Since the onset of the pandemic, Ontario has experienced the worst erosion of housing affordability any province has seen over a two-year period since the mid-1970s.
According to a new study from Generation Squeeze at the University of British Columbia, between January 1, 2020, and December 31, 2021, the gap between local earnings and average housing prices in Ontario grew at a pace not seen in 50 years.
In 2018, the average price of a home in Ontario was $571,771. By 2021, it had risen to $871,688 – an increase of nearly 44%.
According to the study, Ontarians aged 25 to 34 now have to work for 22 years to save for a down payment. The figure has increased by six years since the onset of the pandemic and by 17 years since the mid-1970s.
While the increase has priced many younger Ontarians out of the market, it has grown the wealth of those who own their homes, especially older residents. The net value of principal residences in the province is $1 trillion more than it was in 1977 – residents over the age of 55 gained 68% of that wealth, while those under 45 gained 11%.
- You might also like:
- "The housing party is over:" Modest correction in Canada underway
- These are the 8 most family friendly neighbourhoods in Toronto
- Higher interest rates won't be enough to "cure" Canadian housing market: CIBC
In order for younger residents to afford a home in Ontario, average prices would need to fall by $530,000, or average earnings would need to increase to $137,000. In the GTA, those figures stand at $750,000 and $172,000.
“If we interpret the goal of the housing system is to generate wealth for homeowners, then we should judge that our system has been operating excellently for decades, especially for older residents,” the study states.
“But if the goal of the housing system is to ensure all Ontarians have an affordable place to call home, then the system is clearly broken.”