By: Anisa Ali
On top of being one of the richest countries in the world, Canada is known for its landscapes, cultural diversity, and high quality of living. Over the past couple of years, Canada has been dealing with a significant challenge that continues to affect millions of its residents – an unaffordable housing market.
What Millennials are Facing
With real estate prices on the incline across the country, it has sparked major concerns for homeowners, banks, and policymakers. As of recently, the housing market has shown signs of stability and while that may be seen as a positive step forward, the prices of houses and mortgage rates are still high. Simply put, this means an increase in income is needed in order to purchase a home.
According to an article by Global News, in bigger cities like to Toronto, the average price of a house is 1.16 million. Global News adds that to afford such a home, homeowners would have to earn an income of around $235,000 a year.
But who is dealing with challenges and stresses of the Canadian housing market? Millennials!
Many young Canadians looking to buy into the housing market are saying their life goal of owning a home is slowly becoming out of reach.
An Expert's Insight
Waqar Dogar, an award-winning real estate agent in Ajax explains a lot of the major obstacles include interest rate hikes, high property value with respect to resale and preconstruction. He also explains, because of the high values, millennials would rather rent which has led to the rental market becoming hot and landlords getting a lot more than they normally would in a calmer market.
With more a decade of dealing with a rising housing market, it has changed the lifestyle choices of millennials. With horrible housing affordability, many young adults are now moving away from their hometowns and the city. Not only is the millennial generation changing where they live, they are also putting off marriage and creating a family.
In an article written by the Financial Post, they explain it would take building approximately 3.5 million houses to balance out housing affordability. Another primary factor contributing to the unaffordability in the Canadian housing market is the imbalance between housing demand and supply. The country has experienced a drastic increase in population growth. With immigrants also joining the housing market, this has led to a surge in demand for housing. However, the supply of homes has struggled to keep up with the level of demand, particularly in major cities like Toronto.
Other challenges that are affecting Millennials:
Student Loan Debt: A significant number of millennials in Canada carry student loan debt, which can hinder their ability to save for a down payment on a home. Balancing the repayment of post-secondary education fees with the goal of homeownership has become an extremely stressful task, especially for those who live on their own and do not have financial assistant and support
Wages: Despite being the most well-educated generation, millennials are dealing with stagnant wages that do not keep up with the high cost of living. The lack of correlation between income growth and the increased costs of housing, healthcare, and other essential expenses makes it difficult for millennials to achieve financial stability. This has led to a college or university degree not guaranteeing the same level of economic security compared to previous generations
Healthcare Costs: Healthcare costs that are not covered by OHIP have gone up. this has an impact millennials' financial well-being, especially for those who are in the stage of life where they are starting families. The expenses associated with family planning, healthcare and childcare are costly. These expenses factors into balancing the costs with other financial priorities
Lifestyle: Millennials often face societal expectations and lifestyle pressures that contribute to their high cost of living. Social media can hold an influence over some millennials' desires for experiences. As the housing market and inflation continues to soar, millennials are now choosing to invest their money on travelling and enjoying life rather fixating on the stresses they see on the news and social media.
Renting: with the challenges that comes with the housing market, many millennials have turned to the rental market. This has led to increased demand for rental properties, especially in areas in and around the city. The rental market itself is currently faces challenges such a rises in rental cost and the availability of rental spaces
Gig Economy: The gig economy and the increase of short-term and contract employment have become more common among millennials. The lack of long-term employment impacts their ability to qualify for a mortgage and interest rate, as banks still use traditional lending practices and procedures which works in the favour stable incomes.
Working Population in Canada
Melissa and Zack's Story
Luckily for some, the dream is attainable. On this week’s episode of the Talk To Me Nis Podcast, host Anisa Ali sat down with real estate agent Waqar Dogar and her friends Melissa and Zack. They opened up about their journey when purchasing their condo. In this discussion, Waqar Dogar shares saving tips for those trying to save up and the importance of education!
Millennials in Canada continue to navigate their lives while dealing with the uncertainties of the future. The in-affordability of the housing market in Canada is a complex issue enrooted in economic, governmental, and societal factors. To address this issue requires a complex approach. It is vital for the federal and provincial government officials to focus on both short-term and long-term solutions. After all, millennials make up over 30% of the Canadian population.
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