Canada is at risk of a sharp correction in the housing market, according to a Canada housing agency. Prices have continued to increase for years and millions of Canadians are struggling with affordability, increasing numbers are giving up on the dream of owning a home one day. The price is out of reach for many, even for those with careers and 2 full time working partners contributing.
But as the affordability in housing worsens the calls for government representatives to do something about it increases. But what is there to do? They need to juggle trying to approach different policies that might help to slow down the price, or reverse it some, without driving it too much lower which might negatively impact economic recovery and current home owners. Home affordability has become an issue in cities all over the world, it isn’t something specific to Vancouver.
Addressing Affordable Housing in Canada
Various policies have been tried to address the issue of housing affordability in Vancouver and other regions. Some of those actions have been empty home taxes or minimum down payment rules for housing, other ideas that have been floated include a temporary ban on foreign home buying as well. There are also various plans to build more affordable housing throughout the country although it is unclear how those homes will end up in the hands of end users who need them the most, that process isn’t transparent.
Prices around Canada for housing continue to be drastically detached from labor incomes.
The average earners in Vancouver and elsewhere in Canada aren’t making enough money to support these prices and to be buyers in this real estate market. One previous study suggested that in Vancouver you would need an income of roughly $127k or more to afford a condo, or more than $230k to afford a semi-detached home. The average income is far below that and so this situation is unsustainable and will only get worse if it isn’t addressed.
Housing affordability is one of the biggest issues for Canadians right now and a growing number of Canadians are giving up on the dream of owning a home because of the unaffordable options in the housing market. It is estimated that some 36% of young Canadian adults have given up on that idea of owning a home eventually, they won’t be able to come up with the down payment that’s necessary.
For those Canadians who have been able to buy a home or condo for themselves it is because, for a significant portion of them, they had their parents help them to do it. Those home buyers needed parental help because they weren’t earning high enough incomes to afford it on their own or didn’t have the credit or down payment available.
36% getting help from parents to buy a home
One previous report on the issue of affordable housing in Canada suggests that as many as 36% of homebuyers got parental support on the transaction.
For a number of British Columbians who are struggling with affordability in this province they have already made the decision to look elsewhere. There might be new units going up on the market in coming months or years but isn’t clear in any way how that is going to change the situation and prices that we are seeing if it still isn’t enough to meet or surpass demand. It has been said that the Canadian housing market is overvalued for years now, that a correction might be coming or that the bubble might soon pop, but this continues to be the same message we’ve heard for years and we might still continue to hear it without anything significant changing on this front coming about.
Experts have suggested that bad policy has contributed to this problem and for that reason there is also the chance that even more bad policy introduced to try and fix it, could end up making it even worse, especially if there isn’t a clear understanding of how that policy helped create the current situation in the first place.