I believe it is everyone’s right to have a safe and affordable home to raise a family. The reality in today’s economy is quite the opposite. I see people making desperate decisions to buy a home out of their price range for fear that they won’t be able to afford anything similar if they wait. They are maximizing their credit cards, borrowing more from parents and cutting back on certain activities for their children just to make ends meet.
I had recently quoted Benjamin Tal, Chief Economist with CIBC World Markets, who spoke of a generation that is going to “inherit inequality”. I won’t event attempt to explore the depth of the subject, but suffice it to say that there is a growing demand on rental units. Just yesterday, I had a client that is selling her home because she can’t afford to live in it. Yes, she intends to bank the little amount of equity she will get out of selling her home and rent. I see this trend more and more.
The implication of what Tal was saying is that, if you are not a home owner now that you may not likely be a homeowner in the near future given the trend of skyrocketing home prices. And, today’s Globe and Mail article about Ontario pushing Ottawa for some form of tax on speculative buyers or increasing the capital gains tax is a sign that governments recognize the seriousness of the problem.
Just think, you have people buying properties based on speculation of profiting, low inventory of homes on the market and first time home buyers trying to get into the market. How does a first time home buyer compete with an investor with very little homes for sale?
Don’t get me wrong. I don’t criticize investors. After all, they have children for whom they want to provide a home and ensure a financial nest egg for themselves. I get it. But, if average people can’t afford to buy their own home and must turn to renting, that will put a corresponding strain on all levels of government, primarily provincial and municipal, to provide affordable housing. It is a storm brewing like no other.
Ironically, I know that builders are in tune with this growing demand for rental housing units and have already started building a mix of condominiums and rental apartments. The only issue is that market pricing remains an issue because demand is growing for good rental units.
My question is whether all levels of government can create a unified strategy in concert with builders whereby builders have the right incentives to build affordable rental units for growing families? A grand idea perhaps, but if it works, would this not be a more cost effective alternative to managing government deficits and pressure to keep increasing tax revenues? Just saying……