natasha Howard, 23, a recent University of Western Ontario grad, said she sees a growing divide between her friends who have had help from parents, and those renting on their own. With unexpected expenses earlier this year, she is pushing back her initial plans to move out until the fall or spring. Meanwhile, her peers who have already moved out of their parent’s home are accruing debt at an alarming pace, she said.

“If they don’t have a great family situation, they have to decide if they want to sacrifice their privacy and potentially their mental health, or their bank account,” Ms. Howard said. “It’s one or the other.”

Prof. Worth’s recent research focuses on the experience of Canadian freelancers trying to afford homes. For workers who are self-employed, mortgages can be hard to secure. Vancouver-based Connor Wilson, 24, recently left his full-time job to focus on his start-up business. However, as a recently self-employed worker, he has a hard time qualifying for a mortgage. While he had initially planned to start looking at property this year, he now has a new plan.

“We may eventually just put all our stuff in storage and just live out of long-term Airbnb stays for months at a time,” Mr. Wilson said. Putting off home ownership, he said, will allow him to search farther afield for homes more affordable than those in downtown Vancouver.

Your house is your most valuable asset. We have a weekly Real Estate newsletter to help you stay on top of news on the housing market, mortgages, the latest closings and more. Sign up today.