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Parliament Hill in the summer

Opinion: How to bridge the housing affordability gap for a generation without a home

Over the next few days, the new federal cabinet will gather in P.E.I. for their summer retreat. This is their first opportunity to get together and set priorities ahead of the return to Parliament in mid-September.

As they work to address the pressing issues of “making life more affordable” and “building more housing,” we ask that they keep front of mind how their decisions will impact an entire generation of Canadians and their dream of homeownership.  

The demographics of Canadians impacted by the rising cost of housing have shifted recently. It now includes young middle-class professionals and young dual-income families living and working in urban centres. These are groups that in previous generations would be buying their first home but are now unable to do so.

It is not that the dream of homeownership is just further down the line, but that it feels completely unattainable.  

A growing sense of hopelessness

Talking to peers in Vancouver, Calgary, Toronto and Ottawa, there is a shared sense of hopelessness in seeing a path to owning a home. It is a national issue where there is opportunity for the federal government to take a leading and convening role. It is encouraging to see a new housing minister in Sean Fraser and a renewed focus on addressing housing affordability. 

Urban millennials are a key voter demographic that the Liberals have looked to over the past eight years and undoubtedly will in the next election. The current state of disillusionment and apathy within this group is palpable when it comes to housing affordability.

These sentiments can have the power to keep voters home on election day or even drive some to a populist alternative.  

Whether it is record-high home prices leading to an insurmountable down payment or two additional interest hikes this summer further increasing mortgage costs, housing has not been this expensive in recent memory. Higher mortgage costs have been a key contributor to Canada’s stubborn inflation, with an increase from June’s 2.8% to 3.3% in July.  

At the same time, rents are up significantly, eating into potential savings for a first home. The average monthly rent for a one-bedroom in Toronto is now more than $2,600 a month, up over 11% from last year. Vancouver is averaging $3,000. Even in Calgary, which traditionally has been immune to the high housing costs, one-bedroom rent is now at $1,800 a month, up 18% year-over-year.  

Market conditions as they are mean that unless you have wealthy parents or an inheritance to help with a down payment, there is little hope of getting into a home, townhouse or even a one-bedroom condo.

Potential solutions

So, what can be done? One possible measure is a commitment from the most recent Liberal election platform, which is also supported by their opposition across the floor.  

The federal government could increase the insured mortgage cut-off from $1 million to $1.25 million, and index it to inflation to better reflect today’s housing prices.

Why is this relevant? The average price of a home in the country’s largest centres, both in Greater Vancouver and Toronto, is now over $1.1 million. Any home over $1 million does not qualify for mortgage insurance and therefore requires a 20% down payment. Enacting this platform commitment would help more first-time homebuyers to afford a down payment.  

In recent public opinion polling from Abacus Data measuring the top three issues facing Canadians, housing affordability and accessibility ranked third, ahead of the economy, and following only the rising cost of living and healthcare.

The government has the opportunity to reflect an understanding of the pressure the current market and economic conditions are putting on young Canadians hoping to buy a home someday and establish their lives.

Policies and messaging can benefit from empathizing with those millennials feeling this in their everyday lives.