One of the best takes I’ve seen lately on home ownership can be found in the New Lease series on Refinery29, a website for young women. So I asked Carley Fortune, executive editor at Refinery29′s Canadian operation, to do a guest Q&A on housing. Here’s an edited transcript of our e-mail exchange:
Q: Refinery29′s New Lease series – it’s excellent – looks at how young women are coping with an expensive housing market. What fresh insights on home ownership do you hope to provide?
A: We’re poking at some long-held beliefs about home ownership and renting in Canada. Namely, that owning a home is something we should all strive for, and that renting is a waste of money. A stat that I found particularly telling is that 80 per cent of Canadian millennials want to own a home (only 27 per cent do). But with skyrocketing prices and stagnant incomes, home ownership is wildly unaffordable for a huge chunk of us. Why are we still clinging to this dream? I think part of the problem is that homeowners aren’t open about how we managed to buy our homes – so many of us had help, myself included – and that secrecy stokes the perception that buying a home is something we can all achieve. So we spoke to a number of Canadian women about how they bought their home – and how much they spent. The other side of the equation is the stigma renters face as they get older and move up in their careers, especially if they’re parents. Many people see renting in your thirties and beyond as fiscally irresponsible and even something to be ashamed of, and there can be an enormous pressure from family members to buy. The truth is that renting is a smart option depending on your lifestyle, career plans, income and need for flexibility.
Q: What do you think is the biggest driver of demand for housing among young adults – lifestyle factors or hope for a big financial win?
A: In recent years, I’d say it’s a combination of social pressure (stemming from the powerful idea that buying a home is the best investment you’ll ever make) and the staggeringly high price of rent in Canada’s major cities. When you look at how much you’re spending on rent versus what you could be paying on a mortgage and find the numbers looking roughly the same, there’s an added incentive to buy – especially when mortgage rates are low. But, of course, that doesn’t factor in all the many additional costs of owning a house or condo, including mortgage loan insurance if you don’t have a 20-per-cent down payment (and almost half of new first-time buyers don’t) and the chance of mortgage rates climbing in the future. Since the pandemic, I’d add one other factor to this, which is how much damn time we’re spending in our residences. The home has played an outsized role in our lives in 2020, and that will only increase the value we put on it.
Q: You write in the New Lease series about marrying someone in part to be able to afford a house; how common is it for young adults today to marry or co-habitate with someone to get in the housing market?
Money has always been, and will continue to be, a driving force in bringing two people together. Whether you’re renting or looking to buy, a double income is beneficial. After we published my piece, I got a message from a friend saying he was getting married and moving to Toronto – and that the marriage was going to provide him with a down payment on a home in the city. In my case, my now-husband’s grandfather, an Italian immigrant to Canada who lived modestly and saved to support his family in having a better life, had set aside $40,000 for my husband to put toward a down payment when he got married. Eight years into our relationship, when we felt ready to take on the responsibility of a mortgage, we got hitched.
Q: What’s your take on the housing surge going on right now– soaring prices in a pandemic we can’t seem to control?
A: Obviously there was a window in August and September where buyers were out in droves, mortgage rates were low, and the housing supply was too, and it’ll be interesting to see how the second wave impacts the market. But the surge also speaks to the frantic desire for home ownership in this country, and the sense of security and control over our lives it offers us (two things that are hard to find in a global pandemic).
PERSONAL FINANCE COLUMNIST
The Globe and Mail, October 20, 2020