House in Ottawa
Image: Hong Yue Wang/Fulcrum.
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Will we be renting forever?

Many students can relate to the trials and tribulations of moving day and the common grievances of renting: the hunt for cardboard boxes, running to the store for more bubble wrap, squishing the contents of your closet into suitcases and losing your favourite hoodie in the chaos. Not to mention, after all that, you end up paying ridiculously high rent to live with a leaky tap and faulty window.

Moving day is a dreaded, yet frequent occurrence that is sure to bring frustrations to a boil. You may find yourself longing for the day you can stay put for more than a year. Would it not be ideal to own a home, rather than uproot your life and search for overpriced apartments with many roommates? An inaccessible housing market haunts such hopeful thoughts.

So stands the question: are young people doomed to a life of renting?

Today’s housing market

While topics like inflation and the housing crisis are sure to spark political debates during your economics lecture, these are tangible issues that dictate your future economic opportunities. In Ottawa, the average price of a house has increased 11.46 per cent from $728,205 in 2021 to $811,653 in 2022, according to RE/MAX’s housing affordability report.

Of course, most Canadians cannot buy a house upfront at full price; many pay a monthly mortgage. This monthly mortgage is a common tool to gauge the affordability of a home. A Leger survey explains that 18 per cent of Canadians define housing affordability as allocating 30-40 per cent of their monthly household income to housing costs. 

These housing costs include mortgages, property taxes, and other housing expenses, like groceries, maintenance, and heating. Recent broker predictions and external data expect the average monthly mortgage amount to account for 25.86 to 112.25 per cent of Canadians’ monthly income.

Notably, this prediction includes only the average monthly mortgage. Even if a homeowner allocated 25.86 per cent of their monthly income to mortgage, this leaves 5 per cent or less of their monthly income to spend on housing expenses. Furthermore, the extensive range of the average monthly mortgage in Canada exposes the inequity of the housing market. Not every Canadian can afford to devote more than 40 per cent of their monthly income to a monthly mortgage.

Overall, the increase in the prices of homes in Ottawa coupled with an increase in monthly mortgage payments indicates less affordable housing in the past year. Looking forward, the housing market in Ottawa is expected to become more affordable.

The Canadian Housing Market Outlook Fall 2022 reported that RE/MAX brokers and agents expect housing prices to decrease by 2.2 per cent due to high inflation, rising interest rates and economic uncertainty. However, due to rising interest rates, 29 per cent of Canadians report that they will not purchase a home soon. 

Currently, the most significant factors which influence the inevitable increase of housing expenses include the low or diminishing housing supply, rising interest rates, cost of living and inflation, exterior buyers, and employment conditions. 

According to the 2022 RE/MAX Housing Affordability in Canada Report, 38 per cent of Canadians define housing affordability as a home for which they can pay the monthly mortgage which meets their basic needs and includes livability elements. Such elements may include green spaces, stores, and schools.

While current predictions indicate that the housing market will cool within the next year, Canada needs a long-term solution to its housing crisis — preferably a plan which is conscientious of future generations and centers livable neighbourhoods in its approach. One area of research which aims to improve cities and neighbourhoods is city planning, or urban planning. 

Outside of an apartment building.
Image: Hong Yue Wang/Fulcrum.

Experts weigh in

Some notable theories in city planning impacting the livability of neighbourhoods include new urbanism and smart growth. New urbanism is an approach which orients city planning around people, with walkable neighbourhoods and close-by shopping all being new urbanist ideas. Similarly, smart growth states that professionally managed development patterns could reduce the impacts on exterior actors, such as citizens.

Housing is fundamentally an ecological issue. We cannot chop, sterilize, and ravage forests and fields for our own benefit. Apartments, condominiums, and homes should not sprawl far from cities. Rather, new housing strategies should focus on improving areas which are already populated. New urbanism and smart growth benefit not only people and the economy, but also nature and diversity.

Jill Grant is a professor emeritus at the school of planning at Dalhousie University, whose research examines city planning as well as how to improve our neighbourhoods. Grant focuses on trends in planning Canadian suburbs and creative planning practices.

In an interview with the Fulcrum, Grant explained that the implementation of new urbanism and smart growth paralleled decreasing housing affordability. However, it is unlikely that these ideas are responsible for the problem. While sprawling suburban development was affordable in the post-war period, this is no longer the case. 

This is influenced by a simultaneous decline in household size and an increase in housing expectations, which Grant explained increases the proportion of budgets going to housing.

While new urbanism claims that increased density will lower the prices of homes, this does not translate to the current market. Density may also contribute to decreasing affordability since higher density increases the value of the land.

High-density land allows developers to profit from the units they implement. Grant suggested, “If governments develop land at cost, then higher densities can certainly help to bring down the costs of new housing. Unfortunately, few governments seem willing to do that.” 

Conclusively, to benefit from sustainability, housing must be affordable. If people cannot afford decent housing they face greater stresses, both financially and physically. As a result, they cannot make choices which support healthy communities and environments. Importantly, solutions must consider the long-term benefits of a housing plan.

One of the current challenges the Canadian economy faces is the issue of an aging population. 

“For decades, demographers and planners have warned that when baby boomers hit retirement, the country could be looking at significant challenges,” Grant highlighted.  Undoubtedly, these solutions will impact the housing market possibilities for young people. 

Hopes for the future of the market

Overall, while housing affordability is expected to decrease in the next year, the housing crisis in Canada must be resolved long-term. Issues that must be addressed include economic uncertainty, high inflation, and an aging population.

All of these can be addressed by government involvement. Allowing companies to build more units in already densely populated areas with little cost will only benefit those who are already fortunate while leaving others behind, including current students — our future lawmakers, physicians, care providers, restaurateurs and teachers. 

Grant believes the Canadian government should consider implementing incentives to keep units available as the population ages. Furthermore, if the government increases the cost of developing densely populated land, this will lower the cost of housing and protect environmentally sensitive lands.

If future generations do not have the same opportunities for progress, health, and happiness, our society and systems will fail. Students have a powerful voice, and once educated about critical issues, they must speak up for change.