Can’t afford to buy a home? Can you afford not to?

By Ben Myers
October 19, 2016

In late September I appeared on The Agenda with Steve Paikin to discuss housing affordability, and whether Toronto homes were becoming luxury goods. The entire panel was in agreement that house prices in Toronto will continue to appreciate rapidly if we continue with the status quo. We discussed the construction of social housing, rental projects, stacked townhouses and market rate condominiums.

As much as I would love to see our government focus on improving affordability, building more social housing, and making changes that assist in the development of new residential supply, I’m not holding my breath. So what does the status quo mean to you?

If Toronto and the GTA continue on the current path, we will continue to see fewer and fewer single-detached and townhouse units get completed due to a lack of land availability and the mandate from municipalities to produce higher densities like stacked towns and apartments in accordance with the updated Places to Grow Act. Both new and resale pricing for lowrise housing will continue to rise (in the absence of a recession) and there will be a lot fewer choices for these buyers. The only affordable choice left will be condominium apartments.

The average resale condominium was just under $420,000 on average in the GTA in August per the Toronto Real Estate Board, while the average new condominium clocked in at $480,000 per Altus Data Solutions. These prices might seem crazy to you, but there are less expensive options available if you are willing to compromise. The average resale condominium in Brampton was $290,000 in August, while our new development project with Adi Developments called The West in Burlington, has units from the $190,000s.

Despite the less expensive condominiums in Brampton and Burlington, you still might be saying that these prices are not affordable to you. With the likely continuation of house price gains, I’ll post the question: Can you afford not to buy a home? I would never recommend stretching beyond your means, but maybe getting rid or your car is an option, with a number of new condominium projects located right off GO train stations in areas like Burlington, Mississauga and Markham.

In my latest Market Manuscript report I quoted a poll from the US that showed that homeownership is still highly preferred to renting in America, despite the fact that their housing market went through a noteworthy correction. So, what are you waiting for? Realtors I surveyed for the Market Manuscript indicated the number one reason their clients haven’t purchased a home is because they think house prices will decline. They might be right, but based on the past 20 years, they may be waiting a very long time before they do.

About Ben Myers

Ben Myers is President of Bullpen Research & Consulting, a boutique real estate advisory firm, that works with landowners, developers, and lenders to better inform them of the current and future macroeconomic and site-specific housing market conditions that can impact their active or proposed development projects. Follow Bullpen on Twitter at @BullpenConsult or find Ben at bullpenconsulting.ca

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