It's time to face the facts.
We have a housing crisis in Canada.
Housing has been on the minds of many
voters, and we've heard from you in droves.
We've also heard from the party leaders.
I hear from people everywhere that they
cannot find a place to live.
Political parties have decided that there's one
thing they can promise that will suddenly fix
everything in housing.
Over the last five years, the average price of a
Canadian home has gone up more than 50%,
about half that growth coming in the last year,
and it's pricing many Canadians right out of
their own cities.
I was looking around to a buy a house, but most of them
are more than $1 million.
For renters, prices have steadily been rising about 5%
or 6% a year for a two bedroom in Toronto.
I believe we are in the most expensive housing
market that has ever been experienced across Canada.
The big issue we're facing is
too many people for not enough homes.
A big part of the issue is demographic.
We've got this very large millennial bulge in
Canada.
We've got lots of immigration, which
I think is a good thing.
But it does lead to crowding in the more
desirable locations.
And then, of course, COVID.
Yes, the pandemic has driven a spike in
demand for larger living spaces, kept interest
rates low, making mortgages more
attractive and disrupted the construction of new
homes, all factors leading to higher home
value.
So what solutions to the housing crisis are the
federal parties proposing?
We want to tackle this housing crisis in a
serious way, and we want to build more
affordable homes.
Building affordable homes is in all the major
parties' plans.
Justin Trudeau's Liberals have committed
to doubling down on the National Housing
Strategy launched three years ago, which now
promises $70 billion in investments over 10
years.
The Liberals are also promising to commit
$1 billion in loans and grants to develop a new
rent-to-own program between landlords and
renters.
Introduce a tax-free first-home savings account to
allow Canadians under 40 to save up to $40,000
for their first home and invest $4 billion in a new
housing accelerator fund for municipalities
to apply to support faster housing
development.
Jagmeet Singh's NDP are promising to create at
least 500,000 affordable homes over 10 years,
create a 20% foreign-buyers tax on the sale of
homes to individuals who are not Canadian
citizens or permanent residents, and waive
federal sales tax on the construction of new
affordable rental units.
And Erin O'Toole's Conservatives
are promising to implement
a plan to build 1 million homes in the next three
years, ban foreign investors not living in or
moving to Canada from buying homes here for
at least two years and release at least 15% of
federally owned real estate for housing.
Two-thirds of Canadian households already
owned a home
before all of this, and their average wealth has
grown.
It's only the other third feeling the brunt of this
crisis.
And some experts say that breakdown explains
a lot.
So much of Canadian housing policy
has a kind of bias in it to support the interests
of current homeowners.
And from that perspective, any moves
that are going to deflate the housing market
substantially are going to be problematic.
That could explain why the federal parties are
peddling more surgical solutions for the
housing market problem.
We have brought forward measures on
house-flipping that will discourage people from
fully benefiting from the capital gains on flipping
a house in under 12 months.
Foreign investors are also making the
situation worse. They are bidding up prices, and in some
cases, they're sitting on their investments and
actually leaving homes empty.
And it's that last issue that we've received
many audience questions on: foreign ownership
whether it should be banned and
how big of a factor is it?
There's actually some dispute with how
important foreign ownership is.
There are plenty of researchers, and I think
that they would have adherents in government
as well, who doubt that foreign ownership is,
systematically, very important for us.
It has been important in some places, Vancouver
being the most famous example.
But after British Columbia implemented
a foreign-buyers tax in 2016, home prices went
down only for a few months.
While affordable houses are disappearing,
so are affordable rental apartments.
One reason: many of them were built half a
century ago or more.
The federal government used to build thousands
and thousands of rental homes for lower-income
families in Canada, which they don't do
anymore.
As a result, the conditions in the rental housing
market have just been deteriorating more or
less continuously for several decades now.
The private sector over that time focused on
building condos, while efforts to develop dense
rental housing often ran into another wall:
NIMBYism or not in my backyard.
People like trees better than they like
apartments as neighbours,
and so people are reluctant naturally to
allow more density in their communities.
So, which party has the most feasible solution?
I would say, is that the Conservatives are
laser focused on homeowners, and I think
it's understandable politically, but I think it's
a real problem
substantively for their platform.
The major housing challenges that the
country faces are ones which either involve
renters specifically or renters and places
where renters and owners are kind of
connected.
I think the Liberals look a little better on this.
Their platform,
I think, maybe it's doubling down a little bit
on some aspects of their existing policy. They are
trying to attract first-time home buyers or
younger families who are kind of worried
about their ability to get into the housing
market. I think it is unlikely to rise really to
the magnitude of the challenge that the housing
market faces right now.
And then,
lastly, if you look at the NDP, I think you see a
vision which is probably much more closely
aligned with the realities of the problems and
maybe a little bit less in terms of some of the
specific details of how they're going to get there.
Wachsmuth says he thinks,
at the end of the day, Canada's
housing problem has become so big, the
proposed levels of federal investment
probably all need a zero added to them to
be able to solve this issue meaningfully and
quickly.