Caleb Bowyer and Serena Di Marco Bowyer received assistance from Habitat for Humanity to purchase their condo.Christopher Katsarov/The Globe and Mail
Serena Di Marco Bowyer and her husband, Caleb Bowyer, both 27 years old, are considered middle class in Peterborough, an Ontario city at the edge of cottage country and the Kawartha Lakes. Serena is a hairstylist, Caleb works in construction, and they own a cleaning business.
Despite both having steady jobs and together earning roughly $70,000 a year, they were not able to save enough to buy a home in Peterborough, where the typical price of homes nearly doubled during the pandemic to top $800,000.
“We don’t carry debt,” Ms. Di Marco Bowyer said. “We don’t have any leftover education debt. We don’t carry debt on our cars or our credit cards, and it was still really hard to get that down payment.”
The couple turned to Habitat for Humanity, a well-known housing charity, and with their help were able to buy a condo in 2022. Historically, Habitat has supported low-income earners, but with the steep cost of housing, the organization and other housing non-profits like it have had to change who they serve, and expand their aid deep into the middle class.
“More middle-income families are knocking on Habitat’s door because it’s become absolutely prohibitive for them to be able to afford a home in the marketplace,” said Pedro Barata, chief executive with Habitat for Humanity Canada. “Where else are you going to go?”
Today, housing non-profits are increasingly helping families with an annual income of $100,000 or more. At the same time, they are struggling to help low-income earners at all.
Options for Homes, an Ontario home developer, used to call itself a non-profit that helps low-income families buy homes. Now, Options says it helps moderate-income families buy homes.
Mr. Bowyer said they are in the top half of earners who’ve received assistance from Habitat but even then they never would have been able to buy their condo without help.Christopher Katsarov/The Globe and Mail
Like Habitat, Options develops its own homes and provides zero-interest loans to families so they can become homeowners. At the non-profit’s latest condo development in the Toronto region, it has helped families with an annual income between $55,000 and $120,000. Previously, the non-profit aided families with a household income between $16,000 and $88,000.
“We are doing everything we can to lower costs, but external factors make it challenging to reach low-income buyers,” Options chief executive Daniel Ger said.
External factors include the rising cost of construction and the mortgage stress test, which went into effect for uninsured borrowers in 2018.
Although Options helps families with their down payment via their no-interest loan program, the family must still qualify for a mortgage from a lender, which becomes harder as prices rise. Also, banks have to apply the federal stress test, which requires borrowers to prove they can make their monthly mortgage payment at an interest rate that is at least two percentage points higher than their loan contract.
The changes are reflected in who Options has been able to help. For example, the non-profit launched sales for condo developments in the Toronto region in 2012 and 2014. At the time, the income range for the typical purchaser was between $40,000 and $60,000.
By the time the condo buildings were completed in 2018, the cost of development had increased – and along with it, the price of the condo unit. Families who bought their units in 2018 were not only paying more for their condo, they also had to have more income to pass the stress test. Options said the required income range for the typical purchaser shot up to between $75,000 and $110,000.
“These scenarios show how policy changes, such as the changes to the stress test, interest-rate increases, and the timing of sales, impact housing affordability and the range of incomes required for homeownership,” Mr. Ger said.
Options said it cannot reduce its home prices because it has to cover development costs and generate revenue to help future homebuyers with their down payments.
For years, there has been a shortage of affordable housing in Toronto and Vancouver, where the average home price is more than $1-million and one-bedroom rental rates top $2,000 a month.
But the problem has spread to places such as Peterborough and beyond.
Habitat for Humanity’s Peterborough affiliate had to drastically rethink how it operates. It has mostly abandoned building single-family homes and is focused on constructing condo buildings. Previously, the charity primarily helped parents with children, but it has expanded to providing aid to singles and couples without children.
“If we didn’t do that, then there wouldn’t be an opportunity for some of those people to ever become homeowners,” said Susan Zambonin, chief executive of Habitat in Peterborough.
That includes older singles, such as a woman in her 50s with an annual income of roughly $65,000. “She was single, had a good job and was never going to be able to own anything,” Ms. Zambonin said. “She now owns her own home.”
Habitat Peterborough’s first condo building opened in 2022. The building has 41 units and is home to 41 families and individuals with incomes that range from $35,000 to $85,000.
In comparison, over two decades from 2002 through 2022, the charity helped 41 families buy houses.
“We doubled our impact,” Ms. Zambonin said.
Mr. Bowyer said they are in the top half of earners who’ve received assistance from Habitat. But even though they earn close to the median before-tax household income of $79,000 in Peterborough, they never would have been able to buy their condo without help.
“If you’re making minimum wage, you can’t afford anything. But if you are making more than minimum wage, typically your wage has not increased to match everything else,” he said.
Habitat provided the Bowyers with a no-interest loan of $93,000, which served as their down payment. They qualified for a $265,000 mortgage and were able to purchase their two-bedroom condo for $358,000.
Their mortgage payments, condo fees, property taxes, parking and storage work out to roughly $1,700 a month. That is a tad higher than what they used to pay in rent.
When the Bowyers were renters, they never missed a payment. “We were never late and we never didn’t pay. But saving on top of it was a struggle,” Ms. Di Marco Bowyer said.
Habitat provided the Bowyers with a no-interest loan of $93,000, which served as their down payment. They qualified for a $265,000 mortgage and were able to purchase their two-bedroom condo for $358,000.Christopher Katsarov/The Globe and Mail