Photo: James Bombales
Would-be Canadian home buyers may have to put their dream of homeownership aside — at least, that’s the message coming from the head of the federal agency responsible for mortgage insurance.
“The dream of homeownership may be fading for some,” said Canada Mortgage and Housing Corporation (CMHC) CEO Evan Siddall, in a recent speech. “Housing affordability has become a serious problem in our major cities, a factor that may help explain why homeownership rates have been declining.”
Siddall is referring to data from the 2016 census, which found that Canadian homeownership rates declined for the first time between 2011 and 2016, from 69 per cent to 67.8 per cent.
Meanwhile, only 50.2 per cent of 30-year-olds owned a home in 2016, down from 55 per cent a generation earlier.
Homeownership has becoming especially unaffordable in Toronto, which saw prices skyrocket earlier this year. While the introduction of Ontario’s Fair Housing Plan cooled the market slightly over the summer, many economists predict that strong demand will mean the city remains unaffordable in the coming years.
According to CIBC Senior Economist Benjamin Tal, Toronto is facing a significant and worsening lack of land supply, as provincial growth policies limit how quickly serviceable land becomes available.
Simultaneously, demand for housing in the area is likely to grow, given the federal government’s plans to increase its immigration quota to 450,000.
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“If you look at the long term trajectory, and where prices will be say 10 years from now, I think they will be increasingly more and more unaffordable to the average Canadian,” Tal told BuzzBuzzNews.
In light of these affordability issues, the federal government announced the details of its new 10-year National Housing Strategy last week. The plan includes the building of 100,000 new affordable housing units, and the repair of 300,000 existing units. But economists are skeptical about whether it will lower prices in markets like Toronto.
“This strategy is aimed at providing relief to the most vulnerable Canadians, not the middle class, so its impact on the private housing market will be limited,” RBC Senior Economist Robert Hogue told BuzzBuzzNews. “The strategy is to about to bring immediate supply-side relief in markets such as Vancouver or Toronto.”