70 per cent might equate to a “B” grade in the public school systems; but when that amount reflects our home ownership in Canada, it could be that we’re close to failure.
That’s the number that Adrienne Warren, economist at the Bank of Nova Scotia, sees our next census hitting. And it’s gotten a lot of people even more worried that our housing market has hit the saturation point.
Ms. Warren made her comments in anticipation of the census results that are going to be released next month. With our last census in 2006 showing 68.4 per cent of Canadians as homeowners, Ms. Warren believes that number is only going to get higher. And that we might hit that dangerous 70 per cent, or even higher.
The reason for any increase from one census to the next might be obvious to many Canadians, but Ms. Warren thinks that it’s mostly the sale of condos that are to blame. And that there’s a certain demographic gobbling up these hot properties. “It was people in their early 20s buying as opposed to waiting until they got older. It probably continued,” says Ms. Warren. And it most likely did. Considering that a huge percentage of Toronto mortgages the past couple of years have been for condos and not single family homes, she’s probably right.
But while many have been concerned about condos, Ms. Warren is concerned about the high percentage of home ownership overall in the country.
“It’s similar to the U.S., U.K. and Australia when they came up with the mid-decade census,” says Ms. Warren. That of course, has everyone even more concerned. Does this mean that a complete collapse in Canada is imminent, just as it was in the States?
Benjamin Tal, deputy chief economist at CIBC World Markets Inc. thinks so. “We are at the peak of home ownership in Canada,” says Mr. Tal. “In fact, we are probably too high and it will probably go down.”
It probably will go down. But what if it doesn’t? Will we be destined to the same kind of collapse? Looking at other areas of the world, such as Italy and Spain, their home ownership rates were near 80 per cent with the last census. But do we really want to be like Italy and Spain, two European countries that have also been hit hard by the global recession?
Of course not. But we can all probably relax, too. The percentage of home ownership in any given country alone cannot predict a collapse – of the housing market, the nation’s economy, or anything else, as a matter of fact.
“There is nothing magical about 70%,” says Phil Soper, chief executive of Royal LePage Real Estate Services. “The U.S. fell from this rate because of a collapse in their financial system.” He also pointed out that, even after the U.S.’ economy fell, home ownership remained somewhere around 66 per cent. He also said that as long as we have the option for a 5 per cent down payment, Canada will be okay.
“We have public policy in place that supports home ownership,” he says.
And that’s most likely a big reason why the majority of Canadians can call themselves homeowners.