With no relief in sight for house prices, is it time to rethink home ownership?

Some say the solution to housing affordability is a change in attitude

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Lana and Dwayne Bragonier bought their home in Mississauga, Ontario 30 years ago for just under $300,000.

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At the time, they felt like the last of their friends to become landlords. The couple saved for the purchase by living in an apartment with their three children.

Today, the Bragonier house is worth between 1.5 and 1.7 million dollars.

Thirty years later, Dwayne says they’d probably be able to make it work if they were to buy their house these days. But that would be a challenge.

“We would definitely struggle,” he says. “We’ve been short of money for quite a long time. [back then]. I learned to darn (knit) my own socks.

Skyrocketing values

The Bragoniers are one of many Canadian families who would struggle to afford their own home at today’s prices – or find themselves completely unaffordable.

In February, the average home price in Canada was $816,720, 20% higher than the previous year, according to the Canadian Real Estate Association.

In the Greater Toronto Area, prices have risen 35% over the same period, with the average price now standing at $1.34 million.

A new generation of co-owners

Greg DeCaire, a production administrator in Toronto, was approaching his thirties and decided it was time to have his own space.

He started his search last year, knowing he wanted to live downtown. He ended up getting a co-owned studio in west Toronto.

DeCaire felt that these condos, especially in the era of remote work, weren’t as sought after as traditional homes.

“I also thought about that when things reopened, hopefully the demand for anything in the city increases,” says DeCaire. “So if I had to choose to rent this place or sell it in five years, it might be worth more.”

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That’s not to say it was an easy find. He bids 30 units before he finds his current space. Another studio in particular ended up costing $710,000.

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But what about young people like DeCaire who weren’t ready or able to buy before the last wave?

Unlike the Bragoniers — who were also 30 when they bought their home in Mississauga — DeCaire says the vast majority of his friends haven’t bought a house yet.

“A lot of people find that they can’t ‘avoid’ market increases,” DeCaire says.

Environment vs affordable housing?

Frank Clayton, senior researcher at Ryerson University’s Center for Urban Research and Land Use Planning in Toronto, says the problem isn’t exactly a shortage of available housing. The biggest problem is the type of housing Canadians want.

Most first-time buyers like DeCaire don’t mind buying an apartment or condo for their first spot. But Clayton says that in general, once people have added a dog or child to their family, they’ll want what he calls “ground-tied housing” – a single-family home or a townhouse.

The problem with that is space. The amount of space needed to meet demand for single-detached homes is nearly impossible to find, Clayton says. This problem is amplified in the Greater Toronto and Hamilton Area

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“And the bottom line is that the demand is going to continue to be strong,” says Clayton.

The only solutions he can suggest are pretty radical ideas that he doesn’t actually advocate: cut immigration and throw away environmental priorities, like anti-sprawl rules.

With fewer new families competing for homes and free rein to expand in the Greenbelt — the area around Greater Toronto that the province has protected from development — Ontarians would quickly see supply catch up with demand. This would then significantly reduce home prices, Clayton says.

He does not advocate such an extreme approach, but he argues that, to some extent, policy makers must choose one or the other: the environment or affordable housing.

“If society agrees that house prices don’t matter, because environmental protection is the only important thing in life, then we’re going to have very high house prices,” Clayton says. “But if they want to have affordable housing and protect the environment, they can’t do it.

Time for a new attitude?

With the announcement earlier this year that the federal government has committed $2.5 billion to create 10,000 new affordable housing units across the country, more housing will be available over the next decade.

But not everyone thinks that building single-family homes on undeveloped land is the right solution.

What needs to change is our perspective on housing, says Orit Sarfaty, director of programs for Evergreen, an organization that champions sustainability in Canadian cities.

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Lane houses are an innovative type of housing that is gaining popularity in large cities. These homes are usually smaller and built in the backyards – near the driveways – of existing homes.

This alternative housing solution is more than a decade away from being a viable option, Sarfaty says – although she adds that planners are excited and inspired by creative housing solutions.

If city dwellers opened up to denser options like multigenerational homes, apartments, and non-traditional housing like laneways, there would be much less competition for single-family homes, Sarfaty argues.

“This image of owning your own home has to be something we have to challenge,” she adds. “Think how old school it is: I have land, so I am. We are so beyond that.

But it’s not just an environmental issue. Sarfaty says what enables people to buy dense housing options are the amenities that urban neighborhoods provide: access to parks, proximity to entertainment and cultural attractions, as well as shorter commutes.

Losing access to these benefits in the name of development would make urban life much less vibrant.

“Even if I didn’t care about the environment, I would still want to live in cities,” says Sarfaty. “I can go down to the [Royal Ontario Museum] …when I feel like going for sushi, it’s a three-minute walk away.

“I would give a lot just for that luxury.”

Owners don’t necessarily reap the rewards

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For the Bragoniers, their perspective on homeownership has changed over the 30 years they’ve owned their home. Back then, buying your home was one of the only ways to increase your household equity. But that doesn’t mean it was the most effective.

“If we had taken our initial deposit of $30,000 and put it in an investment vehicle 30 years ago and then continued to pay the equivalent of our rent…we might have gotten a better deal. yield than what we got on the house,” Dwayne said.

However, he adds, there were no robo-advisors back then. There were also limited investment options for those with only $30,000.

Beyond the financial aspect, the Bragoniers love to see their children prioritize experiences like going out to dinner, traveling on a whim and enjoying all that a city has to offer. If they themselves come of age in 2022, the Bragoniers agree they would struggle to give up those perks to buy a house.

As for DeCaire’s investment, he hasn’t watched the market closely since buying it, but he knows his home has gone up in value over the past year. But it doesn’t do him much good anyway.

“It’s not like someone shows up at your door and says, ‘Hey, congratulations, your condo is worth $70,000 more, here’s a bag of money,'” DeCaire says. “You always have to sell it and then live somewhere else. And hey, guess what, everything else is very expensive.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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