The dream for Millennials and Gen Z to become homeowners in the Okanagan is not dead.
But escalating real estate prices has placed increasing importance to develop a national housing strategy to help keep that dream alive, says a new national marketing study released by RE/MAX this month.
Elton Ash, executive vice-president of RE/MAX of Western Canada, says a meaningful impact on housing affordability means the need for involvement of all three levels of government.
Ash said the existing strategy is based around taxation, evident in recent years by added taxes placed on foreign buyers and the controversial home speculation tax assessed in Victoria, Vancouver, West Kelowna and Kelowna.
He says the foreign buyer tax, largely directed at mainland China housing investors, had a short-term impact long since overcome by the demand of those buyers to invest in Canadian real estate.
“The added tax is now just another cost of doing business,” he said.
The speculation tax was a penalty against out-of-town buyers in those markets for making a long-term investment hedge against inflation.
Ash says he wants instead to see the feds offer incentives for developers and home builders to expand the rental inventory pool, such as what was done back in the early 1980s to resurrect a housing industry that crashed in 1981 as mortgage rates climbed above 20 per cent; for the province to assist first-time buyers, and the municipalities to remove rezoning bureaucratic red tape.
Ash, who has an office in Kelowna, said Canada at 70 per cent has the highest rate of homeownership in the world, even ahead of the U.S. at 68 per cent, due to decades of relatively cheap housing, which the Baby Boomer generation has been the beneficial recipient of, advantages of affordability not being passed on to Millennials or Gen Z.
He says the term ‘life-long renter’ is common in Europe because the cost of urban core housing is prohibitive in major European cities like London, but is beginning to enter the language lexicon here in Canada.
But he remains optimistic such thoughts don’t paint a picture of what is happening in Vancouver or Toronto real estate markets, or in the Okanagan.
“I am an optimist by nature and the reality is that the real estate market goes in cycles so change will always happen,” he said.
According to Ash, three factors to pay attention to are interest rates increasing as a reaction to any rise of inflation; the service sector of the economy recovering from the negative impact of the COVID-19 pandemic; and how people spend the discretionary spending that has built up since people have not had the entertainment leisure or travel opportunities.
“I think the buildup of cash savings during COVID reflects on how people can afford homes in some cases if they just cut back on some of their discretionary spendings,” he said.
The RE/MAX market analysis found one in three Canadian homebuyers are exploring alternative options to help them get a foot in the housing market such as renting out a portion of a primary residence (21 per cent); pooling finances with friends or family to purchase a home (13 per cent) and living with like-minded neighbours in a co-op/shared living arrangement (seven per cent).
According to the Leger survey commissioned by RE/MAX, key barriers to personal housing affordability in Canada are identified as a shortfall in salary (26 per cent), fear of rising interest rates (18 per cent), fear of being “house poor” (18 per cent) lack of steady full-time employment (16 per cent), current levels of household debt (11 per cent) and the mortgage stress test (11 per cent).
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