PETER DOLEZAL: Needs versus wants: The housing of Canadians

I am again reminded of the huge difference that exists between Canadians’ housing expectations and those of peoples elsewhere

Having just returned from an extended visit to various overseas cities, I am again reminded of the huge difference that exists between Canadians’ housing expectations and those of peoples elsewhere. Our much higher expectations, and our striving to fulfill them, are major contributors to the relatively high rate of personal indebtedness in Canada, and for many, the un-affordability of their homes.

Wherever one visits — Europe, Asia or South America — it is quickly obvious that some 80 to 90 per cent of the residents live in condominium or apartment accommodation.

What is less obvious is that very few of the homes are larger than 800 square feet — even for those who are financially well-off.

It is clear that outside North America, most people have done a much better job of meeting their housing needs rather than striving for super-sized homes. To compensate for the limited indoor space, their communities encourage a feeling of community with neighbourhood parks, playgrounds, cafes and markets.

Another clear difference in other countries is the much greater residence stability of their population.

In Canada the average individual or couple changes homes about every five years. Elsewhere, it is not unusual for people to make only two or three moves in an entire lifetime.

In Canada, renting, especially among the younger generation, is generally looked upon as a necessary step toward home ownership as soon as they have their minimum five per cent down payment and their income allows. In other countries, renting is often considered an acceptable, affordable, long-term solution.

As a result of these more modest housing expectations, people worldwide are generally much less financially-stressed and indebted than Canadians.

I am old enough to remember in decades past our housing needs and expectations were a much closer match. We need only to look in the older neighbourhoods of our cities and towns to find that homes built 70 years ago or earlier were usually 800 or 900 square feet. Even in the 1950s the average new home rarely exceeded 1,300 square feet — and rarely had more than one bathroom.

Today, the average home in Canada is well over 2,000 square feet and even as we settle in, many of us quickly begin dreaming of our next even larger home — even if it means greater debt.

This is not to suggest Canadians should forego the opportunity to live in a larger, more comfortable home — as long as our higher expectations are truly affordable.

It is one thing to buy that fifth pair of $100 shoes we want but don’t really need, but it is entirely more significant to take on a lifetime of financial stress in order to buy that fantastic home we’ve always dreamed of, but cannot comfortably afford.

The message is simple.

By all means indulge yourself with the caliber and size of home you live in, but do so within a comfortable financial framework that minimizes the stress on you and your family.

The increasing un-affordability of housing in major Canadian cities is already forcing change.

Developers are designing and building a much greater proportion of condominiums, townhomes and minimum-lot size homes. Not only do these new homes reduce the cost of land, they also tend to be much smaller in size than even a decade ago. We may be seeing the emergence of a long-term cyclical trend which will have our grandchildren and great-grandchildren living in much smaller, more efficient and more affordable homes than is the case with our generation.

Superimposed on this already emerging trend is the reality of our changing demographic.

Over the next several generations, the reduced demand for large single-family dwellings is very likely to make them a harder sell than in the past. Owners of larger homes would be wise to lower their long-term, capital appreciation expectations.

Unlike the six per cent average annual price increases of the past decade, we would be wise to plan on only inflation-level adjustments in future decades.

In the interest of full disclosure, my wife and I are among those who indulge in a spacious home — well beyond our needs — in beautiful Sidney by The Sea. However, if such ownership were to create financial stress, we would very quickly downsize our expectations.

A retired corporate executive, enjoying post-retirement as a financial consultant, Peter Dolezal is the author of three books. His most recent, the Smart Canadian Wealth-Builder, is now available at Tanner’s Books, and in other bookstores.

 

 

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Comments are closed

Just Posted

Greater Victoria housing market sees positive bump in June

Sales up by 76.8 per cent compared to May

Saanich plugs into $100,000 government grant for 20 new EV chargers

Six chargers to be installed at four municipal parks

Owners say loss of parking pushes businesses to the brink

New Penny Farthing patio ‘will be like New Orleans, or Las Vegas’

Saanich woman says sexual assault was dismissed by police because of her ‘body language’

Patrol officers investigate sexual assault files, make decisions on what goes to Crown counsel

‘Tarantula moth’ spotted in broad daylight in Victoria

Polyphemus moths are one of the largest insects in B.C.

All community COVID-19 outbreaks declared over in B.C.

Abbotsford manufacturer cleared by Dr. Bonnie Henry

B.C. First Nations vow to keep fighting after Trans Mountain pipeline appeal denied

Squamish Nation, Tsleil-Waututh Nation and Coldwater Indian Band made the application

‘Queue jumpers’ not welcome in B.C. as COVID-19 U.S. cases rise: Horgan

Premier Horgan said he’s heard concerns that Americans have stopped at Vancouver hotels instead of heading to their destination

US officer resigns after photos, connected to death of black man in 2019, surface

Elijah McClain died, last summer, after police placed him in a chokehold

Black worker files discrimination complaint against Facebook

Oscar Veneszee, Jr. has worked as an operations program manager at Facebook since 2017

Nestle Canada selling bottled water business to local family-owned company

The Pure Life bottled water business is being sold to Ice River Springs

Major B.C. salmon farm tests new containment system to curb sea lice infestations

System “essentially eliminates” contact between wild and farmed fish stocks, says Cermaq

Major B.C. salmon farm tests new containment system to curb sea lice infestations

System “essentially eliminates” contact between wild and farmed fish stocks, says Cermaq

Most Read