I’ll Never Be Able To Buy A Home & I’m Not Alone. So, What’s The Government Doing To Help?

Growing up in a middle-class suburb outside of Vancouver, I was incredibly privileged to never really have to think about my family home. A house was just something that was there, it sheltered my Beanie Babies, was plastered in my Zac Efron J-14 posters (well my room was, anyway), and it provided the doorknob I dragged around on a string as my childhood pet (true story). And I expected that when the time came, I would, like my parents before me, buy a home to live in with my (non-doorknob) dog, two kids, and hunky Zac Efron-lookalike husband.

Then, one day, I just knew that I’d never be able to afford a home — or at least one the size of my parents’ and paid for entirely on my own. I don’t know exactly when this shift in perspective happened, Maybe it was the first time I paid rent, which was, at the time, over 50% of my monthly paycheque. Maybe it was reading Toronto Life, where $2-million home purchases were depicted as the norm. Or maybe it was when my then-boyfriend — who was much more financially savvy and financially cynical than me — made it perfectly clear that, despite trying to save as much as we could, we would probably be renters for life. Regardless, as I headed into my late twenties it became obvious that it would be a very, very steep climb towards homeownership, meaning that any potential children I have will have Beanie Baby birthday parties in a condo most likely, and potentially a rented one at that (which is still massively privileged, I know, considering 35% of Canadians can’t pay their rent).

The fact that owning any type of property is unaffordable for 75% of Canadians is the exact reason why in April, Refinery29 Canada launched our How I Bought It feature, under our New Lease series, to capture an accurate picture of the way people get into the housing market.

Because, like discussing salaries or stomach issues, talking about how you managed to buy property is considered incredibly taboo — especially if part or all of that included getting financial help from family. (Which so many of us are: A 2019 Royal Bank of Canada study found that more than 90% of parents surveyed support their adult children via the BOMAD...the Bank of Mom and Dad.)

Since the series launched, we’ve featured millennials with different stories about how they broke into the market — some had eight savings accounts, some lived with parents into their late 30s, some had massive financial help.

And people had thoughts.

Like when we published the story of a Calgary woman whose parents purchased a townhome for herself and her partner. “Anyone can buy a house as long as you do three things. 1. Be financially literate [with] savings accounts since middle school. 2. Move in with your parents as an adult while you work and save full time. 3. Have grandparents put in 6 figures to help. You can get away with only ⅔ but it helps to have them all,” said one user on Twitter.

“What on earth is the point of these articles? The people who have family money are fine and the rest of us are relatively fucked. Why would you want to keep pointing this failure of the system out."

Actually, that is exactly the point of these articles — to illustrate Canada’s affordable housing crisis. 

ICYMI, this year, Canadian cities Vancouver, Toronto, and even Hamilton, ON (yes, Hamilton!) were named the least-affordable housing markets in North America, beating out even New York and L.A. In May, the average Canadian house price had risen 38% year-over-year to $716,000 (after climbing by 6.3% from 2019 and 2020). In the same month, the average price of a home in Toronto hit just over $1.1 million.

With mortgage rules requiring Canadians to put down at least 5% of the purchase price of a home (depending on how much the actual purchase price is; there are all sorts of rules), on a half a million dollar home, for example, that means you need a bare minimum $25,000 downpayment plus closing costs. That's also assuming you can get a mortgage to make up the difference. If all this isn’t enough to make you shook, the average price of a home is more than seven times the average household income. FWIW, the standard measure is that people should spend around four times (or less) their income on a home, so if you’re screaming at this stat, it’s justified. 

It's kind of complex, but there are a few reasons for our current housing bubble. Homes are much more expensive than they were when our parents were buying in the '80s and '90s and not simply due to inflation, but also supply and demand. Especially in popular and large cities, there are more buyers bidding for homes than there are actual homes. (This is due to many factors, including high population growth, and low housing construction, plus record low mortgage rates during the pandemic.)

Canada has the lowest number of housing per 1,000 residents of any G7 country; meaning that, between 2016 and 2020, we needed an extra 100,000 residences to keep the ratio of housing to population equal. Low supply and high demand means sellers can rack up home prices — because they know people will pay (and compete) for limited housing. The rise of properties being bought and used solely as Airbnbs has also had an impact; notching up both housing and rent prices. All this is why a legit decrepit, uninhabitable garage in Toronto sold for $700,000 last March.

What makes the problem so much worse, is that while housing prices have jumped, salaries aren’t following suit. "Local earnings have gone down thousands of dollars once you adjust for inflation. The typical young person, 25 to 34, in the mid 1970s was earning $58,000 a year in today's dollars. Now, the same aged person is earning just barely $50,000,” says Paul Kershaw, an associate professor at UBC’s School of Population and Public Health and the founder of Generation Squeeze, an organization that advocates on behalf of young adults around issues like housing and employment. Let me put this another way. While it may have previously taken someone in the 1970s five years of full-time work to save a 20% downpayment for an average-priced home, according to Kershaw and Gen Squeeze research, now, if you live in Ontario, it would take you 18 years, or in Metro Vancouver, 29 years.

Add to this the fact that over 40% of Canadian millennials are part of the gig economy and are entering the workforce with high student loans and credit card debt, and young people are largely in a precarious financial position. “Home prices have skyrocketed as earnings have flatlined, and that makes housing affordability so much more challenging, especially if ownership is your goal,” says Kershaw.

The pandemic hasn’t made things any easier. As people have sought out more space and a comparatively lower cost of living, moving outside major cities, they also driven up prices there. “If a pandemic-induced global recession is insufficient to actually slow down home prices in this country, then I think it's time for us all to acknowledge that it seems like our housing system is designed, even if unintentionally, to grow home prices faster than local earnings,” Kershaw says. 

