Locked Out: The Crisis of Unaffordable Housing for Young Canadians
We’re Locked Out! As the dream of finding affordable housing increasingly slips out of reach for young people across Canada, a scathing crisis has unfolded, casting a dark shadow on their aspirations for stability and independence. Rising prices and limited availability are painting a grim picture as a generation finds itself locked out of the housing market. It is important to note that this crisis goes far beyond the realm of personal finances as it stifles the ability of young Canadians to plan for their future, invest in their careers, and contribute to their communities. The stark reality is that affordable housing, a symbol of stability and a cornerstone of financial security, has become an elusive dream for many who are in search of it. In this editorial piece, QBR Editor, Evan Marriott, looks to highlight the various factors fueling the housing crisis, its far-reaching consequences on the lives of young individuals, and explore potential avenues to weather the storm and pave the way toward a more accessible and equitable housing landscape for future generations of Canadians.
The Crisis
At the moment of writing this article, my peers and I are on the cusp of our final year undergraduate studies, poised to embark on the next phase of our life’s journey. It is a juncture that demands our attention, as we become aware of a reality beyond lecture halls and the lively atmosphere of house parties. As we stand on the edge of this new chapter, we cannot help but acknowledge the wave of emotions that washes over us, including one significant concern that is at the core of our ambitions post-graduation; the daunting task of finding affordable housing. Fundamentally, this task is becoming an ever more formidable challenge for young Canadians as the combination of skyrocketing prices, limited supply, and the growing disparity between income and affordability increases the barriers to securing affordable and stable housing. Yet, numerous individuals—particularly students who have yet to embark on their quest for homeowner/rentership—often underestimate the gravity of this crisis along with the profound implications it will have on our lives post-graduation. Fundamentally, this is no fault of our own; we are products of a system that has failed to address this pressing issue. I myself am included in this circle and to be quite frank, I did not realize how valuable it would be to study this topic for myself and my peers until I took the time to delve into it.
After highlighting the importance of understanding this current crisis, it remains vital to look into the statistics in order to paint a picture of what life may look like post-graduation. According to the Canadian Mortgage and Housing Corporation (CMHC), the average price of a home in Canada has reached $716,000, while rental rates for one-bedroom apartments have soared past $2,000/month on average as of April 2023. These figures demonstrate a significant surge compared to the numbers from 2019, where the average home price stood at $495,000 and the average rental rate was $1,360/month, reflecting a 31% rise in home prices and a 32% increase in rental rates within just a few years. These substantial increases not only highlight the growing challenges faced by prospective homeowners but also emphasize the mounting pressure on renters, particularly recent graduates entering the job market. In contrast to the soaring housing costs, income growth has been much slower, with a mere 7% increase during the same period, as reported by Statistics Canada. This staggering disparity of 24% (Figures I & II) between rising home prices and stagnant incomes makes homeownership increasingly unattainable. This said, it remains crucial to realize that this scenario has not always been the case in Canada, as housing costs for older generations was much more in line with the incomes they earned.
Figures I & II
A couple of weeks ago, I sat down with my grandfather for lunch to catch up after my exchange semester earlier this year in France. As we delved into a lengthy conversation about my time abroad, I wanted to seize the opportunity to prepare for my upcoming article by asking him about housing prices when he was a first-time homebuyer in order to gain a first-hand perspective of the evolving landscape in Canada over that time period. His recollections painted a picture of a different era, where housing was much more affordable and accessible for young individuals who were in search of their first home. For perspective, he shared that he purchased his first home for approximately $21,700 in 1970 during the point in his career where his salary was roughly $11,000. Adjusted for inflation, the equivalent cost today would be $176,186, while his salary would have the purchasing power of $84,748. This would mean that his first home was only 1.97 times his annual salary, while today the average home price is 10.47 times higher than the national median salary in 2021 of ~$68,400. Renters face a comparable situation as according to the CMHC, the average price for a one-bedroom apartment in Toronto has surged to $2,425. This staggering figure implies that an individual earning the national average salary would need to allocate almost half of their annual income (49%) to rent expenses. This puts a significant strain on the financial well-being of young individuals who are in the midst of seeking out affordable accommodations, leaving them with limited resources for other essential expenses and hindering their ability to save, invest, and build financial security for their future.
