No wonder affordability is a big issue in this federal election.
Millennials—Canada’s largest generation and group of voters—are facing a predicament no other generation has faced in the country’s biggest cities: they may never be able to own a home. And if they do take the plunge, staying afloat financially can be all-consuming on a scale that Baby Boomers and Gen-Xers never experienced.
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The costs of owning an average home in the Vancouver area at today’s prices would take nearly 80% of a typical household’s income. In the Toronto area, it’s more than 66%. Both are near never-before-seen levels and out of reach for most families, let alone millennials who haven’t yet reached their prime earning years. Even a condo (the cheapest ownership option) is a stretch.
Even a condo (the cheapest ownership option) is a stretch.
Affordability issues don’t rank as high on the list of concerns for millennials in other parts of the country. But that’s starting to change. Buyers in Montreal and Ottawa—Canada’s two hottest markets at present—are feeling it more and more. Part of millennials’ frustration (desperation?) is the lack of improvement in the situation over the past couple of years.
A sharp market correction in Vancouver and Toronto had stirred hopes that material relief was coming. In the end, the correction reversed only a small part of the earlier ballooning in home-ownership costs. Worse, any positive impact on entry-level properties—the types that first-time-buyer millennials are eyeing—has been minimal. In fact, Toronto’s condo prices rose right through the broader housing correction.
As the housing market looks set to regain some altitude, aspiring home buyers could be forgiven for remaining grim about their prospects. Some form of help may be on the way after October 21. Whether it brings lasting relief is another question.
Robert Hogue is a member of the Macroeconomic and Regional Analysis Group, with RBC Economics. He is responsible for providing analysis and forecasts for the Canadian housing market and for the provincial economies. His publications include Housing Trends and Affordability, Provincial Outlook and provincial budget commentaries.
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