Housing affordability is one of the most critical issues of our time. It is dividing generations, both economically and politically.
If you take a gander at new data from the Consumer Choice Center (CCC), it’s little wonder why housing is the top political issue for millions of young Canadians in poll after poll.
The CCC’s brand-new report shows it would take the average individual a jaw-dropping 44 years to save up enough money to afford a home in Toronto without financial help from family. And for a couple, it would still take roughly 17 years to finally make it.
That’s if no new taxes or fees pop up in the coming decades. And, knowing municipal politicians, that’s a big if.
The report assumes the average income earner puts aside 25% of their after-tax earnings every month to save for their downpayment and is only able to take on a mortgage that’s below 60% of their take-home pay.
This may sound like a realistic scenario. But there are plenty of Canadians who can’t afford to spend 60% of their take-home pay on a mortgage payment or put aside 25% of their take-home pay toward a downpayment, making the 44-year timeline for Toronto homeownership an optimistic, rather than pessimistic, scenario.
A 44-year timeline by and large puts homeownership out of reach for the average Torontonian, as that’s roughly the amount of time between when one enters the workforce and when one retires.
How about for a couple? Even if a couple marries at age 35 and starts to save for a new home, that couple would have to wait until they’re 52 before finally getting the keys to their castle.
Housing gap getting worse
This isn’t a new problem. Yes, the problem has gotten worse in the past decade or so, but it’s a problem that’s been emerging since the 1970s, when the gap between Canada’s housing supply and growing population first truly began to emerge.
Unfortunately, politicians have failed to innovate. As recently as 2022, 54% of residential land in Toronto was still reserved for single-family detached housing. At a time when it takes four-plus decades for the average Torontonian to save for a home of their own, zoning is stuck in the 1960s.
What’s helping to cause this housing catastrophe?
Ridiculously high municipal development charges, rezoning timelines that stretch for years, fees that add tens of thousands to the cost of a new unit, tax thresholds that lag pricing realities and outdated building rules are all adding to the misery.
What about solutions?
For new builds in particular, sales taxes are a problem. At the federal level, slashing the GST on newly built homes for first-time homebuyers isn’t enough. For one thing, in the Toronto area, a huge percentage of new builds come in at a cost over $1 million. And for another, all buyers should benefit from such a tax break, not just first-time home buyers.
Zoning reform could also make a big difference. Barriers, including fees and tedious applications, add hundreds of thousands to the cost of a new home on top of building costs.
Lastly, there are development charges. The City of Toronto has the highest development charges in Canada, according to the Canada Mortgage and Housing Corporation. Development charges add up to $180,000 to the cost of the average single, detached unit. Until municipal politicians stop treating development charges as a cash cow, the cost of building new homes is going to remain sky-high.
While the numbers in the CCC’s report may seem insurmountable, tackling important issues like taxes, zoning and development charges could go a long way in lessening the housing crisis and making homes more affordable for consumers.
The answer, importantly, does not lie in new bureaucracies. Adding more government into the mix is a tired solution that’s been tried for decades and it’s failed. Now is the time for the government to get out of the way by slashing rules, regulations, taxes, and fees to get shovels in the ground and more homes built, to give hope to younger generations that are quickly losing it.
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