IMO one of the really critical takeaways of this historical survey given the current climate is this: The claim that immigration has caused the crises is completely B.S. With the dynamics in place to drive the crises, increasing population can exacerbate the problem on the margins, but population growth didn’t cause the problem and deportations won’t fix it.
We need systemic fixes, like public development of purpose built affordable housing and regulation to prevent finalization of the human right to housing.
I always explain it along the lines of “increased immigration didnt cause the housing crisis, it was just the final catalyst needed for people to notice it”.
Maybe the crisis had finally gone on long enough to be noticed or maybe people felt more comfortable now that had someone to blame but reality is this crisis has been decades in the making.
The moment cities started ripping out street cars and bulldozing buildings to build parking lots was when the crisis officially began IMO.
I know how to solve it! Let’s build a $100 billion tunnel and a luxury megaspa on public land! /s
Don’t forget removing bike lanes!
Bike lanes are driving up the cost of housing by making the city a nice place to live!! Rip em out!
It took a long time to get here. It’ll take time to get out.
It doesn’t have to. But the CPC and LPC are setting low targets for production, so we shouldn’t expect many units to be built. On top of that, neither are suggesting tax changes to discourage the financialization of housing.
So it’ll take a long time to get out, because there’s little political will to change the current system.
neither are suggesting tax changes to discourage the financialization of housing.
This is the big one. You can build as many houses as you want and it won’t help regular people if investors keep buying them all up.
That’s why I’m intrigued by Carney proposing the build Canada homes company… Will be interesting to see since we did something like that during WW2 that saw the feds build the housing and set the price?
I don’t agree. This is only true because supply is so badly constrained. If each province had another million homes tomorrow, with the biggest cities building another 200 thousand plus a year until capacity is greater than demand, such a thing wouldn’t happen. It’s entirely because people were allowed to believe that a necessity to life could be treated like investible asset despite being an entirely non-performing asset.
It’s like hoarding wheat, then blocking farmers from increasing production so that the value of your wheat stockpile grows. Yes, it technically works, but that’s because you’re artificially preventing the market from doing its job. The value of homes only go up because demand rises without supply keeping up, and various housing associations and interest groups have kept it that way to make their investments grow instead of prioritizing on making this country more livable.
The fixing taxes can fix things, but they’re not the root problem. It’s the sheer lack of development, and if normal developers won’t do their damn job, then it’s the government’s job to step in and fix things like it once did.
I agree that such tax reform (and other regulatory measures) is really needed.
But, if the units are purpose built for affordable housing (as proposed federally in https://liberal.ca/housing-plan/ , for instance), this should at least not fall into the investor problem, no?
I don’t see anything that stops investors from buying the homes to rent out. Without it we’re bound to continue to move towards effectively feudalism.
The only thing I have heard of that will actually solve this long term is a heavy cost neutral land tax. Tax the land for the value you can get for renting it and then redistribute the tax income equally back to the people.
Yeah. And tax reform is far outside the political mainstream at the moment. So we’re stuck with bandaids (GST rebates, zoning changes, etc) when we need serious reform.
Don’t get me wrong: all those lil things are nice, as is building homes, but they aren’t going to add up to a serious improvement in the next few decades. If ever.
Yes it will, assuming they get rented out then of course it will.
The problem is zoning and developer fees. Our government at the municipal level is regressive with zoning and development taxes. While the Federal government uses mass immigration to artificially boost GDP to hide a technical recession, which adds a huge amount of new demand.
Yes it will, assuming they get rented out then of course it will.
In enough volume, yes. But that volume is massive. 3.5 million units by 2030. We built something like 240k houses last year. We’re nowhere near the supply/demand balance that you’re describing.
If an insufficient number of homes are added, prices will remain the same or continue to inflate.
The problem is zoning and developer fees.
That’s tens of thousands of dollars on units that cost over 700k. So 5-10% of the sticker price on new builds. Removing those charges does little to lower the price of existing housing.
There are a host of other factors: expensive materials, not enough labourers/trades, money laundering, etc. But a huge issue is the amount of money in housing.
The feds and provinces could address that through tax changes, but politicians don’t have the guts. 🤷♂️
Ah yes, true prices would rise as Canadians compete with investors. We should disallow mortgages for those with second homes and ban foreign investment in perpetuity.
“At the upper end, government charges can represent more than 20% of the cost of building a home in major Canadian cities.”
https://publications.gc.ca/collections/collection_2022/schl-cmhc/nh18-35/NH18-35-1-2022-eng.pdf
The final cost to the buyer is more relevant than the cost to the builder. It looks like that’s closer to 5-7%.
There are lots of small things that might take a few percent off the cost of housing, if developers and landlords are feeling generous. But we’ll need systemic reform if we’re going to get prices back to affordable.
