Why I can’t afford to buy a house

This week the CCPA released a report asking: what happens if the housing bubble bursts? The answer, as you might expect, is not pretty. The report looks at several scenarios in which Canada’s real estate market declines by 20%, and finds that the effects on young families would be devastating. David Macdonald paints a bleak picture for young homeowners, and underscores the need for governments to prioritize the deleveraging of the household sector.

However, when I read this report, my first thought wasn’t concern for the real estate market. My first thought was: what millennial is buying a house, and can I have their job, please?

Houses are really, really expensive…
House prices have been going up, and up, and up for several decades now. The Bank of Canada predicts that housing prices are on average between 10% and 30% overvalued. Prices have risen 154% since 1999. In every major Canadian city, house prices have doubled (at least) over this period.

Generation Squeeze notes that young Canadians have to save three times longer for a 20% down payment on a house than they did in 1976. Even thought interest rates are low, higher home prices means that the average monthly mortgage payment is larger.

…and I can’t afford it.
Full-time, well paying employment opportunities for recent grads and young workers are increasingly scarce. The effect of the 2008 recession on young workers has been well documented. In 2014 there were roughly 265,000 more unemployed young than in 2008. Over two-thirds of the vanished jobs were full-time positions. Young workers must take jobs that are less well paying, for fewer hours, which they often over-qualified for. “Under-employment” has become the norm.

Without stable, well paying jobs, young workers will not be able to afford the leap into homeownership. I know I can’t.

Most of us have way too much debt
More and more young Canadians are entering university or college, and accumulating more debt than ever before. According to the Canadian Federation of Students, the average debt is $27,000 upon graduation. Those with debt $30,000 saw the fastest growth since 2009: up by 33%.

As Erika Shaker and David Macdonald detail in their report, students have born the brunt of spending cuts to university funding from provincial and federal government through increased tuition and fees.

More student debt means it takes longer and longer for young people to start saving for a house. We are starting our careers at a loss. Can you blame us for being hesitant to add to their enormous pile of debt?

I don’t know where I want to live…
With the job market the way it is, I don’t have the luxury of getting to decide where I want to live. There is only one important factor in my decision: do I have a job?

When you buy a house, you become less mobile. You can’t pack up and move across the country for a 6-month fellowship that you pray will turn into something more (it won’t). Settling down, being rooted to one city, would mean giving up on opportunities elsewhere. I don’t have that luxury.

Sure there are factors such as proximity to my family, whether I have friends there, what the brunch scene is like, but when it comes down to it, employment is my single biggest concern.

… but it sure as hell isn’t the suburbs
Housing costs in urban cores, most notably Vancouver and Toronto, have made homeownership in these cities virtually impossible for young workers. Housing is much, much cheaper in the suburbs. For those looking to buy, the cheaper prices of the suburbs are probably the only thing available.

Personally, I have no desire to live in a suburb, no desire to have a two hour-long commute to work, no desire to drive my car to the grocery store because it’s located off the highway. Walkability, access to transit, proximity to bars and grocery stores and restaurants and shops — that’s what improves my quality of life.

Someone hire me (full-time, on salary, please) 
When I think about my future — career, family, kids — property doesn’t feature into my daydreams at all. Buying a house simply isn’t on my radar. The thought of buying one, just like buying a car, is absolutely bizarre to me. I don’t think of not having these goods as failure — I think of it as sound financial planning.

Davis Carr is a Communications Assistant with the Canadian Centre for Policy Alternatives and a bonafide millennial. Follow her on Twitter @ohhaidavis

11 comments

  1. I very much appreciate this clear and accurate breakdown. I’m not a millennial by most definitions – I work in tech, but turned 41 last month. New daughter. Not only is the situation impossible (especially given the interest rate risk even if we could scrape a down payment together and despite the fact the we are awesome budgeters). Not owning is risky because with 24 more years of work, if I can’t pay out a place to live, retirement savings must include rent – rent that will easily double over that time horizon. Current investment options really don’t make saving that kind of money feasible… Not really, not if you want to feel safe in your retirement. It’s a crunch at both ends – other than drastically lowering cost of living, this city is simply not affordable for most. Who is going to keep the economy going when everyone taking the 35K jobs to pay off student loans and get by decide to leave this totally bum deal? Breaks my heart.

  2. I was financially ruined by 1) Family law court because I had a Legal Aid lawyer which I am still paying off, and 2) student loan debt with zero forgiveness. My child support is included by the National Student Loan Centre when calculating income for the purpose of payment assessment. So I am currently paying over $400/month for student loans, plus the Legal Aid bill, and raising two teenagers with college costs and braces, on a little over $2000/month. Once the child support stops, we won’t be able to afford the rental we currently have. What do we do then? Quit my job so that I don’t have to make student loan payments? Eat at the food bank? It sucks when you follow the rules, study hard and get good marks and then you can’t get a decent enough job or a fair family law settlement so that the kids you raise can have a home. And we had to move away from the kids’ home town in order to get a job, because temporary foreign workers. And I won’t have paid off the student debt until I am in my 70’s. So no home for us. Ever.

