It doesn’t get more Canadian than this. We had a blast at our Canada 150 celebration! We also celebrated our 15 year anniversary since opening our all-Canadian Sutton brand brokerage in 2002. We thought poutine was the best way to celebrate. Thanks Gotham Grill!
Sutton Group – Signature teamed up with Million Dollar Smiles to build a playground on June 9th, 2017. Million Dollar Smiles is a non-profit organization that provides support for families of children battling life-threatening illnesses. Thanks to everyone who came out!!
The internet was set ablaze last week when Tim Gurner, a multi-millionaire Australian real estate mogul-appeared on 60 Minutes Australia with some choice words for millennials struggling to become property owners.
His advice? Stop buying avocado toasts and lattes.
“When I was trying to buy my first home, I wasn’t buying smashed avocado for $19 and four coffees at $4 each,” he said.
This advice was not without backlash. There are myriad reasons why some millennials are priced out of home ownership, and $4 lattes and avocado spreads on toast certainly does not top the list.
This is a very ill-fated suggestion when you consider Gurner is one of the wealthiest people in Australia (reportedly #157 with a net worth of $473 million). Clearly he had to do more than cut back on breakfast items in order to amass his fortune.
I spent all my avocado money paying rent on my apartment, or maybe for my bus pass. I’m such a bad millennial.
— Sarah (@SRRSkelley) May 15, 2017
— Kate Beckman (@Kate_Beckman) May 15, 2017
— Annie Lowrey (@AnnieLowrey) May 15, 2017
— Annie Lowrey (@AnnieLowrey) May 15, 2017
The televised exchange spawned many memes and infuriated rants, but none shed light on Gurner’s short-sightedness quite like Toronto writer David Rudin’s “Millennial Mortgage Calculator,” which quantifies just how many breakfast foods one would have to skip in order to save for that fleeting downpayment. Whether you’re in Toronto, Montreal, NYC, San Francisco, or Boston, you can check out how many avocado toasts or lattes you’d have to forgo here.
(Hint-> In our home of Toronto, where the average home price is about $916,000, factoring in a 20% downpayment, one can afford a home by July 15th, 2067-or the equivalent of 18,320 avocado toasts)
Now that we have ruled out that millennials’ beloved avocado and lattes are not the sole culprit of their housing lockout, we can explore some more all-encompassing explanations for why millennials are priced out of home ownership.
For one, prices in real estate have exhibited a disproportionate growth-while wage growth has remained relatively stagnant. All the while, joblessness has been on the rise and the overall stock of available employment has decreased.
Lenders are also cautious as to which sources of income they favour with regards to allowing a loan-making it extremely difficult for contract workers to secure a mortgage. Full time jobs for those aged 25-44 has grown at a rate of 3.5% since 2008, all the while contract work has increased in frequency by 25%, with most of these employees deemed unfit to be an “ideal borrower” and turned away, according to the Financial Post.
In the U.S, “Income from a second job is generally not allowed unless it has been derived from the same source for 12 months or within the same exact field for 24 months without any more than a 30-day interruption” according to Investopedia.
It is also interesting to note that Gurner purchased his first property with the integral financial aide of his grandfather-who loaned him $34,000 dollars in order to secure a loan that ended up spearheading his attractive entrepreneurial ventures-only then could he deal with formal lending institutions.
In addition to that pitfall, new laws surrounding an increasingly strenuous mortgage stress tests has also put the nail in the coffin for millennial homeowner hopefuls. These stress tests attempt to qualify a would-be mortgagee at an interest rate much higher than the current status quo, which end up discouraging a significant amount of buyers.
In a paper published by the Canadian House of Commons, “The Québec Federation of Real Estate Boards estimated that, because of the new test, between 5,000 and 6,000 Quebec households will delay their purchase of a home beyond 2017, resulting in $220 million in housing-related spending being foregone.”
These stress tests also increase the total debt service ratio by a rate of 7.5%-this has a staggering effect on household income, which is changing at a much slower rate-if any.
In short, although saving for the future is important and frivolous spending should be limited, Millennials would most benefit from a financially stable co-sign. Whether it is a loved one or a total stranger is a different story, avocados and coffee do not quite have the dismal impact portrayed by the tycoon.