Kean Birch is an associate professor in the department of geography at York University
I live in Toronto, and I rent. It was a deliberate choice when I first moved here in 2011, but now it’s not. I recently worked out that our family could buy a house valued at about $720,000 on our current rent: nothing close to the cost of a house on our street, currently selling for around double that. If we want to stay where we are – close to the subway, good schools and more – we can continue paying rent, or we can double our housing costs by buying in the neighbourhood. Buying would mean we’d be paying about 40 per cent to 50 per cent of our disposable income on housing, which is common in Toronto.
Now, we don’t want to spend that much on housing as it limits what else we can do. But my point is not to complain about our personal circumstances. Instead, it’s to highlight a gap in the housing affordability debate going on in Toronto right now – as well as the rest of the country. We saw an example of this debate during part one of The Globe and Mail’s National Housing Innovation Event Series, on Dec. 6. It showcased a series of speakers, including Evan Siddall, president of Canada Mortgage and Housing Corp., who started off arguing that the dream of housing ownership is unsustainable and that there’s a need for densification to reduce housing costs. Other speakers made similar points, including that increasing supply hasn’t solved anything. Contradictorily, most speakers also argued that increasing supply of the “missing middle” – of low-rise rental apartments – is a key solution to the problem.
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This won’t solve housing affordability, however, for a relatively fundamental reason: Housing is an asset. What does this mean for housing affordability?
A couple of recent research notes coming out of the Bank of England highlight this issue. The authors – John Lewis and Fergus Cumming – say that housing has a dual quality: It provides “housing services” to its inhabitants and it’s an asset. You can buy those housing services using a mortgage (and not pay rent to someone), or you can rent them. Unlike other goods and services, you can’t store housing services – buying when cheap and saving to use later – so rent reflects current supply and demand in the market, but house prices entail another dynamic.
Since housing is also an asset, its “price is determined by the (net present discounted) future value of its annual yield” – to quote Mr. Lewis and Mr. Cumming. They note that because asset prices are determined by future yields, they rise and fall in response to the future returns on other assets, and are therefore especially responsive to real interest rates. Consequently, as interest rates fall, then asset prices will rise as investors move out of safer assets such as government bonds for more valuable future returns. The yield from the sale of housing services (i.e., rent) can stay the same over time (so no one is paying more rent) and house prices will still rise as interest rates fall since houses become a more attractive investment asset.
So, to simplify somewhat, a house on our street with an expected future return of $36,000 a year – our current rent – would mean that buyers should be willing to pay $360,000 for it when real interest rates are at 10 per cent, assuming a 10-year time period. But, when interest rates fall to 5 per cent, then buyers would value those same future returns more highly, paying double the price at $720,000; and at 2.5 per cent they’d pay $1.44-million. Rent doesn’t change, yet the price of a house does, and significantly. And, it’s important to remember, these numbers don’t include mortgage interest. Counterintuitively, this means as interest rates fall and remain low, it becomes more expensive and takes longer to buy a house. Research by the Bank of International Settlement supports this argument.
Putting this dynamic together with the massive injection of surplus capital that various central banks released into the global economic system through quantitative easing after the 2008 global financial crisis highlights the fundamental problem we’re facing when it comes to housing affordability. Until interest rates rise, house prices will stay high because housing represents an in-demand and relatively safe asset class. At the Housing Innovation Event, Cherise Burda from Ryerson University made this very point, saying that 90 per cent of downtown condos in Toronto are investment vehicles.
But – and here’s the problem – if interest rates are raised, then this will erode the value of housing assets: It’s an intractable policy choice in the current political climate. No one dares to threaten the status quo, which is why we end up with political parties pursuing policies to expand mortgage access even further and simply exacerbating the problem of housing affordability.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
MONTREAL – The Quebec Professional Association of Real Estate Brokers says Montreal-area home sales rose 9.3 per cent in August compared with the same month last year, with levels slightly higher than the historical average for this time of year.
The association says home sales in the region totalled 2,991 for the month, up from 2,737 in August 2023.
The median price for all housing types was up year-over-year, led by a six per cent increase for the price of a plex at $763,000 last month.
The median price for a single-family home rose 5.2 per cent to $590,000 and the median price for a condominium rose 4.4 per cent to $407,100.
QPAREB market analysis director Charles Brant says the strength of the Montreal resale market contrasts with declines in many other Canadian cities struggling with higher levels of household debt, lower savings and diminishing purchasing power.
Active listings for August jumped 18 per cent compared with a year earlier to 17,200, while new listings rose 1.7 per cent to 4,840.
This report by The Canadian Press was first published Sept. 6, 2024.
In the quest to find cities where renters can enjoy the best of all worlds, a recent study analyzed 24 metrics across three key categories—Housing & Economy, Quality of Life, and Community. The study ranked the 100 largest cities in Canada to determine which ones offer the most to their renters.
Here are the top 10 cities that emerged as the best for renters in 2024:
St. John’s, NL
St. John’s, Newfoundland and Labrador, stand out as the top city for renters in Canada for 2024. Known for its vibrant cultural scene, stunning natural beauty, and welcoming community, St. John’s offers an exceptional quality of life. The city boasts affordable housing, a robust economy, and low unemployment rates, making it an attractive option for those seeking a balanced and enriching living experience. Its rich history, picturesque harbour, and dynamic arts scene further enhance its appeal, ensuring that renters can enjoy both comfort and excitement in this charming coastal city.
