Canadian homeowners are expressing a surprising sentiment when it comes to the value of their homes: they are willing to see prices go down. A recent poll conducted by Nanos Research for Bloomberg News revealed that 70% of respondents would be happy or somewhat happy to witness a decrease in home prices. This contradicts the common belief that homeowners only desire to see their property values rise.
The high cost of housing has become a significant social issue and a political challenge for Prime Minister Justin Trudeau. As apartment rents skyrocket and mortgage rates rise, many younger Canadians are finding it increasingly difficult to afford a home. While the new housing minister, Sean Fraser, has expressed a desire to make housing more affordable without reducing prices, finding the right balance remains a challenge.
Over the past decade, the benchmark home price in Canada has more than doubled, reaching an average of C$755,000 ($556,000). This surge in prices has made homeownership increasingly unattainable for many Canadians, particularly in cities like Toronto and Vancouver, where mortgage payments consume a significant portion of household incomes. According to economists at National Bank of Canada, mortgage payments in 10 major cities now eat up about 59% of household earnings.
In addressing the issue of affordability, the majority of respondents in the Nanos poll advocated for one solution: building more homes. A total of 23% of respondents believed that increasing the housing supply would be the most effective way to reduce shelter costs. Another 22% called for more government-subsidized housing, while 21% believed that lowering mortgage rates would be the top priority.
Interestingly, policies that discourage individuals from buying second homes received less support, and only a negligible percentage of respondents (1.5%) favored eliminating the capital gains tax exemption on the sale of primary residences as a means of improving affordability.
The desire among Canadians to see housing prices decrease highlights the urgency and significance of addressing the affordability crisis in the country. As Prime Minister Trudeau faces mounting pressure to develop a strategy to alleviate the cost of living, it remains to be seen how the government will navigate the complex task of improving affordability without impacting property values.