The Housing Affordability Crisis
Housing is a basic human need, but the lack of affordable housing to buy or rent is fueling a national crisis. We can start by admitting there is a problem. In the absence of Canadian non-profit housing providers, reasonably priced starter homes, middle-class and low-income family dwellings have become hard to find.
Many millennials and Gen Z buying homes are having to borrow money from older generations or wait for inheritance money, if they are lucky enough to receive it. Young households have had to adjust to a lower standard of living or continue to live with their parents.
As it happens, home builders are doing their best at keeping up with demand by continually building. However, the crisis is in affordable housing. It doesn’t seem realistic to new home buyers to exhaust their paycheques on a mortgage payment. When did a million dollars become the target price range? Some people don’t make that much money in their entire lifetime. Affordable housing will be abundant when the government decides to make it so, right now the money trail is becoming a bit of a grey area. Young people are generally not able to afford the same homes they grew up in, but they were affordable for their parents. In Toronto lower income families have insufficient incomes to afford these high prices and have had to add their names to social housing waiting lists. Wait lists in the City of Toronto are over 10 years for one- and two-bedroom units.
The last time housing was affordable was in 2003 and 2004. Housing prices during this period implied that housing costs were affordable. Wherein 40% of their disposable income was needed to buy an average house in Ontario, now that number is closer to 60%.
22 million housing units will be required by 2030 to help achieve housing affordability for everyone living in Canada. If these targets are not met there will be many low-income households that will face affordability challenges. Increased housing supply in the rental and homeownership market is critical. This will help create opportunities for households to access housing that meets their needs. Currently households must stretch their budgets to bid for living spaces in limited supply and that are highly priced. If no change occurs there could be an increase in multi-generational families living together.
There is a need to restore the balance and bring the cost of land and building down so the younger population need not flee to the outskirts of the GTA like Guelph, Hamilton, or Moncton to be able to afford housing. This creates other problems such as access to transit or worrying about car payments and the cost of gas just to be able to commute to work. A few significant big hurdles to overcome to meet the 2030 target to increase housing and lower demand.
Significant delays between when a project is proposed and when it starts due to long approval processes.
Skill shortages and supply-chain challenges are pushing up costs and lengthening the time it takes to build
Increase in supply will put pressure on the cost of construction
Drastic change is required and Canada’s approach to housing supply needs to be re-thought. For home buyers, down payment assistance programs exist but are hard to obtain. Loosening the bank regulations to allow smaller down payments from 0-10% can ease the burden and make home buying more accessible, as well as keeping the fixed and variable rates at a manageable level. Local governments can also help by speeding up the amount of time it takes to process re-zoning applications and site plan approvals to quicken the timeline for construction and eventually move-in day for new residents.