    1. What do you mean temporary foreign workers? Most if not all, foreign workers do not have office jobs, they take the work that Most Canadians do not want, working in farms or jobs with the lowest pay per hour, shift work etc etc- . I wish we, the Canadian population stop blaming Foreign workers. We need our government to create more office jobs, bring back the manufactures and stop trading our resources for barely anything in return.

  3. I thought i chose a riskfree occupation as an engineer having studied hard not lacking ambition, but after looking for 2 years it doesnt seem good. The only work out there is in service industry or some factory im sure. But ive already done that for years. My biggest problem is with employers who need so much experience to hire you. The gap of experience and finishing school leaves you getting no pay and sleeping on someones couch at an internship and even those are scarce. That is out of the question since i have a 2 year old to support.

    As far as getting a house, its either my parents give it to me or ill never own house, simple as that.

  4. I am so tired of hearing this statement: “Personally, I have no desire to live in a suburb, no desire to have a two hour-long commute to work, no desire to drive my car to the grocery store …Walkability, access to transit, proximity to bars and grocery stores and restaurants and shops — that’s improves my quality of life.”

    Lots of folks say this in their twenties but when kids come in their thirties, downtown life in a tiny shoebox condo makes you realize, it is not only about what you want and need. Every single family moving into our subdivision is coming from a tiny central Toronto condo. Every single one over the last five years. An guess what? These families are happy.

  5. Me: 32 years old living in Toronto | Income FT Job: $61,000/yr. Income PT Job: $4,000/yr. Income At-Will Employment: $2,000/yr | Education: BA Economics, B.ED. Intermediate/Secondary, MA International Dispute Resolution | Student Debt at Graduation from BA/BEd: $41,300. Background: Single parent (mother) upbringing; Set compounding, achievable and manageable short, medium and long term goals > Know the difference between wants and needs > Dispassionately assess your available assets (skills, economic etc.) > Enhance those assets through training as necessary > Work harder today than you did yesterday > Do not spend more than you earn.

    Do I want a house? Yes. To that end I am saving every nickle for a down payment and am willing to sacrifice a lot in the present to achieve that goal. I will not start another pile of debt. I am back in school to further increase my earning potential. Not having what I want means *I* just haven’t worked hard enough.

    I can’t afford to buy a house because of economic conditions AND choices I’ve made. I agree that Millennials got handed a raw economic deal. So what? That’s just the way it is. Life owes me absolutely nothing; even though I ‘did everything right’.

  6. There is nothing wrong with renting. I think there is too much emphasis on home ownership. There are many many people worldwide who do not own their homes.
    Relocation to where the opportunities are should not be overlooked, including looking abroad.

  7. Great article. I think as a generation millennials need to let go of the concept of home ownership. The world is changing fast. Last year Calgary was the place to be, this year people are falling over each other to get out. It is important to stay mobile, learn skills, network and hustle. Hustle is the main ingredient missing in our generation. Our grandparents had it, I’m not sure our parents needed it, but we need it in this economy. It’s not just about working hard but working smart being savvy.

    There is no level of education that can promise financial security anymore. Trades, Lawyers, Engineers, Nurses, Service Workers, Marketers, IT. Get more education, get less, get it from youtube or from a university, it doesn’t matter. You need to hustle. We need a little more resolve. We know the economy sucks. We know the job prospects are weak. There is nothing we can do but hustle and stay mobile. And don’t buy a house. Ever. When the bubble pops in this country it will never recover in our lifetimes. Like Japan. Interest rates will only go up, demand will only fall. The old world of traditional careers, home ownership, pensions, white picket fences and 2.5 kids are gone.

    “In times of change learners inherit the earth; while the learned find themselves beautifully equipped to deal with a world that no longer exists.”

  8. We rent, and have a family net income of over $100k. Why? Because in Vancouver, it makes no financial sense to buy. We live in a house assessed at $900k (1950s bungalow, in good shape though), for $2000/month. Why would we buy when the mortgage payment would be somewhere around $5k, and we’d have to rent out the basement to pay the mortgage (and we actually need that space!). So, why buy when house prices are so out of whack with rent costs? Do people like to commit financial suicide? No thanks!

    1. Um…because if you were to own the house and pay $3,000 more each month…the day you sell it in 20 years, you will perhaps be able to sell it for 2 mil+? You’ll have a comfortable retirement and perhaps give some extra dough to your kids? If you keep renting, it is $2,000 lost each month, you absolutely will get nothing in return except for temporary shelter. Simple logic.

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