SHELTER SKELTER

ARE WE READY TO GIVE MILLENNIALS $17,000 EACH TO HELP BUY A HOME? Britain might be. But, no one is suggesting anything like that over here. The hard truth for most of our millennials is that home ownership remains far out of reach.

Most millennials know this. They know that having a well-paid, steady job won’t cut it. Not even with a partner earning the same. Not even if you have enough to make mortgage payments. What you need to cut it is a mortgage down payment: a large lump sum of money far beyond the saving capacity of most millennials.

Millennials know this only too well. But, they don’t seem to be all fired up about it. Posts from a recent Reddit discussion on the millennial housing crisis in Toronto reflect more cold-blooded resignation, than anything else:

• “I’m making over 70k and paying $1800 in rent. At this point I’m resigned to rent forever until I find someone to marry...and marry rich.”

• “I’ll probably just rent forever. I moved out at 17 and I don’t expect my parents to help me purchase a home. I don’t know what I’d be doing if I didn’t have a partner.”

• “I live in my parent’s basement. Although one day I hope to cash in all my Pokemon cards and Star Wars dolls and maybe afford a down payment on a used van I can sleep in down by the river.”

Home ownership less and less likely

Home ownership has always been part of the “Canadian Dream.” Right now it has come true for 68% of Canadian households. But it is a far less likely possibility for future generations. An American study shows:

• the clear majority of millennials—roughly 80%—express interest in acquiring a home of their own.

• since 2004, homeownership rates for people under 35 have dropped by 21%  the Baby Boomers’ rate remained largely unchanged

• most people born in 1980 will not likely earn more than their parents

• more than 20% of people 18 to 34 live in poverty, up from 14% in 1980.

Luck is now what a Canadian millennial harbouing a dream of homeownership needs most. Being lucky enough to have parents who can afford to give or loan you the money for a mortgage down payment makes all the difference.

What can be done about all this, or should be done about it, does not get much attention in Canada. Not yet. But other nations see the “millennial housing crisis” as something that could bring widespread economic trouble.

UK study reveals millennials face real crisis

A recent study on homeownerhship in the United Kingdom confirmed housing and homeownership was a genuine crisis for their millennials. It also generated a surprising potential solution.

The study was done over two-years and chaired by a former Conservative cabinet minister. The big red flag in the study showed that homeownership among 25-34 millennials is half of what it was in the 80s with only 16 per cent of millennials actually owning homes, which turned out to be a 53 per cent drop from 1984 in the same age group.

On top of this, millennials in the UK spend more on housing, face longer commutes, and live in smaller spaces than their parents did at their age.

The findings will be seized on by millennials (born 1981-2000) who believe they have been miscast as self-absorbed spendthrift who would rather splash out on artisan coffee and slices of avocado on toast than save for a house deposit. Research found millennial consumption is down: in 2001 people aged 25-34 consumed the same as 55-64 year olds—they consume 15% less today.

The UK report did make some recommendations, suggesting the country re-evaluate tax policies for younger people looking to enter the housing market by ensuring potential millennial homebuyers don’t get stuck paying for the aging homeowners’ retirement.

But, playing with taxes and making older people pay more could end in public disaster. So what’s a happy approach for everyone? Give millennials better jobs and better pay. In other words: give them some coins to put in their empty piggy bank so they stop borrowing from mom and dad, and can finally move out of the basement.

A $17,000 solution

Resolution Foundation, a well-known thinktank in the UK, spent two years studying the pay gap between millennials and baby boomers and may have come up with a solution to get millennials into their own homes: give all millennials $17,000 when they turn 25.

Now, usually kids inherit from their parents, but, the study is saying that’s not the case with millennials—or it won’t be the case when they need it most.

“Many will not inherit, and those that do are likely to receive this support shortly before their own retirement, rather than in the expensive family-raising years,” wrote one of the authors.

The payment would be called a “citizen inheritance” and would have strict boundaries, only allowing the money to be used for education, housing, or starting a business.

The $17,000 suggestion hasn’t been implemented yet but it’s catching on as a possible “way in” for millennial homeownership.

Make homeownership part of the Canadian dream again

Another recent study in the USA, concluded that by 2030 millennials will account for barely 16 percent of the nation’s wealth, while home-owning boomers, then entering their eighties and nineties, will still control a remarkable 45 percent of the nation’s wealth.

It’s time for millennials to demand politicians abandon the policies that favour those who are already comfortable in their own homes and make a home of your own a real possibility for all generations.

Canadian millennials want homes. Yet, many are still counting nickels for a coffee, daydreaming about homeownership, recalling childhood stories of a “better time” that their parents got to live.

Will they ever have their own backyard again? The UK may have their backyard answer. And while it doesn’t include the BBQ and patio set, it could get millennials cutting their own grass at their own home sooner than later.

The fundamental question is whether the strength and stability that homeownership brings to the common good is worth paying for—following the same logic we use to pay for Medicare or the CPP. If it is, giving 25-year olds a $17,000 grant makes economic and social sense.

Whether or not we are ready to wrestle with that question will depend on millennial activism. This is not something millennials are noted for—yet.

Are you a millennial who’s struggling to buy a home? Tell us your story.

- 30 -