Salomon Gamache

LL. M. Fisc., F.Pl., CLU, CIM, FCSI

Vice-President, Development and Quality of Practice

Institute of Financial Planning

Real Estate Affordability and Financial Stress: Challenges for Financial Planning

One of the most important and most gratifying aspects of financial planning is responding to our clients’ goals. These goals often stem from dreams and plans, which means people are prepared to make sacrifices to attain them.

Our job is often to listen to them, help them prioritize their plans and suggest various strategies that will allow them to achieve them. For most people, buying real estate, such as a home, is one of the biggest goals, in terms of both perceptions and financial value.

It is frequently the most expensive purchase of a lifetime, and the number of real estate purchases a person makes during their life can often be counted on the fingers of one hand.

Becoming a property owner has become more complicated in recent years, however, due to factors such as price increases, low availability, demographics and rising interest rates.

This situation can cause stress for people struggling to achieve their dream of becoming homeowners. Let’s drill down on this.

Real estate: The lay of the land

The affordability of real estate in Québec, for rent or purchase, is a complex issue. Many factors are currently shrinking it, including an overheated market characterized by explosive local demand that is growing faster than the housing offer and a significant increase in property prices.

Québec is grappling with a housing crisis. The vacancy rate is at its lowest since 2004, and the cost of rent is increasing dramatically. This can be explained by the high demand for housing, the scarcity of new construction and the increase in the cost of materials. The crisis is affecting every region of Québec, from major urban centres to rural regions.

Solutions include building more affordable housing, providing assistance to low-income renters and regulating rent increases. Even though, in the short term, the progression of Québec’s rental market is uncertain and pressure on prices is expected to remain fairly high, things should improve in the long term because new dwellings will be constructed.

This situation is not unique to Québec: the entire country is facing the same circumstances, with regional variations. The real estate affordability problem in major Canadian urban centres requires 3.5 million additional housing units to be built by 2030 to reverse the trend, according to a 2022 Canada Mortgage and Housing Corporation (CMHC) report. The report points out that in Ontario and British Columbia, where affordability has declined the most, the number of dwellings needs to be increased by two-thirds. To achieve this, the rental housing offer must be increased and, for owner-occupiers, promoters need to become more productive and regulatory processes must be accelerated. The goal is to reduce the cost of housing and improve affordability to meet the needs of the entire population of Canada.

Affordability especially impacts the younger generation, who want to buy their first home at a time when prices have increased sharply and interest rates are particularly high. It is harder for them to attain their homeownership dreams.

According to Université de Sherbrooke economics professor Mario Fortin, there are many factors behind this:

  • The pandemic: Savings accumulated during the pandemic stimulated the demand for housing.
  • Low interest rates: Rates that were low in 2022 and for part of 2023 allowed people to borrow large sums to buy homes.
  • The separation of couples increased the demand for housing.
  • Demographic growth: The increase in the population drove up the demand for housing.
  • High construction costs: The labour shortage and infrastructure needs slowed residential construction.
  • Inflation drove up interest rates, making financing more expensive.

Québec’s real estate market has been facing serious challenges for months now. The increased competition for access to ownership is one of them, exacerbating stress for many hopefuls. Affordability is a major concern, especially because real estate prices are rising faster than household incomes, which makes it hard for many families to acquire an appropriate home without compromising their budget. The shortage of housing, especially affordable housing, adds to the pressure, forcing some households to choose homes of lower quality or in less-than-ideal locations. Intense competition on the market forces buyers and renters to make fast decisions, often without having enough time to weigh all the options, which adds to the stress and uncertainty.

Uncertainty related to mortgage renewals and the often-sizeable payment increases they may bring can also fuel a sense of instability. Moreover, problems accessing housing can affect quality of life by forcing people to endure long commutes and live in conditions that may be precarious, affecting their physical and mental health. We need public policy solutions to increase the offer of affordable housing and regulate markets to prevent excessive price increases. These measures are crucial to reduce the stress and anxiety related to access to housing and to improve the general wellbeing of Quebecers.


Personal finance is one of the many areas where stress may be felt. This is a universal experience that affects people at every stage of life. There are many definitions of stress. Here is the one used by the World Health Organization: “Stress can be defined as a state of worry or mental tension caused by a difficult situation.Stress is a natural human response that prompts us to address challenges and threats in our lives.” This phenomenon can be rooted in many areas. For example, with regard to work, the INRS is of the opinion that stress occurs when an imbalance is perceived between occupational requirements and the resources available to deal with them. Prolonged stress can undermine workers’ health and negatively affect businesses, leading to losses in productivity and motivation.

The term “stress” in the biological sense was coined by endocrinologist Hans Selye. He was a pioneer of stress studies and the founder of the Université de Montréal experimental medicine and surgery institute (IMCE). For decades, many experts and researchers have studied stress and its effects in various arenas. One of those researchers is Sonia Lupien, full professor in the Université de Montréal psychiatry department, founder and director of the Centre d’études sur le stress humain (human stress study centre or CESH). She also holds the Canada Research Chair in Human Stress.

Her work has revealed the importance of social factors in stress management, suggesting that social support plays a key role in mitigating its effects. Lupien’s multidisciplinary approach offers a holistic vision of stress that combines neuroscience, psychology and sociology to gain a better understanding of stress and intervene more effectively.

Her research has identified four key factors that are universally stress-inducing: Novelty, Unpredictability, Threat to the ego and Sense of control, creating the acronym NUTS. These factors trigger the secretion of stress hormones in almost everyone, regardless of the specific individual source of the stress. Although circumstances may vary from person to person, the stress response is universal, requiring one or more of these ingredients for stress to manifest.

Lupien’s research has considerably enriched our understanding of stress and revealed the biological, psychological and social mechanisms underlying it. Her studies show that having a nuanced understanding of triggers and adaptation strategies can lead to better stress management, even turning it into a constructive force.


With financial stress related to real estate becoming a bigger concern, it is increasingly important to understand its impacts. The affordability crisis in Québec and Canada raises significant challenges, especially for aspiring young homeowners. A variety of factors, including historically low interest rates and increases in construction costs have driven up demand, making it more complicated to purchase a home. In the face of this reality, there is a need to increase the affordable housing supply and facilitate access to ownership for everyone.

At the same time, this situation may generate stress, for young adults in particular. A sound financial plan can improve their sense of control and reduce unpredictability related to personal finances. These topics will be addressed at the next Institute of Financial Planning Congress, in fall 2024.

Your advice, paired with a practical and appropriate financial plan, will help equip your clients to face the real estate challenge and reduce the stress it generates. Effective stress management underscores the importance of multidisciplinary financial planning approaches to address this issue.