How will we ever afford to own a home?
The former CEO of CMHC (Canada Mortgage and Housing Corporation), in a CTV interview with Canada’s premiere interviewer Evan Solomon last Sunday, was straight forward and blunt: Don’t wait for this housing bubble to burst. It won’t.
In fact, we are in a serious crisis of supply and demand, he said. Governments have kept addressing the demand side, with interest rates, mortgage policies, stress tests, etc. But the real problem is the shortage of housing in Canada. We need more supply (and that’s not a quick fix)!
Okay, in plain language, don’t expect the prices to come back down any time soon—probably never!
It affirms my own thinking on the matter.
So, what’s a family to do? In the Lower Mainland, you now need an income of about $100,000 to qualify even for a small condo in an apartment building. That might work for young single professionals, couples with dual incomes and no children, or, at the other end of the spectrum, those who no longer have kids at home.
It won’t work for anyone on an average, or lower income. And how is one to raise a family in such a setting?
The answer is not complex; in fact, it’s pretty simple.
We need to adapt our thinking. The only way most of us will be able to enjoy the dream of ownership is to get back to the good old concept of sharing.
In North America, for the past five decades, or so, the trend has been to have fewer and fewer people per household. We all want our personal space. It contrasts with what we find in many other cultures that are, apparently, less individualistic.
For one, younger people in the early stages of their careers may need to team up with others in similar situations, making joint purchases, and sharing, at least for a time. When it comes to qualifying for a mortgage, the incomes of multiple parties are simply added together. Two incomes of similar size can qualify for double the mortgage. It may be a stepping stone to eventual individual ownership.
Second, we may need to abandon the expectation that families need single-family homes to raise their children. We’ll need to find ways to raise families in ever shrinking privately owned spaces, in townhomes and condos.
In exchange for the decreasing size of our private spaces we’ll share with other families the amenities around those spaces.
It’s already happening. At the municipal level there’s an increase in parks, playgrounds, cultural provisions and other amenities in residential neighbourhoods. At the development level, multi-unit dwellings are being built with an ever-increasing number of shared amenities within their structures.
Third, we may need to be more open to multi-generational living arrangements. This is more common in some cultures than in the dominant North American culture. Homes with suites, where Grandpa and Grandma share the property with the children and grandchildren will become more normal. The trend is growing; it will likely accelerate.
Fourth, we’ll need to get back to the concept of co-op housing that used to be more prevalent. This could be a good fit for those who face singleness later in life. Shared living in larger homes in older neighbourhoods, for example, seems like a good way not only to meet the goals of ownership in an ever more challenging housing environment, but also to provide companionship for those singles, plus the freedom to travel (as so many of them are prone to do) without worrying about their possession while away.
Fifth, we may have to give up our aspiration for handy access to the urban core and move further afield, instead. One of the great problems in the Lower Mainland is the attractiveness of living here yet the confined space, framed by mountains and ocean, within which we must settle, to do so. This has the double-edged sword of keeping wages low and pushing housing prices up.
Increasingly, people are exiting the urban core, for example, to the interior, where housing prices are lower. They’re finding that they can adapt to, and even appreciate, the more laid-back lifestyle that such a transition affords.
Bottom line: if we can’t anticipate housing prices backing down to meet our expectations, then we need to change our expectations.
At least, that’s how I see it . . .