Bank economist tells York millennials: Forget about owning home in GTA

Those earning $50 to $70K a year should look elsewhere, Sal Guatieri says

Thestar.com
May 7, 2017
By Tim Kelly

A BMO Capital Markets economist had some grim news Saturday for millennials who hope to own a home in the GTA.

Sal Guatieri was asked what the average earning millennial, say one pulling in $50,000 to $70,000 per year, should hope about finding a home in the Greater Toronto Area, given the average price of a house is now $1.1 million.

“They can’t,” he said.

“They're going to have to move to Seattle or Ottawa or Montreal; they're still quite affordable," Guatieri added.

His response actually came after he had spent quite a bit of time giving a PowerPoint presentation talking about the positive situation of Canadian economy.

And he even mentioned that millennials were in their prime buying years.

Guatieri told one frustrated man in the lobby at the Markham Civic Centre who had told him just 3,000 jobs had been created in the past month in Canada that 300,000 had been created in the past year.

But he did sound notes of warning about a possible housing bubble in the wake of a 33 per cent increase in the price of GTA homes over this time last year.

He cited low interest rates, cheap credit, a relatively low Toronto jobless rate of 7.1 per cent, a net Ontario in-migration rate in 2016 of 175,000 as factors for skyrocketing prices in addition to speculation and foreign buyers.

Asked if banks could slow down the superhot market with an increase-rate increase, Guatieri said such a move would help reduce the hot market in the GTA but would hurt buyers everywhere else in Canada.

"Why punish people in Winnipeg and Ottawa where there is no bubble. You would have to restrict flow of credit and localize it because it would have the same impact as raising interest rates in that region, that's tough to do as well, because people could borrow in Manitoba and buy the house here in Toronto," he said.

The forum, which included six other speakers, was put on by the Unionville Residents Association and Markham Deputy Mayor Jack Heath and attracted about a hundred people Saturday morning.