Why we wrote this report
It's not news that the cost of buying a home in many parts of Canada is a struggle for younger people.
But with a federal election on the horizon, now is an important time to remind those vying to form the future Government of Canada that despite nominal declines in some housing markets over the past few years, the challenge of housing affordability remains large.
Really large. Average home prices in Canada are more than double what is affordable* for younger Canadians, according to research we just released that illustrates the state of housing affordability in every province and major cities within them. In places like Vancouver and Toronto, prices are four and three times more expensive (respectively) than what a typical 25 to 34-year-old can safely pay.
For a breakdown of affordability findings by province and major city, read Straddling the Gap: A troubling portrait of home prices, earnings and affordability for younger Canadians
Instead of throwing our hands up to a runaway market, Gen Squeeze has simultaneously released a set of smart, common-sense recommendations for tackling housing affordability. There is a path through this challenge if there's political will.
We and other experts are calling on all federal parties to adopt these recommendations in advance of a fall federal election, to demonstrate each party’s commitment to taking meaningful action on housing affordability. [Learn more about the 4 housing commitments we want each party to adopt as part of their election platforms.]
*Affordability means Canadians do not spend more than 30% of their pre-tax earnings on housing, according to the CMHC
Straddling the Gap: A troubling portrait of home prices, earnings and affordability for younger Canadians shows that Canadians between the ages of 25 and 34 continue to straddle a massive gap between housing prices that remain at near-historic levels in key parts of the country, and average earnings for this age group that have been relatively flat, if not down, for several decades. Data in this report show that:
- Average home prices in Canada would need to fall $223,000 – about half of the current value – for someone aged 25-34 to be able to afford an 80% mortgage.
- Alternatively, typical full-time earnings for this age group would need to increase to $93,400/year – nearly double current levels.
- It now takes a typical young person 13 years to save a 20% down payment on an averaged priced home in Canada, compared to the five years it took when today’s aging population started out as young adults around 1976.
Unsurprisingly, the study shows the housing affordability gap for younger Canadians is most severe in British Columbia and Ontario – particularly in metropolitan hubs like Vancouver and Toronto, where housing prices are four and three times more expensive than what a typical younger buyer can afford. However, the study also shows that problems extend to places like Victoria, Kelowna, Hamilton and Kitchener, as well as Edmonton, Calgary, Montreal and Halifax.
How you can use this report
We've had a lot of discussions at Gen Squeeze lately about the risks of reminding people how tough things are. But we decided to do it anyways, because highlighting the problem creates an opportunity to point out the solutions that must follow. And that's where you come in.
Our Homes First petition calls on politicians to take urgent action to ensure housing is treated as a place to call home – not a way to get rich – for all Canadians. If you're with us on this one, sign it, share it and help spread the word.