New polling released by the Ontario Real Estate Association (OREA) confirms that the rising cost of living is greatly impacting Ontario’s families – and shows that the pressures of rising interest rates have worsened, not improved, overall housing affordability in the province.
Conducted by Abacus Data for OREA, the Housing Affordability in Ontario: Perceptions, Impacts, And Solutions (Wave 3) report found that 64% of Ontarians spend over 30% of their household budget on housing. Further, 95% agree life is more expensive today than it was just two years ago, with nearly half reporting they may have to make difficult choices to make ends meet. Many Ontario families are reducing entertainment or meals out, driving less, and spending less on groceries to cut back in light of rising rates.
However, the desire to own a home is growing, particularly among the province’s renters, with 69% of non-homeowners saying they are someone who ‘really wants to own a home’ (+9). Just 5% identified as ‘someone who would be happy renting forever’ – a 17% drop from January.
“At a time when homeownership rates are on the decline, the desire to own a home is still growing,” said OREA President Stacey Evoy. “But these rapid, outsized increases we have been seeing to curb inflation are hurting Ontario’s families – it’s clear Ontarians are feeling the financial pressures of inflation amid an existing housing affordability crisis. Housing remains a spectrum issue across the province, and we must work together to keep housing affordable and the dream of homeownership within reach.”
While decreasing home prices may address one aspect of affordability, it does not help overall affordability: 82% of Ontarians say today’s higher mortgage rates are making buying a home more (37%) or much more (45%) difficult.
Some jurisdictions – like the Province of Ontario and City of Toronto – are making long overdue changes that will improve long-term outlooks on affordability, including changes being implemented through pro-housing legislation like the More Homes Built Faster Act provincially and the HousingTO Action Plan in Toronto.
“Now is the time to stay the course on these important changes. Rising rates might mask the problem as prices dip, but lack of supply remains a key issue,” said OREA CEO Tim Hudak. “The Ford Government’s More Homes Built Faster Act will help bring affordability closer to hand and ensure future generations have a fair shot at getting the keys to their own home. But more can still be done, and governments at all levels should be considering policy changes that will help increase both affordability and supply in Ontario’s market, particularly when it comes to providing more immediate relief.”
To help solve the crisis, Ontario’s REALTORS® have put several ideas on the table for consideration, including:
- Providing further financial relief for young families and millennials, by doubling the current land transfer tax rebate from $4,000 to $8,000, helping first-time buyers afford their first home.
- Revisiting the mortgage stress test to make it more dynamic and responsive to a changing market – currently, homeowners hopefuls must qualify two per cent higher than current rates, or at around 8%.
- Extending the amortization period for CMHC insured mortgages from 25 to 30 years, allowing buyers with less than 20% down to spread their payments out over a longer period of time, reducing their monthly carrying costs.
- Ending exclusionary single-family zoning in high-demand urban areas such as Toronto, allowing for much-needed gentle density and increased supply.
- Utilizing surplus government lands and commercial conversions to increase housing supply and encourage development of transit-oriented communities.
Housing is a spectrum issue, and Ontario needs new supply at any and every level in order to address the affordability crisis and help ensure everyone has a fair shot at owning a home.
However, all levels of government must work together and take quick, meaningful action to increase supply and improve affordability, creating future generations of Canadian homeowners. More homes and more affordable choices is what will help frustrated young families finally get the keys to a new home.
