Certain pockets of the country boast some of the highest housing prices in the world. For years, Toronto and Vancouver have been the most expensive Canadian cities to live in. For example, the average price of a home in Toronto hit a record-high in May 2013 at $542,174.
For months, analysts have sounded the alarm over real estate prices in Canada and have said a correction in the housing market is yet to come. With a supposedly artificial inflation in housing prices, the question begs: Will there ever be an affordable housing market in this country?
Many Canadians, particularly in the larger cities, are holding off on owning property. Rental rates have skyrocketed over the past two years, as wary consumers wait for the economy to stabilize. But the truth is rental prices in Canada have also risen dramatically and affordable housing is hard to find. For example: In Toronto, the monthly rent on a standard 1-bedroom apartment can cost you anywhere from $900 to $1400 per month. However, a 1-bedroom flat isn't suitable for, say, a family of 4 - which may require 3 bedrooms. The price of a standard 3-bedroom apartment ranges between $1700 - $2500 per month.
Sometimes, these prices are barely affordable for young, single professionals with a 50K/year income. So imagine the lack of affordability for low-income families or senior citizens. And with monthly rental rates so high, it becomes nearly impossible to save any money for future home ownership. It is these scenarios that have market analysts, city planners and many Canadians worried about the affordability of housing in this country.
The obvious solution to a housing crisis would be to build more affordable residences. But that's a tough battle that big, powerful developers always seem to win. Experts say inclusionary planning is key, whereby city planners require private developers to include a percentage of affordable housing in their residential developments. Although the idea is great in theory, it is often tough to enforce inclusionary planning in practice.
In Ontario, for example, matters and applications regarding planning are dealt with by the Ontario Municipal Board (OMB). This agency is an arms-length provincial body. But there are reports that the board is often biased toward rich development companies looking to build housing in Ontario's major cities. Ultimately, these developers are able to avoid the inclusionary zoning requirement - leaving the issue of affordable housing unresolved.
With brand new housing developments built every year across the country, city planners say inclusionary zoning is the most effective way to achieve affordability. Zoning requirements are initiatives that can be controlled, whereas a correction in the markets or a stabilization of the economy are unpredictable factors.
Until governing bodies are willing to take a tougher stance on private developers, the creation of an affordable housing market will continue to be an uphill battle.