When faced with something stressful or frightening, the human body tends to react with the “fight-or-flight response.” COVID-19 has produced any number of threats, but for millions of Canadians, that physiological reaction is being triggered by a more unusual source of late: home ownership.
Our national obsession with buying, owning and renovating our homes has become an existential threat to the futures of millions of young Canadians. As prices continue to soar out of reach, those who want to buy are being forced to take on ever-larger debts, and sacrifice ever-increasing portions of their paycheques and budgets, to make the housing math work. And that math is diverting time and money away from other parts of their lives — and other aspects of their futures.
And now, thanks to the combination of billions of dollars in federal stimulus funds, ultra-low interest rates designed to shore up the economy and stimulate activity, and the growing ability to work from home, they’re soaring higher than ever. According to a recent report from TD, the average home price in Canada is up 32 per cent from a year ago, and neither governments nor central bankers sound like they’re about to cool it down any time soon.
If you happen to have the good fortune of owning a home, this unexpected housing boom that’s sweeping the nation has been a gift from above. But for the millions of Canadians who don’t own real estate, this is another major setback.
As a result, some are taking flight to less populated cities and regions, either to afford a bigger home or simply afford one at all. Between July 2019 and July 2020, Statistics Canada reported that 50,000 people left Toronto and more than 24,000 hit the exits in Montreal. But that has only served to pour that housing market jet fuel into once-sedate communities like Merritt, B.C., and Tillsonburg, Ont., where prices are up 40 per cent this year alone.
Now, it seems, some young Canadians are ready to fight. In Toronto and Ottawa (two of the frothiest markets in the country), a group of Redditors are using the proceeds of a GoFundMe campaign to put up a pair of cheeky billboard ads to draw attention to the situation. In Ottawa, their billboard will say “Homes Aren’t For You. They’re For the Rich. You Can Rent,” while in Toronto it will read “Can’t Afford a Home? Have You Tried Finding Richer Parents?” As 33-year-old corporate strategy executive and Redditor Greg Murray told Bloomberg: “We’ll be the generation that can never retire because of housing prices. The barrier to entry has never been higher.”
Ironically, the federal government’s efforts to help people like Murray overcome that barrier are only making it higher for others. Take the First-Time Homebuyer incentive, which was introduced in 2019 and expanded earlier this month to further assist buyers in markets like Vancouver, Victoria and Toronto. Under this program, the federal government kicks in between five and 10 per cent of a first-time buyer’s down payment, and then shares in the upside from any capital appreciation. This program and others like it help individual Canadians buy homes, but they also feed the very problem they’re designed to address, as more demand begets higher prices in the absence of more supply.
That supply isn’t coming any time soon. In cities across Canada, from Vancouver to Halifax, adding supply has become the political equivalent of hand-to-hand combat. Every attempt to increase density in so-called “mature” neighbourhoods seems to run into the same fierce resistance from existing residents. Never mind that additional density is good for the climate (by reducing commute times), good for taxpayers (by reducing costly sprawl) and good for existing schools, churches and businesses (by increasing the number of people who can use them). Those arguments seem lost on those who would prefer to keep new residents out of their proverbial backyards.
There’s a certain poetry in these mature neighbourhoods behaving so immaturely, and it’s surely a tempting target for the young Canadians who are looking for a fight on this front. But a better target for their frustration might be the very idea of home ownership itself, and the exalted status it enjoys in Canadian society. This is the soil in which NIMBYism grows most prolifically, and it’s routinely fertilized by the bankers, realtors and other key participants in Canada’s residential-industrial complex.
How could people take the fight to our shared obsession with real estate, one that has resulted in some of the highest home-ownership rates in the developed world? First and foremost, we have to start demanding more and better alternatives. Co-operative housing, purpose-built rentals and other options that offer security of tenure and more predictable costs need to be pursued far more aggressively by all levels of government.
That security of tenure is the real prize here, one that millions of people in western Europe take for granted. It allows them to save for something other than the roof over their heads, enables them to move around as their professional and personal needs evolve, and helps them plan for retirements that don’t revolve so crucially around the fate of a leveraged bet on a single asset.
The odds of our elected officials deliberately taking action that reduces house prices are just marginally better than the ones of them voting themselves out of office. But the odds of them supporting the development of new alternatives are far better, especially if they don’t appear to crowd out the interests of existing homeowners (and voters). And for a federal government that has made supporting and expanding the middle class one of its key priorities, this should be an easy path to take.
Giving up on a dream that’s been spoon-fed to Canadians for decades won’t be easy. As someone who just bought a house (in Calgary, mind you), I get the appeal. But some dreams are meant to die — especially when fulfilling them can kill so many other ones.
Comments
It seems like reform of the real estate industry needs to be part of this conversation. Why do we still accept that only the real estate industry have access to home purchase price information? Why are sales made by silent bid? This industry has been allowed to orchestrate the process of home sale to benefit realtors rather than home owners. Realtors could now easily be replaced by a data bank, empowering people to buy and sell homes without paying a third party and without the processes that artificially inflate prices. It's tricky because everyone in government falls into the home owner category of people who are understandably pleased with the way things are going and less likely to see a problem.
