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Construction workers on a Habitat for Humanity build site at 423 Old Weston Road in Toronto on July 21.Duane Cole/The Globe and Mail

After decades of helping low-income Canadians get into homes, Habitat for Humanity is witnessing a profound change in who it is assisting.

The charity is increasingly backstopping mortgage loans for higher-income households, including those earning about $100,000 a year, in yet another sign of how unaffordable Canada has become.

The typical price of a home in the country is more than $760,000, with properties in Vancouver and Toronto well above $1-million. Homes in other parts of southern Ontario are perilously close to that level, pushing an increasingly larger swath of the population out of the housing market.

Habitat, a charity that has provided lower-income families with no-interest loans to buy a home for nearly four decades, has seen its client base shift to a higher income bracket as the typical home price in the country has jumped 40 per cent in five years.

“We have seen that the housing market has changed a lot in the last few years, and it’s left many more people and families having trouble finding homeownership who are in ranges of income we would have never expected to be problematic,” said Julia Deans, president of Habitat Canada, which oversees 46 local organizations across the country. “People that we might traditionally have thought of as being middle-income earners are now also struggling to afford homeownership,” she said.

Nowhere is that shift more pronounced than in the Toronto region, the country’s second-priciest real estate market. There, the typical home price is up 53 per cent – to $1,171,300 – from five years ago, according to the Canadian Real Estate Association.

Because home prices have increased so much, the income required to qualify for one of Habitat’s no-interest loans has risen dramatically. The Habitat loan effectively acts as a down payment for the Habitat client, allowing them to qualify for a mortgage from a bank or credit union. And like any other borrower, they must have employment income that can cover the monthly payments.

The average household income required to qualify for Habitat aid in the Toronto region was $85,352 last year, compared with $53,508 in 2018. The minimum income for 2022 was $67,266 and maximum was $102,609.60, according to data provided by the charity.

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CEO of Habitat for Humanity GTA Ene Underwood, left, and CEO of Habitat for Humanity Canada Julia Deans outside of a build site.Duane Cole/The Globe and Mail

Habitat typically serves families with children under the age of 16. Residents must be Canadian citizens or permanent residents and must have a job with enough employment income to make mortgage payments and maintain the home, which includes paying property taxes and insurance.

“We’re serving families that look like they’re doing so much better,” said Ene Underwood, the chief executive with Habitat for the Toronto region. But, Ms. Underwood said, in reality they are struggling.

One of Habitat’s tenets is that their clients will not pay more than 30 per cent of their gross income on housing costs, including mortgage payments and other expenses associated with homeownership.

Ms. Underwood said Habitat used to help clients in the services sector, such as those working in retail. Now the charity is serving residents with higher-paying jobs, such as in the medical field and government.

The size of the Habitat loan and bank mortgage in the Toronto region has risen in tandem with the spike in home prices. The average mortgage was $809,363 last year compared with $437,959 in 2018, according to the charity.

“This shows you just how strained our system is,” said Heather Tremain, chief executive officer with Options For Homes, a non-profit developer that provides shared-equity mortgages for low-income earners so they can buy a home.

Ms. Tremain has observed the same phenomena with the homes that her organization develops. An average household income of $56,000 was required for a unit in an Option for Homes condo building that was completed in 2018. That compares to an average household income of $86,000 for a unit in a similar Options condo project that is due to be completed this year.

Recent data from Statistics Canada show how rising living expenses has destroyed savings for middle and lower-income households. They are spending more than they can save as their daily expenses rise at a much faster clip than their wages.

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Construction workers on a Habitat for Humanity build site.Duane Cole/The Globe and Mail

In the first quarter of this year, the bottom fifth – or bottom quintile – of all earners spent an average of $8,289 more than they earned in the first quarter of this year, up from $6,638 in the same quarter in 2020. Middle-income earners, defined as those that fall in the middle quintile of all earners, spent an average of $1,306 more than they earned in the first quarter of this year, an increase from $319 in the same quarter in 2020.

The fourth-highest income quintile managed to save money but saved less.

In contrast, the top income earners saw their savings grow. Households in the highest income quintile had average net savings of $13,040 in the first quarter of 2023 compared with $11,753 in the same quarter in 2020, according to Statistics Canada data.

“We’re seeing stress in every part of the market, from mortgage rates to rental costs to interest rates and construction costs. And this is all coming at a time when incomes are stagnant and we’re experiencing record inflation. It’s unlike anything I’ve seen before,” said Ms. Tremain.

Even in Edmonton, a city where home prices are below $400,000, residents are finding it difficult to break into the housing market. The typical price of a home in Edmonton was $376,800 in June. That is slightly higher than the typical price of $353,000 in the summer of 2018, according to data from the Canadian Real Estate Association.

Habitat Edmonton CEO Ann-Marie Reddy said five years ago families could probably have saved enough for a down payment but that is no longer the case given the sharp rise in prices for food and other necessities. “It’s just not happening for them,” she said.

Across the country, every Habitat affiliate has a version of the no-interest loan program. When the client decides to move, Habitat gets first dibs on whether it will buy back the property. Otherwise, the home will be sold on the open market and fetch market prices. The client will receive all the funding they paid into the mortgage. The appreciation or depreciation on the home is split between the charity and client using a predetermined formula. For example, at the Toronto Habitat, there is a prescribed shared-equity agreement that allows the client to earn a set amount.

Since Habitat provided its first no-interest loan in Winkler, Manitoba, in 1985, the charity has helped 4,512 families buy a home in Canada. Organizations such as Habitat and Options For Homes have been critical in aiding households secure safe, affordable housing. But their aid only goes so far.

Habitat’s Ms. Deans said when people don’t have an affordable and safe place to call home, they don’t have that security, stability and savings that they need to reach their full potential and contribute as much they can to their community and to the country.

“It’s quite frightening to think of that loss of stability and what it means to society as well,” she said, noting every city across the country is dealing with ramifications of unaffordable housing.

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