The housing dilemma: Canadians struggle to afford a home

Canada’s home-building industry, once marked by economic growth, is currently facing a series of challenges. The cost of building a home has skyrocketed as many of the factors involved in home building have increased. A few major factors include high borrowing costs, rising construction expenses, a slowing buyer market, and several other challenges.

One of the significant challenges affecting home-builders is the lengthy municipal approval process times. In Ontario, residential development approvals take close to 26 months to be approved. This extended timeline increases carrying costs and creates uncertainty around the start of new projects. Builders face delays in planning, and this prolonged process means valuable time is wasted, keeping workers idle and limiting job opportunities.

As a result, developers are often unable to meet growing housing demand promptly, which further exacerbates housing shortages and affordability issues in the region. On top of this, other factors such as government taxes, developmental charges, and land transfer taxes contribute significantly to the rising home prices.

As of 2023, the average housing cost in Canada was a whopping 657,145 Canadian dollars. Conversely, if you look at the numbers 10 years ago, in 2013, the average cost was 391,820. This represents an almost $300,000 difference and a staggering 67.72% price increase. To put this into perspective, wages in Canada haven’t kept pace with housing prices. The average household income in 2013 was 53,500 Canadian dollars, which increased to 70,500 in 2023. This is a less proportionate 31.78% increase as opposed to the housing cost figure mentioned above. This also inevitably puts a strain on younger generations when it comes to buying homes, owning property, and establishing themselves as young adults. With wages failing to keep pace with skyrocketing housing costs, many millennials and Gen Z are forced to delay major life milestones, such as purchasing a home, starting a family, or even moving out of their parents’ homes.

In contrast, Japan is facing the exact opposite issue. The country has an overabundance of homes and buildings for sale. Nearly 9,000,000 vacant properties exist across Japan, and almost 14% of Japan’s homes are vacant. In rural areas, that number jumps to closer to 20%. This stark difference highlights how demographic trends, urbanization, and economic factors shape housing markets in dramatically different ways across the globe.

Canada’s housing market issue also likely plays a significant role in the growing homelessness crisis the country is facing. Nearly 235,000 Canadian citizens are reported as homeless annually, with 35,000 citizens experiencing homelessness on any given night. This alarming statistic highlights the severity of the issue, emphasizing the people affected. Many individuals are forced to live in shelters, temporary housing, or even on the streets due to the lack of affordable housing options. It’s something worth thinking about.

Considering everything discussed, Canada’s housing market challenges are complex and have severe impacts. Rising home prices, construction costs, and lengthy approval times are making it harder for people to afford homes while also contributing to the homelessness crisis. With wages not keeping up with housing costs, many young people are forced to delay essential milestones like buying a home or starting a family. This situation calls for a deeper look at the issues driving housing affordability and homelessness. It highlights the need for solutions that ensure everyone has access to safe and affordable housing. There is no simple solution, but work must be done to help bring down these costs and make living more affordable.