A Boucherville bungalow with a huge garden for $325,000. A quintuplex in Laval at $400,000. A renovated four-room condo in Villeray at $199,000.
You might think I’m pulling examples from the last century, but these properties for sale were posted in the classified ads of The Press in February 2014, just 10 years ago.
At a time when you could still invest in real estate without selling a kidney, or your soul to the devil.
PHOTO ARCHIVES THE PRESS
A real estate section taken from the pages of The Press, in February 2014
Homeownership goes unnoticed these days, hidden in the blind spot of the housing crisis. But for an entire generation, it is a dream that has become inaccessible. Unthinkable, even: 64% of young Quebecers have “abandoned” the idea of one day owning a house or condo, according to an Ipsos survey.
A historical inequity is growing between the rising generation and the one that preceded it.
For the first time in at least half a century, the homeownership rate has declined in Quebec. It slipped from 61.3% to 59.9% between 2016 and 2021, far behind the Canadian average of 66.5%.
This might seem like a statistical detail, but it’s more of a trend that shows no signs of reversing itself.
Quebec is gradually becoming a people of tenants again.
Many households are spending a larger share of their income than ever before on paying their mortgage – when a bank agrees to give them a loan. “Affordability” of the real estate market is at its lowest since at least 1981 across the country, according to a troubling report published by Charles Saint-Arnaud, chief economist at Alberta Central.1.
And it is in Montreal, of all the large Canadian cities, that the situation has deteriorated the most over the past year, he says.
In the metropolis, families now need a net annual income, so After taxes, of $121,000 to be able to afford a property at the average price, with a down payment of 20%.
According to Saint-Arnaud’s calculations, it would be necessary for prices to fall by 43%, or for wages to increase proportionally, or for interest rates to fall very close to zero, all at once for properties to become “again”. affordable” for the average Montrealer.
These scenarios won’t happen, of course.
Why pay so much attention to home and condo buyers when there is a dire lack of affordable housing and there are thousands of homeless people?
We can – and we must – focus on these two fronts at the same time. They are interrelated.
First there is the question of wealth creation, so dear to the government of François Legault.
For the majority of people, purchasing a home constitutes the main investment of their entire life and the most important piece of their assets. A sort of forced savings, very concrete, in the form of bricks and mortar.
Home ownership also provides continuous oxygen to the rental market. People who buy generally vacate a home, which becomes available for another tenant. A domino effect, if you will.
Finally, purchasing a residence constitutes a form of protection against evictions and other abusive rent increases, which have become commonplace in the Quebec rental market.
Some are starting to talk about the need for a new “Corvée habitation”, or even a “Marshall plan”, to give aspiring homeowners a boost.
Loaded terms, which evoke crisis and urgency, and which appear to me to be entirely justified in the current context.
The leader of the Parti Québécois, Paul St-Pierre Plamondon, tabled a fairly comprehensive plan to this effect on Monday. It proposes a series of measures, most of them inspired by government programs from the 1980s and 1990s.
The PQ suggests, among other things, a 3.5% rebate on the current mortgage rate for first-time buyers, paid by the State for a period of three years. Quite similar to the “My rate, my roof” program of the government of Robert Bourrassa.
Another memorandum, submitted to the Ministry of Finance as part of the consultations on the 2024-2025 budget, makes a bold proposal. Promoters Laurence Vincent, president of Prével, and Martin Galarneau, partner of the TGTA group, suggest setting up a $1 billion fund to stimulate the purchase of a first new residence.
This envelope would provide 20% of the purchase price, or the equivalent of the down payment, an amount which would have to be repaid after 10 years by adding the capital gain realized on the property. This boost could reduce monthly payments by about $500 per month for a $400,000 condo, at current rates.
As the fund would recapitalize as the loans were repaid, it would be a zero-cost investment, perhaps even slightly profitable, for the Quebec state, the promoters believe.
Ideas among others, all of which have the merit of shaking things up.
Those who are banking on the next provincial budget to help first-time buyers should not hold their breath. Nothing very concrete is planned in this regard, according to my informants.
Quebec estimates that it has already invested a fortune in affordable housing and is waiting to see how these amounts materialize in construction starts. The government believes that it is by leaving more money in the pockets of taxpayers, in particular with tax cuts, that it will be able to help families acquire their first home.
The idea is justified… on paper.
But for all these young (and not so young) middle class people who are already struggling to pay their $2,000 rent and their skyrocketing grocery bill, this lack of direct assistance risks being received as a slap in the face.
1. Read Charles Saint-Arnaud’s report (in English)