For those who did manage to get into the market before the year 2000 and whose home values have been appreciating by hundreds of thousands year-after-year, “it’s friggin' gold,” Kershaw says. Aka a perfect example of the rich getting richer. Or at least, those who are already in a place of more financial security becoming even more secure, at the cost of those of us with little to no financial security. (TBQH a tale as old as time.)

In Canada, home ownership has long been viewed and valued as an investment. Not only when and if buyers choose to sell, which gives financial stability and grows wealth, but even if they don’t sell. Homeowners can even, should they wish, borrow money against their homes and invest (something Kershaw himself has done), ensuring more affluence. (It goes without saying you should speak to your financial advisor before you do this.) It also helps that when you sell your house, you don't pay taxes on the gains if it's your principal residence.

Governments at various levels have taken some small steps to address housing affordability. The City of Vancouver now taxes empty homes owned by foreign buyers and in 2017, the federal Liberal government introduced the National Housing Strategy, which pledged to invest over $70 billion to help Canadians access safe and affordable housing. The strategy includes initiatives like the First-Time Home Buyer Incentive, which offers new buyers 5 to 10% of the home’s purchase price to use towards a downpayment — although, as Maclean's reported last month, the Liberals have been falling short of their plans.

With an upcoming federal election, parties have cranked up their promises. The Liberals 2021 budget doubles down on the goals of the already implemented National Housing Strategy, and the Green Party is proposing the creation of a federal “empty home tax” (along with the Conservatives and Liberals) as well as building 300,000 low-income housing units over the next decade.

Prime Minister Justin Trudeau introduced a plan for additional policies, like building or renovating 1.4 million homes and doubling the home buyers tax credit, which experts say is a start but won’t actually address the fact that home prices keep rising. Meanwhile, the Conservatives plan to build one million affordable homes over three years, and have pledged to convert 15% of federal government property into housing and create an Indigenous housing strategy. The NDP's housing platform is focused on building 500,000 affordable homes over the next 10 years and reintroducing 30-year mortgages for first-timer buyers.

But is any of this enough?

A recent report by Generation Squeeze, in conjunction with the Canada Mortgage and Housing Corporation (CMHC), has outlined ways to make housing more affordable. This includes scaling up co-op and social housing (which will serve people of varying incomes and guarantee more permanent and consistent affordability), encouraging the building and upgrading of homes in locations, form, and price that suit the need of existing residents through government incentives, and breaking this country’s addiction to high-home values. (This includes encouraging Canadians to invest in non-home related ventures and making sure they grow their wealth by cutting taxes elsewhere.) 

Canadians also need to take a look at themselves and stop holding up home ownership as the pinnacle of success and adulthood. "We haven't yet tried to have that harder conversation with Canadians, when we ask ourselves to look into the mirror, especially those of us who are owners and say, 'hey, how are we entangled in these incentives and excited when home prices rise? And how does that reinforce a system that makes it harder for those who follow in our footsteps?'” 

Owning property isn't the only way to go, either. There are plenty of benefits to renting (and for some people, the idea of renting over ever owning is actually a relief). As opposed to being locked into a mortgage and city once you buy, renting affords more flexibility. In addition to this, it’s — in theory — more inexpensive than owning (when you factor in mortgages, taxes, maintenance fees, insurance, and upkeep), and more consistent too. For many people, simply covering our regular living costs is a struggle, let alone saving. Renting allows you to control your costs a bit more than being a homeowner would — you know exactly what's coming out of your account each and every month.

While long-term rental means you can’t hop on the wealth that comes from properties appreciating in value or have a nest egg, it also means that you won’t feel the firsthand sting of depreciation or market ups-and-downs. Experts recommend that those who rent look to investment as another avenue of generating wealth, taking that money you may save from household expenses and putting them in an RRSP or TFSA, for example, even if it's a little every month.

Despite homeownership being established as a social norm in Canada, the reality is that renting is becoming — for many — the only feasible option, and even a desirable one. “Given the large gap between home prices and earnings, more and more people, especially younger people and newcomers to our country, are going to have to think about how do they make a home as renters for longer periods of their lives, if not indefinitely,” Kershaw says. 

Some millennials are also dreaming up new and unique ways to break into the market, like buying homes with friends. If you can afford $15 to $20k of a downpayment, partnering up with someone to purchase together can be a viable option (realtors are even starting to connect people with similarly-minded people in their network). The idea being that you eventually sell, and use that split equity to go on and buy on your own property alone.

(FYI, experts strongly advise legally protecting yourself, because we all know things can go sour with a BFF — or someone you meet via a FB group). This is a method Monique Johnson, a GTA-based real-estate agent, used to get into the market 10 years ago and recommends for some of her younger clients. “It's going to be scary. I was scared, but you’ve just got to feel the fear and still hold the emotion because this market is not waiting for anybody.”

I’m not sure when, or if, I’ll ever be able to buy property on my own. And this uncertainty — and the need to unlearn some seriously privileged expectations and feelings of worth I have around home ownership — is probably the reason I want to scream at my phone anytime I get a text from a condo realtor who somehow scored my number, asking if I’ve changed my mind about buying. (No Adam, nothing’s changed since you texted me three weeks ago!)

While I’m not quite ready to put out feelers to see if any of my BFFs wanna buy together just yet, it’s helpful to know that there are options out there — and that includes continuing to rent. For now, I’ll be keeping an eye on the housing market...and blocking any calls from Adam.