A Millenial's Cry for Housing

It is beyond trite at this point to talk about the high price of housing in Canadian urban areas. Vancouver and Toronto are notoriously expensive, with the average price of a home in Vancouver comfortably exceeding the one million dollar mark, and Toronto now following suit. Even major city centres in Canada that are currently below the national housing price average are making up for lost time, as Ottawa, Montreal, and Calgary housing prices have risen an astonishing 26, 20, and 15 percent this year, respectively.

The rate at which these property values have grown over the past decade has left a society of ‘haves’ and ‘have-nots’. The public reaction to this development seems to vary, with the monetary incentives very much split along generational lines. The ‘haves’ are primarily Gen X and baby boomers who already own property, and have for decades. They came of age at the right place and the right time, and have been enjoying a meteoric rise in the value of their asset. The ‘haves’ also include their younger descendants, those privileged few who won the birth lottery and stand to inherit the tremendous value of their parent’s inflated assets.

In contrast, millennials and younger Canadians are generally struggling to find lasting homes in this competitive climate. The value of Canadian homes in most major cities has well outpaced largely stagnant wages, and the younger generations find themselves entering a more precarious workforce, often facing student debt and underemployment. In these conditions, it is difficult to even afford rent in a large city, let alone save enough to come close to a down payment. Even as millenials are getting older, those who have waded into the housing market have had a mixed track record of success. They have often had to buy more modest homes farther from the city core, or squeeze into small, overvalued condominiums as a point of entry into a city’s housing market.

The government’s response to this issue has, somewhat understandably, been inconsistent. Unable or unwilling to ease a housing bubble that has endured longer than many prognosticators imagined, the federal government has mostly tinkered around the edges. They have tried to discourage reckless buying by enacting a mortgage stress test, and have tried to introduce a government assistance program for first-time buyers.

Frustrated at the lack of a comprehensive government response to this issue, and feeling stymied by the government’s mortgage stress-test, this millennial prospective-buyer felt the need to draft a letter to their local federal Member of Parliament (“MP”), back in the spring of 2020. This MP is a prominent figure in the governing Liberal Party. I wish to share this letter, the reaction, and some reflections on the future of Canadian housing with you all. I am sharing this letter with the acknowledgement that I was in a relatively privileged position at the time that I drafted this, and am in a privileged position still. I make a fairly high income for a younger Canadian, and lived in a family where I could stay home and save money for a down payment. My problems are not universal or existential, and I deserve little sympathy. But it is telling that such a person in this generation still felt the need to draft this letter:

“Hi – – – – –,

I am a – – – year old consituent in your riding. I love my job, I plan on staying in it for a long time, and I really enjoy living in the City of Toronto. I am currently renting an apartment with a roommate, but have recently decided that it makes sense at this point in my life to try entering the market by purchasing a condominium in Toronto.

Recently, I began looking into condos that are within my price range. Toronto has not been very affordable in recent years at the best of times, but I was pleasantly surprised to see that I could afford a decent range of different condos listed for sale, based on the amount I have in my savings for a down payment, and using a mortgage calculator to estimate my monthly expenses. The next logical step was to get a mortgage.

Speaking to my realtor, we were both optimistic that I would be able to get a reasonable mortgage. I make a high salary for someone my age. I aggressively paid off my university debts by living at home after school, and have lived debt-free for a year and a half. I have an “excellent” credit score (the mortgage broker’s words, not mine). Given all of this, imagine my surprise when I found out from the broker that I will only be eligible for, at best, a 440 thousand-dollar mortgage. You are a prominent Torontonian and seem like you have a good sense of this city, so I don’t need to tell you how few places are available in Toronto for that price. I was told by the broker that the reason my mortgage eligibility is so low, is due to the mortgage stress-test that your government has introduced.

