Last year, Kalsang Youdon, a Tibetan who immigrated to Canada from India, celebrated her son’s fourth birthday in their cramped Toronto apartment. After more than a decade of renting in the city, she decided that she was ready to buy a place of her own.
She remembers saying that she was going to have a house so that she could invite more than two of her son’s friends over at a time.
This month, her son’s fifth birthday came and went. And they still live in the same apartment.
“It didn’t happen. It really made me upset,” she said.
Prices in the Toronto region — already one of the most expensive markets in Canada — have soared. Since the start of the pandemic, the cost to purchase a house in many areas has climbed at a pace well ahead of income growth, with the average price of a house up more than 50% in two years.
For Youdon, who’s lived in the city for 15 years, and who works at a childcare center, even the most rundown houses now seem out of reach.
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Canada’s local and federal governments are now pursuing a suite of measures to try and rein in prices, including a boost to interest rates this month and a proposed two-year ban on purchases by foreign buyers.
Mike Moffatt, senior director of the Smart Prosperity Institute at the University of Ottawa, said that areas like southern Ontario already faced a shortage of supply before the onset of the pandemic.
“We’ve seen in markets like London, Ontario, for instance, prices nearly double since the beginning of the pandemic, and it’s been driven by preexisting housing shortages coupled with just a flood of money from low-interest rates and white-collar workers being able to save during the pandemic,” he said.
By early 2022, the cost of a house in the greater Toronto area had jumped almost 28% over the prior year, according to the brokerage firm Royal LePage. In some cases, it’s had a knock-on effect, where sellers took their profits and moved to smaller, more remote communities, pushing up prices there, according to Paul Kershaw, who lives in British Columbia and founded Generation Squeeze, a policy advocacy organization to support younger Canadians.
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“At an intergenerational family table, you’ll have an older demographic, who are more likely to be homeownerss, and they experience housing price increases in one way — often it’s a big benefit [to them] … but they’re concerned about their kids or their grandchildren.”
“At an intergenerational family table lately, you’ll have an older demographic, who are more likely to be homeowners, and they experience housing price increases in one way, often it’s a big benefit. But they’re concerned about their kids or their grandchildren, or the grandchildren they’d like to have, and their millennial kids haven’t started families yet.”
Canada’s finance minister, Chrystia Freeland, recently referred to housing costs as a “generational injustice.”
“We cannot have a Canada where the rising generation is shut out of the dream of home ownership.”
“We cannot have a Canada where the rising generation is shut out of the dream of home ownership,” Freeland said.
The Bank of Canada has begun by hiking interest rates, which will raise the costs of borrowing, but should also slow the price increases.
Freeland recently proposed a two-year ban on overseas buyers. The measure would not apply to permanent residents or foreign students, but instead target speculators living overseas. Their impact is most debated in Ontario and British Columbia, where the provincial governments have already created an additional tax for foreign purchasers.
Tom Storey, a Royal LePage realtor in Toronto, said that nationally, foreign buyers represent about 5% of sales.
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“It’s easier for the government to ban people that can’t vote, because obviously, then that helps them in terms of the people who are actually living here. But I don’t think that segment of the market being removed is going to actually change true affordability,” Storey said.
Ricardo Tranjan, a policy economist who worked for the city of Toronto on poverty reduction, said the government isn’t tackling one of the big sources of the problem — working families are being priced out, in part, because buying homes has become such a popular investment for other Canadians.
“Between 30 and 40% of homes in Canada are owned by multiproperty homeowners, meaning people who have one, two, three, four homes,” Tranjan said. “It’s a much harder issue to tackle, than the sort of foreigner-buyer boogeyman.”
He said that policies that would have the greatest impact on housing affordability will be harder to enact, for example, any measures making real estate a less attractive investment, even if they would help working-class homebuyers and renters, who also face rising costs.
Kalsang Youdon, speaking from her daycare located in a church, said she has come to suspect she will probably have to leave Toronto if she wants to buy a home.
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“My son is growing and I feel like we’re going to be getting more in debt, than leaving him anything.”
“My son is growing and I feel like we’re going to be getting more in debt, than leaving him anything,” she said. But, she explained that moving to another, lower-cost city such as Calgary, where a friend recently relocated, would also mean leaving a large community of other Tibetan immigrants in Toronto.
“I have my brother here, you know, [people] he gets to call uncle and auntie,” she added.
Youdon said that she can ask one of them to pick her son up from school if she’s sick. “But let’s say if I move to Calgary, who am I going to ask?”