By Staff
July 30th, 2024
BURLINGTON, ON
The housing problem has s significant intergenerational aspect to it.
Paul Kershaw, a Globe and Mail Opinion writer said: “We should compensate younger people for sacrificing their standard of living in return for asking them to ensure higher housing costs to protect older people who bank on current home prices for their retirement.”
Irene Galea, in an interview with Prime Minister Justin Trudeau, shared that housing prices would need to drop by 50% before they would be affordable to her generation. She added that if this was unacceptable to home owners most of her generation would need to wait 18 years for their incomes to catch up while housing prices stall.
Kershaw’s column went on to say:
“Presented with these options the Prime Minister responded as almost any politician would when home owners remain the majority of voters. He assured listeners to the interview that his government intends for home prices to retain their value because housing wealth is a “huge part of people’s potential for retirement and future nest egg.
“The Prime Minister had acknowledged that intergenerational inequity would remain. Conservative leader PierrePoilievre said that “we had a deal in this country when I grew up. You got a job. You get a house by your 20’s. That deal is broken.”
“Both leaders have named this intergenerational problem – with that the country is now better positioned to design an adequate plan to tame it.
“A political decision to protect older generations housing wealth out of concern for their retirement inflicts a nasty sacrifice on younger generations. It rules out home ownership for many while imposing expensive rents for smaller spaces often at greater distance from their jobs.
“Housing may have been a nest egg when owners gained equity primarily by paying off their mortgages. Monthly payments functioned like enforced piggy bank savings. Over years, people shifted from debt holder to asset holder, leaving them rent free in retirement with some equity to draw down.
“But the last decades changed this cultural norm, especially in British Columbia and Ontario. Gaining equity primarily by paying off the mortgage was supplanted by the expectations that housing values would also grow exponentially.
“While preserving these wealth gains, many politicians now hope we can flood the market with new supply that will reduce rent or ownership costs for younger folks. There is little chance that this will happen in the next while without government subsidies.
“Scaling up such subsidies is how older affluent can begin to compensate younger folks for tolerating a political bargain that protects our wealth windfalls at their expense We can contribute more to scale up deeply affordable, energy efficient, family sized rental and co-op hosing and ensure post secondary and child care fees no longer cost mortgage sized payments.
“Contemporary federal and provincial budgets do the opposite. They disproportionately increase spending for retirees while leaving deficits for younger people to pay later. Correcting this age imbalance in government budgets is the least we can do to compensate younger folks for the political calculation that they must forfeit some of their standard of living to safeguard the housing wealth gained by many older Canadians.”
Paul Kershaw
Paul Kershaw is a professor at University of British Columbia and founder of Generation Squeeze, Canada’s leading voice for generational fairness.
That is what is wrong with our offspring these days? Sounds more like intergenerational entitlement than sacrifice to me.
Are gold-plated indexed pension incomes also an intergenerational issue, a lot of us don’t have those, how about the lack of affordable university education a lot of us had to use pure graft and ingenuity to achieve the wealth we have, the problem lies in the kind of education being taught in schools, if this professor is anything to go by, maybe teachers should be taught in trade school’s not Universities.
Generational fairness, as defined by whom?
What about generational fairness for the men and women who served the country in the WW1 and WW2 and the various peace keeping missions. Yes, the younger generation may have a more challenging time buying a house, than the last, unfortunately they were the generation that voted for this government that is responsible for massive inflation, money printing and uncheck/out of control immigration.
I would note the bells and whistles and technology built into homes today vs. 1950, 1960 or 1970. No landscaping, driveways were gravel, often no garage, no fencing, basic kitchens of Formica and pressboard, the list goes on. One then built or purchased these upgrades over the next 20 years or so.
That’s only housing, the generation we are talking about here, have had better education, better access to post secondary education, a better standard of living as young people compared to their parents when they were young, better technology, better access to sports, recreation, coaching, more technology, access to more advanced medical procedures, better dental care, early childhood education.
So when we look at generational fairness, lets look at the entire matrix, and not cherry pick one item that suits a narrative of more government taxation.
