One of the distinguishing features of a high-functioning country is how it invests in the well-being of its future generations. Somewhere along the way Canada strayed from that path, bumped its head, tumbled down a rocky hillside and off a cliff into shark-infested waters.
We do a good job pre- and post-natal with reasonable support for mothers and young families. Daycare has been a bit of a mixed bag between $7/day care in Quebec and programs in Ontario and B.C. that top $1,000/month. Overall we could do better as a country.
After some neglect in the early years, things do pick up again. We are solid through elementary, middle and high school, and still subsidize around two thirds to three quarters of post-secondary tuition—although the average student will still graduate with around $26,000 in student debt that will take a decade to pay off.
Things go downhill rapidly after that.
Between student debt, low-entry wages and an impossibly expensive housing market, younger generations are starting life further underwater than any generation since at least the Great Depression. At the same time the wealthiest generations in human history have been happily racking up record levels of national and provincial debt for future generations to finance, and there’s a massive environmental bill coming due in the next few decades.
A lot of the hardship affecting younger Canadians revolves around housing, with soaring rents and impossible pricing in our fastest-growing cities. Home ownership is a pipedream for millions of new and young Canadians unless they are fortunate enough to inherit something or have the kind of jobs that let them live in the rural communities that are more affordable than the frightening national housing price average of $686,000 (around $900,000 in Ontario and B.C.).
According to the Canadian Real Estate Association, the average home price has increased 375 per cent in just two decades (almost 490 per cent for Vancouver) while wages have been mostly stagnant relative to inflation.
Assuming you can actually find a decent house somewhere for the “average” price, that’s a lot of money—a $34,000 minimum down payment, almost $3,000 in monthly mortgage payments for the next 25 years, plus all the strata fees, insurance premiums, property taxes, and other expenses that go with home ownership. That’s a stretch for the average after-tax family income of $93,800. A lot of families are paying close to half their wages for housing instead of the recommended one third.
Political parties gave some lip service to the housing crisis during the election, but none of them presented anything resembling a comprehensive plan to address all of the issues we know are affecting prices—which is disappointing because this situation has been worsening since the ‘90s.
A plan to make housing affordable would account for everything, including:
Urbanization, increased immigration and demographic shifts that are putting more demand on housing markets than ever before. Toronto and Vancouver are adding tens of thousands of housing units every year and still can’t keep up. Slowing the population growth a little could help until 8 million baby boomers start to sell their homes or buy the farm.
We haven’t been good at tracking foreign ownership of homes, but both the Liberals and Conservatives are in favour of temporary bans. Data shows that it should have at least a small effect, with foreign buyers accounting for three to six per cent of home sales in major markets.
Low interest rates have encouraged people to bite off more than they can chew, while also increasing speculation. The idea of a tax on flipped homes has been raised but nothing has come of it so far. Meanwhile hedge funds and corporations are also getting into the housing game in a big way, investing billions of dollars a year to price out other prospective buyers. Interest rate increases planned 2022 could put a small damper on speculation but will also cause hardship for people who can already barely afford their homes.
The high cost of new housing also isn’t helping matters. Even before COVID-19-related shortages, the cost of land, construction materials, equipment and labour was increasing. The result is that new condos in some of the pricier Vancouver neighbourhoods are starting at around $1,000 per square foot (which explains the need to sell to wealthy foreign buyers). Temporarily reducing demand should reduce the cost of building new homes, but that approach isn’t an easy sell because:
Real estate has become Canada’s largest industry, accounting for around $260 billion of our Gross Domestic Product, while home construction is fourth at $145 billion. Nobody wants to mess with close to $400 billion of economic activity.
Whistler’s alternative housing market is the exception, and an example that every major city in Canada should be copying right now. The fact that they aren’t is just another way that older generations are letting younger Canadians down.