Figure III
The Social Impact
Beyond the financial burden that the current housing crisis has placed on young Canadians, it has also unleashed a cascade of social ramifications that experts predict will have lasting effects for years to come. These social consequences encompass a broad range of areas, including homelessness, mental health, employment prospects, and overall well-being. The topic of homelessness in particular is at the forefront of this current crisis as the lack of affordable housing options, skyrocketing rent prices, and insufficient social housing programs have left many individuals and families without a stable place to call home. Homelessness not only disrupts the lives of those directly affected, but also has far-reaching implications for communities and society as a whole. Homelessness leads to increased vulnerability, physical and mental health challenges, and limited access to basic necessities. It also perpetuates a cycle of poverty, as individuals struggling with homelessness, or in this case the ability to secure affordable housing, often face barriers to employment and educational opportunities. This is coupled with the strain it places on social systems, such as shelters, social security, and healthcare. For example, according to Health Canada, homeless individuals are more likely to suffer from respiratory illnesses, infections, mental health crises, and chronic diseases that require ongoing medical care. Treating these conditions is often complex and costly, as homeless individuals face challenges in adhering to treatment plans, accessing follow-up care, and obtaining necessary medications. Additionally, through no fault of their own, the influx of homeless people seeking treatment for preventable ailments inhibits the ability of others to access care, leading to a domino effect and the need for increased funding for public health care. The Canadian Government recently announced an additional $3 billion to combat homelessness across the country, yet one could argue that this additional funding would not be as large in magnitude if we chose to address one of the fundamental issues at hand, affordable housing.
In addition to the surge in homelessness across the country, the prevailing housing crisis has sparked a multitude of consequences that have impeded our generation's capacity to excel in academic studies and secure stable employment within our chosen fields. One significant component of this impediment is student debt. According to Statistics Canada, the average student owes approximately $28,000 in student loan debt upon graduation, excluding any debt accumulated from daily lifestyle expenses, such as food, housing, and textbooks. This ever-growing debt burden, coupled with the high costs of housing, leaves many young individuals with limited financial resources to invest in further education, such as pursuing advanced degrees or vocational training that could enhance their employability. This situation is particularly pronounced in major cities, which, based on primary research through my peers, are the preferred locations for beginning their careers upon graduation. A report published by RBC Economics at the end of 2022 highlighted that housing affordability for young Canadians in Vancouver stood at a staggering 98.1% of their pre-tax income, while in Toronto it sat at 85.9% (Figures IV & V). These statistics underscore the formidable financial challenges that myself and my peers are likely to encounter, which will extend beyond our educational and career ambitions to impact various other milestones in life. The implications of this crisis can significantly influence other key life events, such as the timing of marriage, starting a family, and the ability to save for our retirement. These daunting financial obstacles will most definitely create uncertainty and hinder our ability to plan for the future with confidence if not addressed with adequate solutions.
Figures IV & V
The Future
So, the question remains, are we locked out? Well, there is not really a simple answer to that question; however, it is evident that something needs to change.
Addressing Canada’s housing crisis will require a comprehensive and multi-faceted approach that tackles the root cause of the problem and provides solutions that are not only attainable, but sustainable, and address the long-term issues. One fundamental aspect of resolving the crisis will be to increase the supply of affordable housing. This can be accomplished through various means, such as government investment, providing financial incentives to developers to include affordable housing in their projects, and streamlining regulatory processes to facilitate development across the country through the elimination of red-tape. Both Federal and Provincial Governments have begun to roll out initiatives to act on these points, such as the Federal Government's $82 billion National Housing Strategy and the Ontario Government’s commitment to build 1.5 million new homes over the next 10 years.
Similar effort will also need to be committed toward the rental market, given its particular importance to young Canadians. Stronger tenant protection laws can safeguard renters from unfair practices and excessive rent hikes. Rent control measures can help stabilize rent prices, allowing individuals and families to better plan their finances for the future. Additionally, providing targeted rent subsidies, expanding affordable rental housing programs, and incentivizing developers to include affordable rental units in their developments can support low-income and younger individuals in accessing suitable housing.
In conclusion, Canada's housing crisis is exerting profound and far-reaching impacts on the younger generation, affecting their education, employment prospects, and overall well-being. The soaring housing prices, coupled with limited affordable housing options, have created financial barriers that hinder young individuals from pursuing higher education, obtaining stable employment, and achieving important milestones in their lives. The crisis has also contributed to increased homelessness and exacerbated social inequalities. Urgent action is needed to address this crisis comprehensively, including measures to increase affordable housing supply, improve rental market conditions, address homelessness, and facilitate homeownership. By working collectively with private companies and all levels of government on these solutions, we can create a more equitable and accessible housing system, providing young people with the opportunities they need to thrive, contribute to society, and secure a brighter future for themselves and the generations to come.