Good grief.
Is Paul Kershaw for real!!
Owning a home was never a given. My parents did not have money to buy a home and I am going back many, many years. Our family lived in rented apartments and we all went to post secondary institutions. Some to University, some to colleges. We did not have a car either, we used the public transit system to get around.
My parents had to make choices and the choice was to put their limited resources to education. There was no talk of owning a home or a feeling on their part to ensure that we owned homes, and we did not expect this from them.
Yes, homes were much less expensive but the reality is that home ownership was not available to many.
I agree that the rental rates presently are exorbitant and unfortunately this in part is a result of rent control. While I am totally in favour of some sort of rent control, it in effect, created a huge loss in the building of rental units. Developers would need huge incentives to perhaps encourage this type of development.
My son who is in his early 50’s told me that he realizes that his children will not earn as much as he does. I will have to ask him if he feels it is his responsibility to provide them with the funds to buy a home?
Our decision was to not provide funds for the purchase of a home. We paid for their education and they walked out of university debt free. We gave them the tools to succeed, and they did.
My parents never had a credit card therefore paid cash for everything and only bought a car when I left the nest at 24. I was not as financially astute but have done ok and we gifted each of our 3 children money for a downpayment to buy a house.
When I look at the high end vehicles and the vacations younger people are taking I have to conclude these purchases are more important to them than saving to buy a house.
As to Trudeau’s preposterous assertion that his government will assure home prices remain high shows how little he knows about supply and demand. He also is unaware that his governments failed policies are fuelling the flames of housing inflation.
Lastly, sitting on a nest egg does not mean it will hatch. The writer of the article is but yet an example of someone who does not understand our generation or investment strategies.
On a personal basis we “ right sized” our accommodations 13 years ago by moving to a condo resulting in a young couple being able to buy our home so their yet to be born children could enjoy our lovely home and yard.
As to the headline it makes zero sense.
Blaming the older generation for the housing crisis is ridiculous. The recent rapid increases in the cost of both rental and purchase housing in Canada has been caused by the Canadian government’s raising immigration of both permanent, temporary and student immigration without a simultaneous increase in the housing supply. Colleges and educational institutions should not be allowed to solicit students if they do not have housing for the students they take tuition from. Likewise…the Federal government should ensure that immigration levels are in line with increases in the housing supply.
As a senior citizen…I struggled to afford and pay for my house. We suffered through mortgage rates rising to 18 to 20% for a period in the late 1970’s.
Starting a “generational war” over the price of housing is deflecting the true cause of the problem…the baby boomers did not cause the housing crisis.
It’s not my job to look after other people’s kids, that’s what an American friend once told me, I personally took care of mine as a lot of other like minded parents also did, it’s called family wealth not some communistic generational scheme to share in something that was not earned; I don’t need to sell my home to fund my retirement, when I’m done with it it goes into a trust that will fund future generations of my family, not yours.
In my case I purchased my present Burlington home in 1993, when I sold my previous home in Richmond Hill. I made a decent profit on the Richmond Hill house, and this one in Burlington was cheaper. But considerable renovation was needed. But since 1993 my house has increased in value by 1,000%. That is not my doing or that of my generation. I put the blame on later generations who bought and flipped &/or bought rental properties putting strong upward pressure on house prices. For sure it’s almost impossible for millenials etc. to get on the housing ladder. I’m gifting a couple of hundred thousand to my younger daughter so that she and her boyfriend can buy a small house. Both my daughters will be well set financially when I pass and will have no problem buying property. The absurdity of the present situation is that both daughters pay a monthly rent of about $2,500. If they qualified for a mortgage large enough so they could buy a property with say a 5% downpayment their monthly mortgage payment would also be about $2,500. But they do not qualify because the models used by the banks says they cannot sustain a mortgage payment of $2,500 per month even though they pay that much in monthly renty. So ridiculous !
One should also note the equity tied up in a baby boomer owned property will likely be drawn upon to fund very expensive senior housing and healthcare costs in the closing years of life. For sure the Provincial government will not help.