According to StatsCanada, the average household income in Canada is 66K. The average income of a single person household is 34K.
The average price of a home in Canada is now 816K, an almost 100% increase in 6 years.
Real estate is now part of Canada’s top three “industries”, along with oil and gas, and mining.
Think you can buy a home if you just pull yourself up by your bootstraps?
If you use the CMHC “housing affordability” calculator for a 66K household with a 50K down payment and $1100/month non-housing related expenses, it says that the household can afford a $292K house.
According to the housing affordability calculator, a household would need to earn 134K, have a 100k downpayment, and no more than $1100/month in non-house related expenses to afford a $816K home.
According to StatsCanada, only 10% of Canadian households earn over 100K per year. That means that 90% of Canadians cannot afford an average Canadian home.
What does this mean? Firstly, people without wealthy co-signers and/or family wealth are now statistically unable to own a home. In some cases, they will be able to strategize around that, but on average, it’s not attainable. This has created a class divide between the ownership class and non-ownership class that will continue to widen.
Second, people will take on massive mortgages (if they can somehow get approved) in order to avoid the instability of renting. They will struggle to make their payments, and if interest rates rise like they did in the 80s and 90s, they will lose their homes to foreclosure.
Third, renters will continue to bear the cost of these massive mortgages or face homelessness. With limited options, renters may end up staying in unsafe rentals, or unsafe relationships.
Stats were all taken from the public StatsCan website with mortgage estimates from the CMHC website.
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