There's good news and there's bad news for Canadian millennials -- those born between 1980 and 2000.
The good news is that "Canadian millennials are faring better economically than is commonly portrayed," says a report by Beata Caranci and Diana Petramala at TD Economics. "This is especially the case when compared to their American counterparts."
They say that over 50 per cent of millennials in Canada own a home and they entered the real estate market at a younger age than any generation before them. In the U.S., only 36 per cent of millennials owned a home in the first half of 2015, compared to a rate of between 40 and 43 per cent for this same age group in previous decades.
"Millennials in Canada have faced better job conditions alongside greater availability and access to credit since the 2008/2009 recession. They also carry lower student debt loads than their American counterparts," says the report.
The bad news? Home ownership in the country's hottest markets, Vancouver and Toronto, is becoming out of reach for many millennials and forcing them to move elsewhere.
Sal Guatieri at BMO Capital Markets says real estate prices in the two cities continue to climb. "Even as tougher mortgage rules -- and, more recently, plunging oil prices -- have cooled markets in much of the nation, Vancouver and Toronto continue to heat up. But, like a good steak, their sizzle comes at a cost."
Up to now, he says, millennials have been driving household formation. "The leading edge of this sizable generation is now purchasing their first home, and starting careers in two cities that are serving up jobs faster than the rest of the nation." But he says, "Lofty prices could increasingly become a deterrent to workers considering moving to Toronto or Vancouver and wanting a detached home, leading to skills shortages in coming years."
In a report earlier this year. Vancity said, "Areas with a high cost of living due to increasingly unaffordable housing will be at a significant disadvantage in the near future. It is entirely likely that this desire will motivate millennials to migrate away from Metro Vancouver in search of better opportunities."
It says salaries are not keeping pace with increasing housing costs and that by 2020, 82 of 88 in-demand jobs will not pay enough to afford a single-family home in Metro Vancouver.
In Toronto, a recent poll by the Angus Reid Institute found that 84 per cent of residents are worried that the next generation won't be able to afford a home in the area. The same percentage agreed that "it's just not realistic for young people to expect to own a house and yard in the Greater Toronto Area (GTA)."
Thirty-nine per cent of residents agreed with the statement, "I'm seriously thinking of leaving the GTA because of the cost of owning a home." The highest level of agreement was in the 18 to 34 age group.
Almost one-quarter of those surveyed say they personally benefit from high house prices, but 35 per cent of residents say they are being hurt by the high prices.
Fifty-seven per cent of GTA residents say the government should be more involved in the housing market, with 60 per cent saying the goal should be to help first-time buyers, rather than protecting values for current owners.
The TD Economics study says that although Canadian millennials have less student debt than those in the U.S., their mortgages have pushed their overall debt levels higher than their American counterparts and their parents.
However, mortgage conditions are better than what their parents faced in 1980, with interest rates about 10 percentage points lower. The required down payment for qualified first-time buyers is also lower.
"As a result, millennials in Canada have used debt to build housing wealth. As of 2012, Canadian millennials had accumulated almost double the amount of net wealth as generation X had attained at their age. While younger U.S. households may not be holding as much overall debt as Canadians, they also have not seen the same gains of net wealth."
The report says many Canadian millennials have likely received financial help from their parents, who have seen the value of their homes almost double during the last 10 years. "No doubt, some of this financial wiggle room has been passed down to children."
The report authors say the gap between U.S. and Canadian millennials will narrow in coming years because there's little room for more homeownership gains north of the border, while the U.S. has strengthening housing and job markets.
Again, it's good news and bad news. Many Canadian millennials are already homeowners and are accumulating equity in their properties. Canadian millennials have higher wealth but more debt, so they are more vulnerable if there's a price correction. But a price correction in the major cities, or at least a slowdown in price growth, will keep homeownership a viable option for first-time buyers in Toronto and Vancouver.