Cross Country Checkup

'If I lived in Toronto, I would be broke': How owning a home feels increasingly unaffordable for many

Politicians, economists and advocates alike chalk the hot market up to a lack of supply. Many say what’s needed is more affordable housing. But as more people find themselves pushed out of the market, the definition of what’s affordable can feel murky, says Julieta Perucca.

Experts call for increased supply, density to combat existing issues in real estate market

Carpenters work on a new home in a newly constructed subdivision in Ottawa. Experts and advocates alike say increasing the housing supply is key to improving affordability. (Sean Kilpatrick/The Canadian Press)

As interest rates rise, Canada's housing market is showing signs that it's cooling off. But the idea of owning a home — and even renting — still has some people feeling stretched.

Despite making what he describes as a "pretty good" single income and having a down payment ready to go, government worker Craig Dykeman, 54, says he's struggling to find a home he can afford near his community of Jemseg, N.B.

Dykeman currently lives with his mother in a home she owns an hour west of Moncton, but he's hoping to soon purchase a place to live with his young daughter.

Aside from mortgage costs, he's worried about covering related expenses such as insurance and property tax as inflation pushes the cost of living higher.

"It doesn't have to be a fancy house, but a house that I can live in ... where I have enough left over to not have to worry about groceries or heat," he told Cross Country Checkup.

Politicians, economists and advocates alike chalk the hot market up to a lack of supply. Many say what's needed is more affordable housing. 

But as more people find themselves pushed out of the market, the definition of what's affordable can feel murky, says Julieta Perucca, deputy director of The Shift, a non-profit advocating for housing to be seen as a human right rather than a commodity.

"I feel like currently we're using our imagination to define affordable housing, unfortunately," she said.

"Affordability, at this point, and the price of our housing, is largely driven by the market itself. And this is why we see that housing costs have far outpaced household income."

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Affordable defined as 30% of pre-tax income

The Canada Mortgage and Housing Corporation (CMHC) defines housing as affordable when it's less than 30 per cent of a person's pre-tax income and can include subsidized housing, market-rate rentals and homeownership.

Assuming a pre-tax income of $55,700 — the median pre-tax household income in 2020 according to Statistics Canada — the average household would have just under $1,400 per month to spend on housing.

For Eric Burnet, a social worker, buying a home in Hamilton, where he previously lived with his partner, was a daunting prospect. At the time, the pair were paying "quite a bit" in rent for an "OK place" as they watched home prices skyrocket, he told Checkup.

"We just started our careers. Like, we'll be in our 40s by the time we can afford something like that," he recalled.

So Burnet and his partner decided it was time to take a leap and look elsewhere. They moved to Sydney, N.S., first subletting an apartment and eventually buying a home last October.

The move worked well for them, he says, but he still worries about affordability elsewhere.

"I feel like I make a good income, and yet if I lived in Toronto, I would be broke," he said. "I don't know how people do it."

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Perucca believes the 30 per cent figure is due for an update and that calculating housing costs should take a more sophisticated approach that considers affordability relative to income.

For example, affordability for a dual-income household that has support from extended family should be calculated differently compared with a household with a single parent who works two jobs and needs to pay for a full day of child care.

"I think a lot of us are being left out of this definition of affordability," Perucca said. "So many of us are experiencing a housing market that does not meet our needs.

"But I don't think that people are feeling it as acutely as those groups that are ... low income, which in Canada also happen to be disproportionately people of colour, Indigenous peoples [and] marginalized communities."

Burnet says the challenges with housing affordability are systemic in nature and need to be addressed through greater investments in social housing, increased housing and better public transit in cities. Real estate speculation and prices should also be capped, he added.

"Housing is an essential," Burnet said.

Access to safe, secure housing crucial: economist

Addressing housing affordability will require different responses for different scenarios, says Tsur Somerville, an economist at the University of British Columbia's Sauder School of Business.

"Much of the focus on housing affordability is on the focus on the ability of people to access homeownership," Somerville said.

"I think the fundamental question has to be the ability of people to access safe, secure housing of an appropriate size and a decent quality."

Condo towers under construction rise up a few blocks away from houses, in Burnaby, B.C. Increasing density in urban areas can be key to making housing more affordable, experts say. (Darryl Dyck/The Canadian Press)

That means ensuring low-income households have access to subsidized options and that overall housing supply is adequate. 

"What that means is it's money and it's supply — and money is taxes, and supply is a change in the built environment," Somerville said, referring to the need for increased density. "People are very resistant to that."

Dykeman recently looked into buying a used trailer home that he could move onto a piece of property he owns. 

It was on the market for 11 hours, he said.

By the time he heard back from the seller, it was sold — over asking.

Written by Jason Vermes with files from Steve Howard and Abby Plener.

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