Last weekend I happened to be in State College Pennsylvania on a beautiful fall weekend. It is a nice city in a valley in the middle of the state. It is not close to any major city and can be described as a rural city. Needless to say I looked into the local real estate market and was surprised at how expensive the homes were. I started to think how young people could afford these homes. Then I pondered how Hamiltonian’s could afford their starter homes.
Every week I meet couples and singles who are lost and scared when attempting to purchase their first home. After WWII starter homes were the standard. The average home was 900-1000 square feet. Since the war square footage has increased and family size has decreased.
In today’s market, builders want to make money and lots of it. The builders are up-selling everything including larger homes, upgrades and quality materials. Needless to say this is why they are not building starter homes. Today clients who are able to buy a home want newer homes that have central air and finished basements and man caves and spa tubs, home offices and, granite counter-tops. But all those things are useless to young families who want location and decent schools to raise families. Many Hamiltonian’s would love a two-bedroom starter home on a cozy lot in Rosedale, Hamilton Mountain, or the West End. But for young couples this is just not attainable. In Hamilton there are affordable homes, some of which are located below the escarpment, but the cost of these homes has escalated quite a bit and they still need fixing up. Reasons for the increase in prices in this area have included the Toronto influence. The other is families who would buy cheaper homes are being edged out by investors who buy the homes and rent them out. At a time when interest rates are so low, renting to stable families is a great way to make a return on investment. Dual income parents with decent jobs are being shut out of the housing market because there’s nothing but luxury homes to buy.
Investment property landlords and their renters are causing a major shift in neighbourhoods, because lack of ownership changes commitment to areas such as neighborhood security, local schools and shared public facilities as compared to primary homeowners. Westdale is the greatest example of this where student housing has changed the area profile. This shift is leaving affordable home ownership with a bleak future. With builders not committed to supplying affordable housing, the government may have to provide subsidies to the builders to even out the housing landscape.