Sherbrooke, QC
Sherbrooke, Quebec, emerges as a leading city for renters in Canada for 2024, offering a blend of affordability and quality of life. Nestled in the heart of the Eastern Townships, Sherbrooke is known for its picturesque landscapes, vibrant cultural scene, and strong community spirit. The city provides affordable rental options, low living costs, and a thriving local economy, making it an ideal destination for those seeking both comfort and economic stability. With its rich history, numerous parks, and dynamic arts and education sectors, Sherbrooke presents an inviting environment for renters looking for a well-rounded lifestyle.
Québec City, QC
Québec City, the capital of Quebec, stands out as a premier destination for renters in Canada for 2024. Known for its rich history, stunning architecture, and vibrant cultural heritage, this city offers an exceptional quality of life. Renters benefit from affordable housing, excellent public services, and a robust economy. The city’s charming streets, historic sites, and diverse culinary scene provide a unique living experience. With top-notch education institutions, numerous parks, and a strong sense of community, Québec City is an ideal choice for those seeking a dynamic and fulfilling lifestyle.
Trois-Rivières, QC
Trois-Rivières, nestled between Montreal and Quebec City, emerges as a top choice for renters in Canada. This historic city, known for its picturesque riverside views and rich cultural scene, offers an appealing blend of affordability and quality of life. Renters in Trois-Rivières enjoy reasonable housing costs, a low unemployment rate, and a vibrant community atmosphere. The city’s well-preserved historic sites, bustling arts community, and excellent educational institutions make it an attractive destination for those seeking a balanced and enriching lifestyle.
Saguenay, QC
Saguenay, located in the stunning Saguenay–Lac-Saint-Jean region of Quebec, is a prime destination for renters seeking affordable living amidst breathtaking natural beauty. Known for its picturesque fjords and vibrant cultural scene, Saguenay offers residents a high quality of life with lower housing costs compared to major urban centers. The city boasts a strong sense of community, excellent recreational opportunities, and a growing economy. For those looking to combine affordability with a rich cultural and natural environment, Saguenay stands out as an ideal choice.
Granby, QC
Granby, nestled in the heart of Quebec’s Eastern Townships, offers renters a delightful blend of small-town charm and ample opportunities. Known for its beautiful parks, vibrant cultural scene, and family-friendly environment, Granby provides an exceptional quality of life. The city’s affordable housing market and strong sense of community make it an attractive option for those seeking a peaceful yet dynamic place to live. With its renowned zoo, bustling downtown, and numerous outdoor activities, Granby is a hidden gem that caters to a diverse range of lifestyles.
Fredericton, NB
Fredericton, the capital city of New Brunswick, offers renters a harmonious blend of historical charm and modern amenities. Known for its vibrant arts scene, beautiful riverfront, and welcoming community, Fredericton provides an excellent quality of life. The city boasts affordable housing options, scenic parks, and a strong educational presence with institutions like the University of New Brunswick. Its rich cultural heritage, coupled with a thriving local economy, makes Fredericton an attractive destination for those seeking a balanced and fulfilling lifestyle.
Saint John, NB
Saint John, New Brunswick’s largest city, is a coastal gem known for its stunning waterfront and rich heritage. Nestled on the Bay of Fundy, it offers renters an affordable cost of living with a unique blend of historic architecture and modern conveniences. The city’s vibrant uptown area is bustling with shops, restaurants, and cultural attractions, while its scenic parks and outdoor spaces provide ample opportunities for recreation. Saint John’s strong sense of community and economic growth make it an inviting place for those looking to enjoy both urban and natural beauty.
Saint-Hyacinthe, QC
Saint-Hyacinthe, located in the Montérégie region of Quebec, is a vibrant city known for its strong agricultural roots and innovative spirit. Often referred to as the “Agricultural Technopolis,” it is home to numerous research centers and educational institutions. Renters in Saint-Hyacinthe benefit from a high quality of life with access to excellent local amenities, including parks, cultural events, and a thriving local food scene. The city’s affordable housing and close-knit community atmosphere make it an attractive option for those seeking a balanced and enriching lifestyle.
Lévis, QC
Lévis, located on the southern shore of the St. Lawrence River across from Quebec City, offers a unique blend of historical charm and modern conveniences. Known for its picturesque views and well-preserved heritage sites, Lévis is a city where history meets contemporary living. Residents enjoy a high quality of life with excellent public services, green spaces, and cultural activities. The city’s affordable housing options and strong sense of community make it a desirable place for renters looking for both tranquility and easy access to urban amenities.
This category looked at factors such as average rent, housing costs, rental availability, and unemployment rates. Québec stood out with 10 cities ranking at the top, demonstrating strong economic stability and affordable housing options, which are critical for renters looking for cost-effective living conditions.
Québec again led the pack in this category, with five cities in the top 10. Ontario followed closely with three cities. British Columbia excelled in walkability, with four cities achieving the highest walk scores, while Caledon topped the list for its extensive green spaces. These factors contribute significantly to the overall quality of life, making these cities attractive for renters.
Victoria, BC, emerged as the leader in this category due to its rich array of restaurants, museums, and educational institutions, offering a vibrant community life. St. John’s, NL, and Vancouver, BC, also ranked highly. Québec City, QC, and Lévis, QC, scored the highest in life satisfaction, reflecting a strong sense of community and well-being. Additionally, Saskatoon, SK, and Oshawa, ON, were noted for having residents with lower stress levels.
For a comprehensive view of the rankings and detailed interactive visuals, you can visit the full study by Point2Homes.
While no city can provide a perfect living experience for every renter, the cities highlighted in this study come remarkably close by excelling in key areas such as housing affordability, quality of life, and community engagement. These findings offer valuable insights for renters seeking the best places to live in Canada in 2024.
