With affordability falling, is it time to rethink home ownership?

Owning his own home is a key part of Vishal Joshi's Canadian dream. But despite his efforts to pursue higher education, save up a down payment and work hard at his career, the economics keep moving the goalposts farther away. 

Newly married and 31, Joshi considers London, Ont., home but had to move to Brampton to get a job as a quality control manager for a manufacturer of sinks and faucets. 

He and his wife are renting and want to buy a house. The problem is home prices, particularly where he lives, continue to surge at a pace that far exceeds what he can squirrel away in savings.

The Fanshawe College graduate is renting at a rate of more than $2,000 a month. He's managed to save about $25,000, but in a market where a decent townhouse is in the $900,000 range, it's nowhere near enough to swing a purchase and anywhere close to his work isn't close to affordable.

"The radius of where we're looking for a house keeps getting bigger and bigger," he said. 

He'd like to find a job similar to his in London, where houses are more affordable, but hasn't been able to find a comparable position in the Forest City. 

"When I drive back to London, it feels like home, but the right job isn't there," he said. 

Falling affordability has Joshi considering other options, everything from heading to the United States to moving back to India where he was born. Both are options some people in his peer group have chosen. 

He said the main barrier to buying is saving enough money for a down payment. 

• Did you ask for cash towards a down payment on a house in lieu of gifts at your wedding? We want to hear from you. Send an email to ask@cbc.ca.

Looking for home 'like going to a buffet' with 2 options, prof says

Diana Mok, a University of Guelph professor who focuses on real estate and housing, questions whether home ownership can even remain a universal goal for Canadians like Joshi.

People with decent jobs in an era of high inflation and stagnant wages are struggling to buy and those who manage to pull it off are exposed to considerable financial risk, for something as simple as shelter. 

She said it's time to look at residential tenure options outside of home ownership. 

"Right now looking for housing is like going to a buffet, but instead of different options, there are only two available: rental and home ownership."

Mok recommends exploring and expanding other options aside from owning or renting, including: 

• Life lease: A form of tenure in which the resident doesn't own the property, but holds a contract that allows them to live there. This lease can be transferred to another family member or sold.  
• Co-owning: This involves pooling money among people who are not romantic partners. There can be a lot to consider with this approach. 
• Land Trust: Under this model a benefactor buys a property and provides rental units to tenants at and affordable rate. Housing corporations in many Canadian cities provide housing this way, often to low-income earners who qualify. Mok said with the help of governments, this could be expanded as housing becomes more expensive. 

Mok said some of these options, and others, could allow people some of the benefits of homeownership without taking such a big financial leap.

2-year search for home pays off for this woman

Some young Canadians do manage to swing a first purchase without a large salary or help from family, but it isn't easy.

Gabrielle Coleman became a first-time homeowner earlier this year, but only after a bumpy search that took two years.

Coleman, who is in her 30s, had a goal of buying her first home without a six-figure salary, a partner to share expenses or a boost from the bank of mom and dad. 

Coleman is a sales manager in the agriculture industry. 

"I just wanted a house for myself, nothing too big," she said. "I just wanted a bungalow or a simple one-storey."

Despite the challenges, she felt home ownership made the most financial sense for her. A big factor pushing her toward buying: rents in London had climbed to the point where the monthly mortgage payment was roughly equal to the rent of a decent one-bedroom apartment. Also, she'd seen friends happily renting a house only to have their tenancy end abruptly due to a decision by the owner. 

To find a small house that fit her budget, she had to widen her search to areas outside of London, targeting places like St. Thomas, Strathroy and Lucan. Those locations were viable because she can work remotely and often has to drive to meet clients outside of London anyway.

Dealing with shifting financial reality

During her search, the financial reality continued to shift.

She was first approved for a $600,000 mortgage, but when interest rates began to climb sharply in early 2022, it pushed that amount down to $550,000. 

"Nothing had changed on my end. It was just the interest rates, something I didn't have control over."

The search took a lot of time and created a lot of stress.

She's lost count of the exact number, but on at least five occasions she put in an offer and lost to a buyer willing to pay more. 

"You'd see a house listed for $400,000 and it would go for $500,000, which was really hard," she said. 

Having her hopes raised and dashed repeatedly took a toll and eventually forced her to take a six-month break from the home search. 

"I took pause because I was just so defeated," she said. 

Shortly after she decided to get up, dust herself off and resume the search, Coleman's Realtor found her a bungalow in Lucan going in the $500,000 range. 

"It had only been on the market for a day," she said. I put in an offer in next day, which we had increased because they were expecting other offers that were coming in."

Coleman managed to get the house and it's working out well for her. 

"I needed that control. I love the idea of having a home, building equity and having a place that's mine."