Wife Gwen and I climbed on the property ladder in 1972. Alvin Narod, a highly respected builder, had constructed a condominium called Hawthorne Park on 104 Avenue in Surrey. We were among the first buyers. Housing units were built in clusters, with small places for gardening or lounging, and plenty of open spaces, a playground, and a swimming pool near the centre of the property.
Our three-bedroom strata unit cost $16,900. The down payment was $950. Legal and closing costs were $100.50. Put simply, the buyer needed $1,050.50 and the ability to service a mortgage of $15,950. As first time homeowners, we qualified for a provincial grant of $1,000 so we paid net cash of only $50.50 and moved in. The initial strata fees were $20 monthly.
Using Bank of Canada’s inflation calculator, these are the 1972 numbers converted to current dollars:
- Purchase price for 3 bedroom townhouse: $125,700
- Down payment: $7,066
- Closing costs: $744
- First home acquisition grant from BC Government: ($7,438)
- Cash required from homeowners: $372
- Monthly strata fees: $149.
Ours was like one of the units pictured below: At about 1,200 square feet, it was a perfectly adequate home, even when our first child was born. Our neighbours were other young families and a few downsizing seniors.
A Globe and Mail article today notes the average size of a newly constructed condo has shrunk to 700 square feet, which is 42 percent less that our starter home. Additionally, few of today’s condominium developments are family friendly with a reasonable amount of greenspaces.
[Calgary realtor Rose] Calvelo says small units are coming to the Calgary market, a function of a drastic increase in the cost of development. “Developers are building matchboxes and charging a lot per square footage, and the quality is not the same,” she said...
[Toronto mortgage broker Ron] Butler said a near decade-long rental market boom that saw investors scoop up preconstruction condos to later rent out has also played a role in incentivizing builders to build smaller spaces. According to Statscan, 57 per cent of condos built after 2016 in Ontario were owned by investors, along with 59 per cent in Nova Scotia and 49 per cent in B.C.
First-time home buyers are shunning today’s shrinking condos
Another Globe and Mail article written by Vancouver journalist Kerry Gold discusses the move away from resident-owned properties. Ms. Gold believes this is not a good thing.
There are problems with an investor-fuelled housing market. Such homes can sit empty for long periods or be used for lucrative short-term rental. Both issues have added to the housing affordability crisis...
[According to University of Toronto’s Prof. David Hulchanski, who studies issues around housing and inequality] “The key to understanding the current version of the ‘housing crisis’ is the fact that housing assets are now at the core of the national economy. This drives up house prices and rents, makes access to home ownership difficult, and increases the risk of economic instability. Canada’s housing system needs serious reform as it is mainly a system for increasing the wealth of some while increasing the housing distress of many,”
I don’t expect 1,200 square foot townhouses to be available to new homeowners for almost zero downpayment. Population pressure have grown while available land has decreased. But I think it is clear that we are badly served by a development industry that aims to build small units that appeal to investors who expect to rent these to people with few choices.
Beyond the land supply and zoning issues, I don’t understand why a 3-bedroom condominium could be offered to my family for $125,700 in 2024 dollars but after fifty years is now offered for sale at $700,000.
Long ago we accepted the idea that prices of utilities needed to be regulated in ways that offered a fair return to companies providing the services and fair treatment for consumers.
It is past time to regulate the housing industry in the same manner.
Categories: Housing
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