Housing affordability was on the agenda during the federal election campaign, although the voices asking candidates to promise to address the issue were mostly drowned out by the scandals that plagued the campaign.
Now that the battle is over, those heading to Ottawa should heed the sentiments of 78 percent of Canadians who, when surveyed by Zoocasa, said they wanted the next federal government to prioritize addressing the long-running affordability problem.
Zoocasa conducted the survey with homeowners, prospective buyers and tenants from across Canada in mid-September, asking for their sentiments on various housing issues.
“Whether or not Canadians can feasibly purchase real estate in their local markets, qualify for a mortgage, or secure an affordable rental have long been hot-button topics for policymakers,” says Penelope Graham, managing editor at Zoocasa. “According to our findings, respondents feel very strongly indeed that the cost of housing is a problem that has come to the forefront. A whopping 84 percent agree with the sentiment that housing affordability is a major issue that’s negatively impacting Canadians and has significant economic and political repercussions.”
Zoocasa reports 91 percent of respondents say they felt the cost of buying a home in their city or town has been rising faster than their incomes and 92 percent feeling rising home prices have made it hard for middle-class Canadians to buy their first home.
Rapidly rising prices are regional problems.
“A key issue behind home unaffordability is housing prices, especially in the nation’s largest urban centres, have increased rapidly over the last decade, outpacing the rate of inflation and local wage growth,” says Graham. “For example, the average price of Toronto homes hit $843,115 in September 2019, well out of reach for a household earning the median income of $78,373 in the region.”
Canadians still believe homeownership is an important milestone, with 31 percent of respondents believing people should own a home by the time they are between 31 and 35 years old, while 29 percent feel this goal should be accomplished as early as 26 to 30 years old.
There is one group benefitting from rising home prices — those who have owned for some time.
“A total of 69 percent of respondents who identify as homeowners agree that owning a home has been effective in helping them build wealth,” says Graham. “However, the responses reveal a high level of anxiety still persists among this group. A total of 54 percent of these respondents say their housing costs have increased faster than their income since they purchased their home.
“Perhaps more telling is that more than half feel that they greatly benefitted from the timing of their purchase — 66 percent said they felt they may not be able to afford the home they currently live in if they had to buy it in today’s market conditions.”
The uncertainty in housing markets in the country comes at a cost not included in the purchase price.
“The high cost of housing has an impact on Canadians beyond their wallets and the resulting financial stress has affected their mental health, especially among renters,” says Graham. “A total of 76 percent of those who identified as renters said rising home costs have negatively impacted their mental health at least once, compared to 50 percent of homeowners.
“However, all groups of respondents appear to be stressed by their finances to a large extent, with 75 percent of homeowners and 86 percent of renters saying they were their biggest source of stress at least once over the last 12 months.”
With almost four in five respondents looking to the feds to address housing issues, they would be wise to pay attention, says Ian Martin, director of Industry Development & Partnerships for REW.ca, a Canadian online real estate marketplace and information hub.
“It will be key for the Liberals to address the needs of home buyers and sellers especially, but also take into consideration how this will affect developments and the real estate service industry,” says Martin. “The mortgage stress test provided some relief in terms of home prices, but it has also, in effect, created stress for many first-time and uninsured home buyers. By re-introducing the 30-year amortization period for uninsured buyers, mortgage payments may be reduced and the housing market will, in some cases, open back up for a segment of the population that is being pushed out.”
“That said, when it comes to stress test relief, this is still unknown. At this very moment, the government needs to provide Canadians a real commitment to providing solutions that address concerns about affordability.”
The problem with governments at any level meddling in housing matters is bureaucratic malaise, which is when efforts to keep an organization running crowd out the work the organization was formed to support in the first place.
More consultations with the industry are required and another requirement is bureaucrats must listen.
Experts from the industry are available and more than willing to sit down and help design and define programs that effectively address the issues, which vary, market by market.
Toronto and Vancouver need regulations lifted to increase housing supply to tame the costs, not regulations that prevent well-qualified people from getting mortgages.