VANCOUVER (NEWS 1130) – Home prices may be dropping around British Columbia, but that’s not offering much of a break for younger buyers, according to a new study.
Paul Kershaw with Generation Squeeze says British Columbians aged 25 to 34 are still straddling a massive gap between housing prices and earnings.
“For a young person to think about getting into homeownership at an average home prices in this province, they’d need to see their earnings triple or they need to see average home prices drop by around $450,000.”
In Metro Vancouver, earnings would have to quadruple and home prices fall an average $795,000, he says.
“Neither of these things are likely in the near term,” Kershaw admits. “We need all levels of government to continue to be bold and hold firm to the idea that restoring affordability is a top goal for our government.”
He says that also applies at the federal level. Kershaw notes while moves have been made, he points to the importance of federal leadership to address the issue.
The current focus, he says, is on a social housing strategy, which largely focuses on providing housing at below market prices, all while scaling up the not-for-profit sector.
“Those are important dimensions, but we ultimately need to adjust the dials on the regular market, where the vast majority of people are still finding their homes and there’s lots of work to still do there,” he tells NEWS 1130.
Saving times up
For a typical young person, the study suggests it would take 19 years to save a 20 per cent down payment on an average-priced home in B.C. That, according to Generation Squeeze, is 14 more years than when the current aging population started saving as young people.
Again, that number increases in the Metro Vancouver area: it’s estimated it would take 29 years for a young person to save for a down payment.
“If home prices are levelling out right now, they are levelling out at untenably high prices that put home affordability out of reach and driven rents up in places like British Columbia dramatically,” Kershaw adds.
Getting it done
According to Generation Squeeze, there are a lot of different solutions. However, Kershaw points to the importance of a solid framework.
“It needs to commit to the Canada Mortgage and Housing Corporation’s goal to restore affordability by 2030 — it’s an important timeline,” he says. “It means committing to the principle of homes-first, that housing is… a place to call home, not a place to launder money, not a place where you can protect everything in your neighbourhood from ever changing, not a way to get rich.”
Comprehensive strategy is something he also highlights, adding all levels of government need to work to address supply and demand to try and resolve the issue.
According to the CMHC, affordability means Canadians do not spend more than 30 per cent of their pre-tax earnings on housing.