Gap between earnings and home prices a top concern for housing strategy critic

VANCOUVER (NEWS 1130) – For a new national housing strategy, one critic says it leaves a lot of old-fashioned policies intact.

Paul Kershaw — the founder of Generation Squeeze — says Ottawa’s plan, announced yesterday, misses the mark for young Canadians.

The UBC professor does give kudos to Ottawa for returning to a leadership role in housing, but he suggests the federal government almost entirely ignores the growing gap between home prices and the earnings of young people.

“Amid all its talk of renewing social housing and launching a rental benefit for the working poor, the new strategy fails to acknowledge that more than nine-in-10 Canadians must rely on the real estate market to access suitable housing that is in reach for what they earn either as renters or owners,” Kershaw says in a statement.

“That is a BIG omission, because the market is now failing younger Canadians.”

Kershaw points to figures previously cited by Generation Squeeze that suggest it now takes an average 13 years to save for a 20 per cent down payment on an average home, compared to five years of full time work for a typical 25-34 year old in 1976.

“This national average is influenced by the Greater Toronto Area and Metro Vancouver where it currently takes over 20 years to save the down payment. But it also captures that that young people in Alberta, Saskatchewan, Manitoba, Quebec, Nova Scotia and Newfoundland have to work years longer to save a 20 per cent down payment by comparison with the past, as do many people in BC and Ontario outside their biggest cities,” he says.

Read more: Vancouver’s mayor relieved as Ottawa rolls out national housing strategy

Kershaw would like to see the federal government change “old-fashioned policies that distort supply and demand in the real estate market at the expense of younger generations.”

One suggestion is to make federal investments conditional upon municipalities modernizing land-use practices that prevent density. Kershaw believes that could price young people back into the market.

“In our cities, most land is zoned for single homes or low density. By restricting the number of units that can be built in these areas, outdated zoning policies restrict competition. The result is many neighbourhoods with home prices that squeeze out young people, even with good jobs,” he writes.

But while Kershaw suggests there are deficiencies with Ottawa’s new housing strategy, he says, it does have some strengths.

“Most notably, it secures the existing stock of social housing — around 250,000 to 300,000 units, and then invests to build another 60,000 units. Generation Squeeze worked hard with our partners in co-op and non-profit housing circles to achieve these policy victories, and we should praise Ottawa for its investments.”

Still, he suggests the Trudeau government’s new money for the National Housing Strategy is “small potatoes” compared to other investments made in the 2017 federal budget.

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