I understand why your government felt the need to introduce something like this – it is no secret that Canadians have a high level of personal debt, and the last thing we need are people buying beyond their means. In some respects, low standards and lax regulation of mortgages is what led to the 2008 financial crash in the United States. But there is something wrong with the law you have created, when a relatively high income millennial Canadian like myself is handcuffed so severely from buying within their means in Toronto.

I’ll put my cards on the table – I am a Liberal voter. I voted for you last election. Regardless of where I live next, I will almost certainly vote Liberal again, if only because I feel that it is the only reasonable option. You may not have to worry about losing my vote, so you may not feel the need to respond to this letter, or address its concerns in any substantive way besides a perfunctory response. But I am telling you, Liberal to Liberal, Torontonian to Torontonian, constituent to constituent, that your government is failing the millennial generation on urban housing. I am telling you that your government needs to do better. You may not lose my vote, yet, but you have lost and will continue to lose more young voters if you do not meaningfully address their concerns on housing.

Foreign investment and speculation has continued to plague Toronto and other Canadian urban centres, driving up prices and lowering supply. Airbnb and other short term condo rentals have had similar effects. In response, your government has either done nothing, or has passed well-intended but poorly conceived legislation that does not accomplish its purported goals. The government’s first-time home buyer’s incentive has been an abject failure that clearly does not help urban centres where housing affordability is most at issue. The mortgage stress-test has made it even more difficult for millenials to enter high priced urban markets with confidence. Many millenials have become resigned to their fate, leaving urban centres in droves, searching ever-farther away from major cities in order to find something affordable. Major cities like Toronto and Vancouver are becoming hollowed-out and inaccessible to young Canadians. Many of them are either stuck in their aging parent’s homes, pushing for an urban real estate dream that increasingly feels farther from ever achieving fruition, or have simply given up altogether.

I am respectfully asking you to recognize that the steps your government has taken on urban housing affordability have not had their desired effect. It is time for you and others in the Liberal government to move on from those failures, and begin taking concrete actions to help young Canadians afford property ownership in their own cities.

Regards, – – – – – –”

(Note: This letter was lightly edited for privacy and clarity)

This letter was sent in the spring of 2020. I received an automatic reply that someone had been assigned to my correspondence and would be getting back to me shortly. After not hearing anything back for some time, I followed up in the summer, and again in the fall. Both times, I received no response other than an automatically generated email. Nearly one year later, I still have received no response from my MP or their staff.

Ultimately, I have ended up being one of the privileged few millennials who owns (very modest) property in a large Canadian city. But I still believe that our generation is being largely forsaken on this issue. Stuck with the prospect of life at home, the pandemic created an increased demand for houses, but few younger Canadians are able to afford spacious housing near major city centres. As a result, demand for houses farther and farther away from major city centres has skyrocketed during the pandemic. Demand for urban condominiums, while relatively anemic during the pandemic, is already recovering, and expected to increase once workplaces resume physical operations, schools reopen, and immigration returns to the pre-pandemic rate.

The results are still coming in, but the pattern for young Canadians is becoming clear. More of us are living at home than ever before, returning to aging parents with little prospect of self-determination. Many are toughing it out in the big cities, either paying exorbitant rents to opportunistic landlords, or stretching as far as they can to own a small condominium. Those buyers are spending more than what many of their parents once comfortably spent to own large houses. Plenty more young Canadians are leaving major cities entirely, and beginning an urban exodus that risks hollowing out the character and lifeblood of increasingly gilded and inaccessible city centres.

Although I wrote a letter complaining to a Liberal MP, about the specific policies of a Liberal government, this is not a Liberal problem on its own. It is not the fault of any one provincial or federal government. Housing is an incredibly complex and political issue, with a wide array of opinions, incentives, and proposals coming from different parties. There is no silver bullet to this issue, or simplistic solution. But as a starting point, our governments and government officials need to heed the warnings of an increasingly lost and despairing generation. They need to show that they are alive to this issue, and aware of the long-term societal effects that the overheated housing market is creating. Failing that, at the very least, they need to at least start showing that they hear us, and actually respond to our letters.