What Can Be Done About Unaffordable Housing Across Canada?

In our previous blog, we discussed the challenge with places like Vancouver and Toronto only having the ability to grow up versus growing out, causing massive price increases.

Buyers in those cities need some help from the Bank of Mom and Dad or do house hacking to acquire their properties and sustain their mortgage. Those who can do neither ventured into other cities like Calgary to find more affordable housing.

Toronto Rental Situation

We had the opportunity to talk to Kyle and Emily to learn more about the rental situation in the GTA. Kyle has been a resident in Mississauga for the last five years and is currently renting a 300 square feet basement suite for a shocking $700 a month. Emily is a wife and a mother of four. Their entire family of six is all living in a 900-square-foot, two-bedroom condo in the GTA.

These two individuals are actual representations of homeowners and renters that are feeling frustrated in the GTA and Vancouver. And they have been contemplating moving for a couple of years now.

Emily and her family have been watching the real estate market closely for more than a year now, waiting for the best time to sell their condo and move up. They are considering Oakville and Burlington which are wonderful areas close to their workplace. However, the recent interest rate hike made that plan seem out of reach.

They also have other friends and relatives in the same boat, feeling the struggle and the frustration. All they can do now is be optimistic and hope that interest rates and home prices will go down so they can finally get a chance to move.

Canada is now in a high inflation condition, which is causing interest rates to go up. But historically the current rates are not that high! If you look at the last 30 years' record, the average rate is around 5%. Back in the 1980s, rates even skyrocketed to 18%.

Having so many different forces pushing interest rates and home prices causes confusion for a lot of people. When consumers are confused, they typically refuse to make a decision. That is what is happening to the market right now.

Finding Affordability

Home prices in the GTA and Vancouver have softened over the past months. Yet, it is still not enough to make up for the affordability problem that there is. Spending $700 a month in rent can go a lot further here in Calgary than it can in Mississauga, Toronto or Vancouver.

According to a report published by Generation Squeeze, if you were to move to Calgary and rent a place for the same price, the value of your money would go further. You will have more space and even shave off over 15 years of time in saving for your down payment simply by living in a different location.

This report says that it takes over 25 years for someone to save up the 20% down payment in BC or Ontario, while it only takes under 10 years to do the same in Alberta.

Whenever you feel like you are being pushed to the wall, you need to find a window. And moving to Alberta could be that window for you. Hope is one of the strongest emotions that you can feel. On the other hand, being hopeless is the opposite! Feeling hopeless in figuring out where to go can be devastating.

Emily and her family are planning to move to Calgary by March. As early as now, her friends are already telling her they want to visit her here to see if moving to Calgary can also be the best option for their family.

Moving to Calgary can be quite a journey, but it is a path that Emily along with her family is willing to take. They are convinced that it will be so much better for all of them to be here. They can have more sustainable living and even be mortgage free through the home equity that they have.

Transfer of Equity

Being mortgage free is a goal that many Canadians have. For many families, paying their mortgage is the biggest cost they have every month. So if you are living in Toronto or Vancouver and you own something, you might just have to transfer that equity and get closer to that chance of owning a place without any mortgage.

According to the affordability index released by RBC, 90% of the typical household income in Vancouver goes towards the average cost of running a house. In Toronto, that number is 83%. While in Calgary, it is only 38%! That is a massive difference.

Many of these people who need to make the change and want to move have the equity they need to pay the down payment required to own a home in Alberta.

Millennials in the GTA have two choices, to stay and be part of the world-class city that it is becoming or fulfill the Canadian dream of home ownership elsewhere.

A lot of people might choose to remain in Toronto if there is a really good career opportunity for them, and there is a reason for them to be close to Bay Street or close to the financial district or in the financial heart of Canada.

But many people are becoming less and less dependent on that. The workplace is relatively decentralized, and you can now get a job in a better company with a hybrid set-up anywhere.

The ratio between the prices of houses in the GTA and salaries is so far apart. House pricing has gone up significantly in the last 15 years, but the salaries have not kept up the pace to that. So many young professionals trying to get into that marketplace chose to move.

Moving to Calgary

In 2022, our team helped over a hundred people make a change from out of town to the city that we live in. That is just within our team, there are way more that have moved here with the help of other realtors.

Emily started considering moving to Calgary because of a listing right next to a school, which is pretty enticing for their family. Her children could just walk to school, and there would be no need for her to drop them off. She can have more time to do other things.

Here’s an unexpected twist. Jeff and Catherine who recently became a Bank of Mom and Dad helped their sons buy properties in Calgary which is much more affordable than the GTA. Parents like them are also considering making a change and uprooting their lives because they want to be close to their children especially as they age.

Another surprising fact that we found out is that for many people, the only thing that’s keeping them from considering Calgary is the winter! Calgary seems to have an extended winter compared to what others are used to. It starts early and ends late.

In April 2020, Jeff and Catherine helped their son, Justin move-in into his new home in Calgary. It was sunny and warm when they arrived at the house. When they opened the door the next day, the ground was covered with snow! Good thing they got things done in time.

Why Choose Calgary

Most people who move to Calgary want to feel close to the action. They want to feel the energy and be close to things that are happening, nightlife, and all that kind of stuff.

What's interesting about Calgary is it is very similar to Mississauga. There is an airport in the northeast part, three Costcos, lots of parks and a lot of people!

Mississauga has about 800,000 people while Calgary has about 1.2 million. Yes, Calgary has more population, but it is also much larger than Mississauga. Mississauga has 292 square kilometres of green space and Calgary has 825 square kilometres of green space. That is three times the parkland space than what Mississauga has!

Mississauga has 10% of its total land as parkland space, which is about 29 square kilometres. Calgary has 11% of its total land as parkland space, equivalent to 93 square kilometres.

Calgary has improved from being known as an abandoned ghost town from the oil days in the past. For the most part, you can find local shops in every quadrant. There are many local businesses like restaurants and coffee shops starting to franchise and have branches all around the city. No matter where you live, you will find these hip places close by to hang out and feel like being a part of a community.

Moving to another place and leaving some family members behind can be a big change, but sometimes chasing down affordability and a lifestyle that you are excited about can be worth it. Still, for some who are unwilling to move, you have to figure out house hacking or find other ways to have more income to sustain your lifestyle and mortgage cost.

The last number of years has opened up doors of opportunities, not only for Calgary but also for you. Our city grows with those of you that are making the change here. Calgary allows many people to fulfill this fetishization of home ownership that we have in Canada.

If you are from another city and considering making the change to Calgary, interview our team. We know the market well, and we want to help you make that change!