Are you part of Generation Rent?

If you think housing prices are prohibitive here, at least you don’t live in Britain. According to MacLean’s, the dream of home ownership is dead on the other side of the pond. “Letting for life” has become the norm for Generation Rent.

A white paper released by housing minister Sajid Javid last week put pressure on developers to build low-rent solutions and to make renting more family friendly, as opposed to encouraging low-cost home ownership. The paper also advocates banning rental agent fees and encourages landlords to negotiate longer-term leases. Average home prices are now seven times the average income, with home ownership falling over the last decade for the first time since such record-keeping started.

We’re not there yet. Even with recent mortgage changes, there are still opportunities for ownership, especially in the condo market and centres outside the downtown core, but if we don’t act to help especially middle-class and younger buyers get a foot on the bottom rung of the property ladder, we could be next.

According to Wikipedia, the country with the highest rate of home ownership in 2015 was Romania, with 96.4%. Canada was 35th on the list, with 67.6% in 2013. Remember that’s not in the GTA, of course, but rather nationwide, and there are still ample great deals to be had if you can move further north, or head for the Maritimes or the Prairies.

Part of the problem is that we now live in a real estate-based economy. More and more purchasers are looking at real estate from an investment standpoint instead of as a place to lay down roots and bring up families.

Part of it is a self-perpetuating cycle of paying whatever it takes out of fear that we’ll be left behind. The Toronto Star reports this week that a 1,500 square foot Don Mills home just sold for $1.15 million over its $1.19 million listing price. Granted, Don Mills is hot right now but the mind boggles. We’re talking about a small, older three-bedroom home nowhere near the subway. This is insane.

We as buyers are complicit, and nothing will change it except a change in attitude — one I don’t see coming anytime soon. Housing has little intrinsic value. Like many items on the free market, it’s worth whatever a buyer will pay.

I’m a diehard capitalist, and I don’t see the desirability of government intervention to a great degree. So, what’s the answer? How do we cool housing prices without collapsing the economy? How do we get people to get smarter about what they will (and won’t) pay to join the ranks of homeowners?

I don’t have an answer, but I’d love to hear your suggestions!