Homes are becoming increasingly unaffordable for the average household in Canada. The cost of living is rising, while wages remain stagnant. This means that households are bringing in less money overall, but they’re also having to spend more on basic necessities like food and shelter.
The price of houses is also increasing. The average price of a home in Canada was $483,000 in September of 2020. This is an increase of 6.7% from the same time last year. For many households, this price increase is simply too much to handle.
Rent prices are also on the rise. The average rent for a one-bedroom apartment in Toronto was $2,260 in September of 2020. This is an increase of 3.6% from the previous year. For many renters, this price increase means that they’re spending more than 30% of their income on housing costs.
Be Careful what you hope for…
A recent report released by RBC Economics says that the decrease in home prices seen since last spring will not be enough to make housing affordable for the average Canadian household. The report goes on to say that, despite a projected fall in prices of around 5% from their peak, homes will still be unaffordable in most of the country.
This news comes as a blow to those who were hoping that the decrease in prices would finally make ownership within reach. For many, the high cost of housing is one of the biggest obstacles to saving for a down payment and becoming a homeowner.
According to the RBC report, the main reason why prices are projected to remain unaffordable is that incomes have not kept pace with the rise in housing costs. In order to mitigate this issue, policymakers need to put measures in place that will encourage income growth.
One way to do this is by investing in programs that help people upgrade their skills so they can earn higher wages. Another way is to help businesses create more jobs, which would also lead to higher incomes.
The current state of affairs is simply not sustainable. Something needs to change in order for the average household to be able to afford a home in Canada. Otherwise, we will continue to see an increase in homelessness and house insecurity across the country.
The bottom line is that, while a decrease in home prices is welcome news, it is not enough to make ownership affordable for the average Canadian household. In order for this to happen, incomes need to grow at a faster pace. Policymakers need to put measures in place that will encourage this income growth so that more people can realize their dream of homeownership.