Why You Can’t Afford a Home 

There’s an unfortunate trend that I’ve seen over the last few years. Fewer people are able to get into a home.

The majority of the time, when I can’t qualify a client for a home it’s because of everything else that’s happening in our housing market right now. It’s not because of their income or even their credit, those are all things we can work with.

High costs of living, increasing home prices, and low inventory are just a few of the reasons why it’s getting harder to qualify people for a mortgage.

I came across an article in the Globe and Mail recently that looked at 10 reasons why Canadians can’t afford a home. It was a good overview of what’s happening right now across Canada.

The Top 10 Reasons

The article concluded there were 10 main issues affecting affordability.

Note: Many of these comparisons are taken from the major city centers across the country. Our market in Bow Valley and even into the interior of British Columbia, is slightly higher than you would see in Calgary, but lower than somewhere like Toronto or Vancouver.

1.) Ownership costs are high. According to Royal Bank of Canada, 63% of gross pay is going to housing costs (the highest it’s ever been).

2.) Housing prices have skyrocketed. The suburbs and smaller cities and towns are experiencing this as well.

3.) Not enough housing. We are no strangers to that here in the Bow Valley region! The country’s population increased by more than a million last year, while housing starts slowed.

4.) Rental supply is low. There’s just nothing to rent. According to the CMHC, the rental vacancy rate sits at a record low of 1.5%, which in turn is pushing up rental costs. This is then forcing many potential home buyers to stay put, furthering the pressure on the rental market.

5.) Housing project delays. In a report by the Canadian Home Builders’ Association, for every month of delay, construction costs rose by $2,600 to $3,300 a unit.

6.) Lengthening construction timelines. We are no strangers to long construction times in Bow Valley! In Ontario cities, the average building time for apartment buildings is 32.6 months.

7.) Not enough output. Output in the construction sector is hovering where it was in the late 1990s. With fragmented construction companies, lack of capital, and rising wages for workers, productivity has fallen here.

8.) Construction cost inflation. Construction costs have increased by nearly 60% since the end of 2019.

9.) Increasing mortgage rates. While we’re hoping for a start of rate cuts this summer, the quick rise in mortgage rates has shocked a lot of homeowners who renewed these last two years. Renewal rates and higher mortgage payments are placing an even bigger burden on personal housing budgets.

10.) Aging at home. Many retirees and seniors are staying at home longer. As the article states, “The sell rate of homeowners aged 75 or older who sold their homes has fallen steadily since the early 1990s, dropping to new lows in the 2016 to 2021 time period.” In 2023, there were 1,459,513 people between the ages of 75-79. Only 21.5% of these people are selling (these percentages actually lower in Alberta and British Columbia).

Short Term Rentals

One thing the article didn’t mention was the short-term rental markets which we see a lot of in Canmore and British Columbia.

In Canmore, out of the total housing, 714 units are tourist homes. This does not include the 587 apartment rentals (as of 2022). With more tourist housing planned at Silvertip and Three Sisters Village — an estimated 900 - 1,300 units — it does put even more pressure on non-market (not short-term rental) housing.

In the same article linked above, they mention this has had an impact on retaining workers in Canmore. For as busy as our community is, to have businesses close because they don’t have the staff seems outrageous. I’ll have to dive into this topic in another post as there are many layers to this.

Where Do We Go From Here?

I do want to try and keep things on the positive side. I know, it’s a tall order! But, the best thing you can do right now if you want to buy or sell a home is to start talking to your financial experts sooner than you think.

Many of the files I’ve worked on over these last few years have required more — more documentation, more time, and more patience.

Being ready is the key in this market so reach out if you have any questions about buying in the next two years.