So, you’re a NOT-SO-empty-nester. Your Millennial went out, got an education and came back with a degree, a lot of debt, and no job. Your experience is not in isolation, indeed 1 in 3 Canadian households are experiencing this exact scenario today. Let’s be clear, no one in your household is a huge fan of the situation. At first it was novel, little Jonny came back from his college or university career, full of energy and knowledge he was ready to commit towards a well-paying and fulfilling job. Four years on and the energy has waned, the job is not so fulfilling, and the pay…well, Jonny’s glad you decided not to charge him rent.
What the labour market is telling your Millennial that they are probably going to have to re-skill and/or move to find more better paying or more fulfilling work. However, the effect this delayed home ownership or renter-ship is having on the housing market has wider implications which will be witnessed over the next 20 years.
As commented on in their Financial Post column, Dr. Murtaza Haider and Stephen Moranis foresee this delayed exit from the parental home as having two general affects on the housing market. The first, is that it postpones Boomers’ natural inclination to down-size. As Baby Boomers are entering their senior years mobility decreases, incomes become fixed, and a need for a family-sized house is reduced. The third of Boomers that are still hosting an adult child are unable to fulfill this natural inclination which both increases personal financial strain and reduces the number of potential houses on the market which artificially increases the market price. Meanwhile, Millennials are at home because both rental and ownership options are unattainable due to an inflated price and their comparatively low incomes.
Nevertheless, Haider and Moranis believe that Millennials will eventually own homes and when they do, they will have many housing options available to them. The Millennials, nominally, are a smaller generation and while housing supply in urban centres will continue to be highly competitive, prices elsewhere could conceivably fall due to excess supply. The long-term effects of the Millennial nester will play out over the next few decades but for many, home ownership might just be on the horizon of a not-so-distant future.