Can my children afford to live in Toronto?

Growing up in the big smoke better known as Toronto was something that l took for granted and never stopped to think about where l was living or whether l may need to struggle in finding a home. Growing up in a downtown setting was something that was just there, and l never second guess myself or thought that finding a future home for myself and more so for my children would be a very difficult thing to do.

Over the past 30 or so years the trends would be that homes would come up for sale and over time in a palm easy going transitional way that a home in my neighbourhood would sell and new folks would move in as though it was a very normal thing that occurred. There have been time periods where mortgage rates would fluctuate and there would be a bit more movement, but nothing that would catch your attention and say “wow” that real estate market is crazy.

Trends in the real estate market would change, but with no major significance that one would take notice of, with the exception of 1981 when interest rates soared to 21% and most media outlets were talking about it and the long-term effects it may have on our future. I remember this era fondly where Minister Crosbie was the then Conservative Federal Minister of Finance with some dome and glume that it created. My most vivid memory of that time was my father coming into the kitchen and in his broken dialect said “there may be some problems coming in this country” those words to this day still resonate with me and are as vivid as day is long.

That was the one and only time in my lifetime that l took note of the marketplace and how it may affect our real estate moving forward and l also recall asking myself at the time…” would l be able to afford a house and live here in Toronto close to my family?

That was the only significant time for me over the past 30 to 40 years that l had any concern for myself and possibly my kids, but at that time l was only thinking about my future and the possibilities of living in Toronto. Looking back over the past in relation to my housing needs l took it for granted that l would never have a problem neither for myself nor my future generation until today. My personal journey was not as difficult as my children will have because of many of the changing factors that have occurred over the last several years.

Putting the COVID-19 situation aside for the moment, the influx of people moving into our city has put the real estate market today at an all time high. The demand for new product and for existing residential accommodations have gone through the roof. More folks coming into the city has put a high demand on real estate making prices sky high and in many cases a home that was very reasonable to purchase 5 years ago is now untouchable. With interest rates very low and product very scarce, it has elevated prices to all time highs with competing bidding wars on homes that have in some cases sold way over asking.

The way in which the system is set up today almost surely tells you that if you are in the marketplace today for yourself or your children, you probably will have to consider moving very far out of town. Your options are very limited, and, in many cases, the over inflated market is still getting crazy prices for homes that are not worth the true value.

On a personal note, my children will struggle even with two incomes to be able to afford a home in Toronto. This has led to many kids continuing to live with their parents and not being able to afford a home on their own. I personally know of many couples who have gotten married and needed to carve out a small area for them to live with their parents until they were able to find something. In some cases, these folks never move out and eventually take over the home that was there’s growing up. This situation is very common, and most are just taking over the family home and making it their own.

Although interest rates are low, one other obstacle in the mortgage game is that they have implemented a program called OSFI a mortgage regulator which makes it even more difficult in getting qualified for a mortgage. This program in my humble opinion has been put there to weed out folks that may be on the border and their risk could be high of either getting a mortgage or being on the verge of losing their job and throws them into a high-risk category. These institutions are making it almost impossible for our children and or someone just starting out that they most definitely will not be able to afford to live in Toronto or even the suburbs.

The other possible major issue will be ounce COVID-19 breaks and we go back to some sort of normalcy, many of us may not have a job to go back to. When you compound the effects COVID-19 will have on jobs and being able to show that income you need to buy a home, the institutions making it almost virtually impossible to secure a mortgage you have a receipt for disaster. The shit will really hit the fan when many of these government programs end and many will have to pay the taxes or in some case have to repay loans. Many families approximately 30% are living on the fact that they have only less than $200 and are living from month to month and in some cases week to week.

The way in which this shut down is heading there will be many folks losing their homes and being forced into poverty or moving very far away where they can afford to live. Many of us are either facing these challenges or will be coming to grips with these realities very soon.

You may ask the question is there a solution?

The one answer that l use to get all the time was that you need to work harder or get another job and save your money…. the problem with that line today is that there are no jobs and COVID-19 hasn’t made things easier.