Demographics and the Housing Market - Essay Example

Canada has a unique pattern of land markets, wherein the markets have been rated as, "moderately unaffordable", "affordable", "seriously unaffordable" and "severely unaffordable". It has been observed that the national median multiple is slightly above the above the affordable standard. Over the years there has been a rapid increase in housing prices. Prices and quantities in housing markets are determined by the interaction of the supply with the demand. During this time the home ownership rates have eaten up a deeper chunk of house hold wealth, thereby increasing household debt.

Most important variables governing the supply of new housing include prices, the costs of construction materials and land, the cost of financing, and the value of the housing stock. Similarly, the important variables governing the quantity of housing include prices, the level of mortgage rates, expectations of permanent income or wealth, rates of return on other investments, and demographic factors that influence the decision to buy a house. Let us take a closer look at Toronto that is well known for its multicultural society.

It is situated in southern Ontario, Canada with a population of 5,113,149. It has an urbanised region of 8.1 million people. Toronto being the fifth largest city in North America is one of the most populated cities having people from diverse backgrounds. Its clean environment together with a generally high standard of living, Toronto remains the most desired destination for immigrants. It also has the second highest percentage of foreign-born population. People of different European origins form the largest ethnic group in Toronto.

Afro-Caribbean, Filipinos, Latin American too, find a place for themselves in this place. This is reflected in the neighbourhood names, like Little Italy, The junction, Little India, Chinatown, Portugal Village and others similarly named. The Downtown area of Toronto remains most densely populated while the financial district of Bay Street boasts of the maximum number of skyscrapers in Canada. The historically wealthy residential enclaves stretch northwards from downtown. It is a paradox of sorts, wherein, on one hand the up scale homes exist and on the other hand in the core vicinity of downtown low income families and incomes reside.

The east and west regions of downtown however, radiate with artists and middle and upper class professionals. The inner suburbs retain the small, single family homes, while the housing boom has led to the construction of many high rise apartments in many neighbourhoods. North Toronto and some western neighbourhoods in York are some such areas. The housing boom has had a cascading effect on many municipalities. The advent of skyscrapers has not only changed their skylines but also helped them develop as secondary business centres .

However further growth in the housing market is affected by the temperament of the consumers in that whether they are prepared to take risks. If the price is high and the consumer is averse to taking risks, the purchase of houses will automatically fall. The buying strategy of a consumer therefore differs from one demographic group to another. It can be safety said thus, that consumers differ in their thought process with regards to procurement of a house. Their views may differ on the money spent to rent a house vis-a vis to purchase