As if the crisis in the real estate market weren’t dire enough, we are being told that 40% fewer rental units and 23% fewer single-family homes will be built in Quebec this year than in 2022. complete shortage of housing, this is a very bad omen for many people.
New couples, immigrants, students, young graduates, low-income households, seniors who no longer want to maintain a home, victims of renovations and all others looking to rent will be particularly affected by this major setback. But in reality, all those who seek housing will suffer the consequences, especially young people who dream of buying a property.
In all, 40,000 new units will come out of the ground, which compares to 57,107 last year. This is the lowest number in seven years, says the Association of Construction and Housing Professionals of Quebec (APCHQ).
Imagine, only 8,000 homes will be built in urban centers – “a new historic low” – while the province would be short of at least 100,000 homes. A figure that does not even take into account the fact that Quebec wants to increase the number of immigrants accepted.
But precisely, if the demand for housing is so strong, how is it that construction contractors do not move heaven and earth to meet the needs and collect maximum gains? Because the costs of construction and financing have jumped, replied Paul Cardinal, director of the Economic Department of the APCHQ. To sell or rent for a profit, prices would have to jump dramatically, but there is a limit to what consumers can pay.
Entrepreneurs therefore prefer to wait for interest rates to fall before multiplying projects. The lack of manpower also slows the enthusiasm. As for construction costs, they have stabilized in the past year, but remain 35% higher than at the start of the pandemic.
The reasoning of entrepreneurs hardly surprises me in the context where access to property has never been so difficult.
To accumulate the down payment needed to buy a house in Montreal, you must save 10% of your gross income for 49 months. This is significantly above the average of the past two decades, which is 29.5 months. Even for a simple condo, 31 months of budgetary discipline are necessary, calculates the National Bank. No wonder there’s no more crowding in the sales offices of condo towers.
In Montreal, high prices combined with interest rates mean that the average household must now spend 54% of its income on housing, according to the RBC, a rate equivalent to the historic record set in 1995.
Faced with such a budget, many couples therefore postpone their dream of acquiring a bungalow with a small green courtyard… which accentuates the shortage of apartments. The good old principle of communicating vessels, what.
The situation is far from obvious for the youngest. And not just in the short term. The 3 ½ to $1,800 a month has an impact on their long-term financial health, as Desjardins economists point out. “Unfortunately, being a tenant for a long period of time has a significant negative impact on long-term savings and wealth accumulation. »
SCREENSHOT
Some apartments for rent in Montreal
The median net worth of homeowners approaching retirement age (55-64) was $952,100 compared to $40,000 among renters, according to Statistics Canada (2019). The gap is gigantic.
The retirement of a whole generation is therefore likely to suffer.
This issue would not be as serious if employers all offered generous defined benefit plans. But this is not the case. Plans that provide a comfortable and predictable retirement are increasingly rare, increasing the need for personal savings. How do you get there when 54% of your gross – not net – income is spent on housing and the price of groceries is at historic highs? Young people change jobs to improve their lot or move to more affordable cities, which teleworking facilitates, but not always cheerfully.
Others choose to stay with their parents. They were just over 35%, according to the most recent statistics, which date from 2021. It would not be surprising if this proportion has jumped since then.
Housing affordability even influences “family planning,” according to Desjardins. Some young people delay their plans to start a family and some women decide to have fewer children than desired for financial reasons.
Yet millennials haven’t been running after trouble. Financial knowledge is better than that of previous generations and more of them pursue post-secondary education, which increases the likelihood of enjoying a high income. That doesn’t mean that previous generations haven’t struggled too, but I remind you that the unaffordability of housing has never been so high.
Faced with such a portrait, it is high time that the government took the housing crisis more seriously and acted to increase supply. It must focus on social and affordable housing, as is done elsewhere in the world. It could also encourage the construction of “intermediate dwellings”, a category including duplexes, triplexes, quadruplexes and townhouses. These homes have the merit of bridging the “gap” between condos and single-family homes.
It is not a whim to want to find accommodation, it is an essential need.
Do you have a particular real estate story to tell me? I would like to read it.