The corruption has taken over the minds and hearts of people who once enjoyed community. We gave it up for assets. Hoping we shall become wise rather than too rich.
Excellent article about how greed has created market failure for many who cannot find housing that is even close to needs and income. One small caution: all increased density is not necessarily helpful or environmentally sustainable. First of all, there are many ways to achieve higher density. Corporate developers and land speculators, for example, often choose large bulky towers that overwhelm not only the building site but also drive up the land costs in the surrounding community. This in my experience as a community activists can often lead to higher housing costs but also a net loss in the most affordable housing, particularly rental in a given area. In short. density in itself is not inherently good. It's benefit has a lot to do with how it is achieved, particularly if we have both price and environmental impacts. Done poorly and in order to maximize profits, high density development can overwhelm the community, it's resources, it's livability and its environment, in the end making impossible to build co-op, non-market, and rental housing that meets the needs of the all who live in the community. The solution is a wiser density that is lower in height so as can be built with wood, as opposed to environmentally disastrous concrete. Municipal zoning is another way to attempt to solve the housing crisis. Areas of a city, such as Vancouver, can be zoned strictly for rental, or non-market housing. In addition, when zoning is change in order to increase density, existing housing, such as rental, needs to be protected in order to undermine eviction and displacement, which, again, will often lead to a net loss of the most "affordable" housing in a neighbourhood. My community activism around housing goes back to 1980 and I have seen that happen over and over again, particularly in Vancouver's Downtown Eastside. Any progress in the housing crisis also hinges convincing people that publicly funded housing is not only essential but something that has worked well elsewhere. So far the Trudeau government has neither developed a national housing strategy, nor provided federal funds to build a range of non-profit housing models. We must put the housing issue and the "market failure" and housing crisis it has brought to so many squarely on all political agendas. In addition we need to see the destruction of the natural environment and the urban environment as the result of corporate greed. And finally, we need to talk about how to talk about density. In the words or Jan Gehl, world renowned architect and urban planner, "The tower is a lazy architectural solution for density." He also cautions that we must make the distinction between "senseless density" and "sensible density". If you live in either Vancouver or Toronto, the difference should be self-evident. Thanks again for the fine article on such an important issue. Cheers
All that said, there is a certain egregious misbalance with the simple geometry that in the city of Vancouver 80% of all residential land houses just 30% of all residents. That is the very definition of exclusionary zoning which has preserved detached house / large lot sprawl for generations, irrespective of pipsqueak intrusions like laneway houses.
The inverse is true regarding high density tower communities, which consume a fraction of the per capita energy and produce a fraction of the per capita emissions as sprawling car-dependent subdivisions and malls over the operating life of the towers, even when built with concrete. This was overlooked in your commentary on towers, which, incidentally, can be made from reduced-emission concrete (I have worked with materials engineers on such projects). One day Portland cement kilns will use induction and renewable electricity. This means the environmental focus isn't on towers or concrete, but about changing the processes to create a low emission concrete. Concrete will always be a very useful and necessary building material.
Meanwhile, Vancouver has experienced an average demographic growth rate of 13% over the last 10 years despite extraordinarily high housing prices. That's 81,000 more people requiring on average more than 36,000 additional homes. Obviously, they weren't built on the 80%, which the majority of councillors until recently wouldn't dare touch out of fear of an electoral backlash, specifically from the Creme neighbourhoods. There are signs this is changing in denser, low rise communities like Kitsilano, specifically around dedicated mid-rise rental projects on arterials. That can only be a good thing.
Unfortunately many existing homeowners (here in Vancouver at least) also oppose building these types of housing options as well. Seems like the major issue is not tenure type but the refusal of the haves to share space. While you may have a point, rentals and coops are not a solution either if they can’t be built anywhere.
PS I’m also a home (not house) owner.
It was the capricious enforcement of tenancy law in BC that drove me out to an area with abandoned houses I could afford to buy. Now, I can renovate for efficiency without being evicted, but the volatile market makes moving very difficult. I think the housing mess is an inevitable result of allowing extreme economic equality, and band-aids will never be enough if that continues.
I find the expression “real estate market” objectionable. Land is a public resource and should not be privately owned (our government no longer sells waterfront). As land increases in value, all or most of the increase should become a state asset and any purchaser would only have to pay for the improvements (house etc).
One problem is that our main alternative model, renting from small or in some cases large corporate landlords, is pretty badly broken as well. People don't like renting because the rent can rise unpredictably, they can be renovicted, all that stuff. Renting is precarious, not secure; people have reasons to prefer home ownership. If you want to move away from the home ownership model, you're going to have to give people better alternatives. It can be done--in Vienna apparently 44% of the property is owned by the government and rented out cheap, private rental and house prices stay low because of that competition from government social housing, average expenditure on housing is 25% of income, and quality of life is very good. But we need to be aware that it takes big interventions to create better alternatives.