What Do We Mean By “Affordability”?
When today’s grandparents bought their first home, it cost them about three times their annual household income, likely with only one parent working.
Now, for young families in many of our larger cities, that first home costs five, eight or ten times their household income – even with both parents working! Income growth, particularly for the Millennial generation, hasn’t nearly kept pace with soaring house values.
With current conditions, it’s no surprise we are seeing homeownership rates falling for those under 35 years of age. Achieving homeownership is a much greater challenge for young people and families today.
This isn’t merely an issue for our industry; it undermines the socio-economic fabric of Canada. Homeownership serves as the financial foundation for most families. If many Millennials are unable to enter the market, or are forced into housing options that don’t meet their needs, the effects will be far-reaching, affecting all of society, including businesses and existing homeowners.
Owning a home connects people to the places they live in important ways, fostering personal investment in thriving communities on many levels, both financial and social.
Having homeownership slip beyond the reach of many well-educated, hard-working young people represents a huge change in Canada’s economic landscape, but it doesn’t have to be this way. As more and more young couples start families, and face some of the toughest financial choices in their lives about how and where to live as they raise their children, the need to address affordability is becoming urgent. We need to have this conversation.
When CHBA talks about “affordability,” this is what we mean.