Catch-’23: Canada’s Affordability Conundrum - "there are at least three reasons why we simply cannot rely on supply alone to do the job. First, and most obviously, housing supply can only respond gradually, and is essentially fixed in the short run, whereas demand can change in a moment. Second, even over a more extended period of time, there are clearly limits to how quickly supply can respond, given Canada’s existing skilled trade workforce, availability of serviced land, and materials. Third, and perhaps more subtly, any success in improving affordability (i.e., lower prices) will sow the seeds for less building in the future. Moreover, note that the marked deterioration of affordability in the past few years has come at a time when new homebuilding has surged... Over the short term, the housing market can be swayed by cyclical factors such as interest rates, unemployment and income growth. But over the longer term, demographic trends have the biggest weight on home prices. Evidence from 18 large advanced economies since the start of the century shows that real home prices are closely correlated with population growth over time... Regression analysis suggests that every 1% rise in population will be associated over time with real home price growth of just over 3% per year. In recent years, Canada’s population has been growing at an average annual pace of 1.5% per year (and a whopping 2.7% in 2022 alone), which is consistent over time with 5% annual home price gains on top of inflation. In any given year that relationship will likely be overridden by short-term factors such as rates or job growth, but it tends to remain strong over time and across economies... Canada’s affordability crisis may be an unintended consequence of record international inflows layering on top of peak domestic demographic demand, both of which are combining to pressure a construction industry already near full capacity. The catch is that driving down prices will incent less supply; and at the same time, heightened immigration flows designed to ease labour supply pressure immediately add to the housing demand they are trying to meet. The infrastructure in place and the industry’s ability to build clearly can’t support unchecked levels of demand, so the affordability conundrum continues..."
Steve Saretsky on Twitter - "BoC says huge population growth is creating imbalances in the housing market. Fiscal policy is counteracting monetary policy."
Policymakers talk big housing game, fail to get shovels in ground - "If municipalities are too beholden to NIMBYs to act, then provincial governments must force their hands, overriding them on zoning regulations and reducing bureaucratic red tape that holds back new builds. Ontario Premier Doug Ford should seriously consider implementing more recommendations from the Ontario Housing Affordability Task Force report. Federally, Prime Minister Justin Trudeau’s Liberals must create a sustainable immigration plan that doesn’t further exacerbate the housing crisis or continue to put foreign students and temporary workers in exploitative situations. They should also hyper-prioritize immigrants who work in the skilled trades, while provinces must ensure newcomers can work in their chosen fields. Trudeau should also stop implementing policies that juice demand and do little more than allow first-time home buyers to take on ever larger debt loads. He also needs to disincentivize Canada’s growing class of amateur investors and speculators, preferably by making it more difficult to qualify for residential mortgages on multiple properties. In several provinces, multiple owners hold between 30 and 40 per cent of the housing stock."
Approval Delays Linked with Lower Housing Affordability - "higher overall land use regulation seems to be associated with lower housing affordability across Canadian municipalities. The corresponding data can be found in the table, which is aggregated by region or province...
Greater Toronto and Greater Vancouver have the highest Municipal Land Use and Regulation Index scores (100 and 98 respectively) and stand out sharply relative to other regions in Canada
Atlantic provinces, Québec and the Prairies are much less regulated, having 23% to 34% less land use regulation than the Greater Toronto Area
The Municipal Land Use and Regulation Index scores relate strongly with housing affordability, as measured by the house price to income ratio... The Greater Toronto and Greater Vancouver Areas have the longest approval times in Canada, which are almost 4 times as long as regions with more affordable housing. Approval delays are not the only regulatory factor affecting housing affordability. Our analysis shows that the “Developers Restriction Index” is also a key factor for understanding differences in housing affordability — this includes survey questions on fees, environmental assessments and mandated criteria. Interestingly, the “Density Restriction Index” has the weakest association with affordability differences in Canadian municipalities."
Damn investors buying up properties! Clearly we need even more regulation to stop greedy developers profiting
Liberal minister Ahmed Hussen desperate to keep housing prices high - "Municipal politicians are incentivized to block housing, to not build it en masse. Offering mayors and city councils opposed to increased density more money to build homes they don’t want isn’t going to cut it. You can’t motivate carnivores with carrots. Yet Hussen touts the Liberals’ new $4 billion Housing Accelerator Fund — which municipalities have to apply for, and many won’t — as a game changer. Here’s what Hussen doesn’t mention. The Housing Accelerator Fund first appeared in the Liberals’ 2021 budget with a target to fast track 100,000 homes by 2025. It then appeared again in Budget 2022, except with an updated target of 100,000 homes by 2027. Only after being publicly criticized for being “slow as molasses” to actually create the fund did Hussen finally launch it this March, with funds said to be deployed this summer. It now aims to accelerate the construction of 100,000 homes within a decade — that’s 2033. So even if it does deliver 100,000 homes, it will do so eight years after the Liberals initially promised. Moreover, this will be a tiny drop in the bucket of the 5.8 million homes the CMHC says we need to achieve affordability by 2030. Hussen goes on to inexplicably blame Poilievre for not doing more to address housing affordability under former Prime Minister Stephen Harper, entirely ignoring that it was under eight years of Liberal rule that Canada’s home prices doubled and entire generations were effectively locked out of ownership. It was under Hussen and Trudeau’s watch that prices climbed 30 to 40 per cent year over year while they continued to deny there was a crisis. In 2022 alone, rent prices for new tenants in purpose-built units surged by 18 per cent nationally, and by 10.9 per cent for all unit types. We desperately need supply, but housing starts are plummeting. As I wrote in a recent column, the standalone seasonally adjusted rate (SAAR) for total housing starts across Canada declined by 23 per cent from April to May of this year. At the same time, the Liberals are ushering in record levels of immigration to the tune of over a million newcomers each year. Even the Bank of Canada now admits this is only making the housing crisis, and the role it plays in inflation, worse."
Opinion: The cure for Canada’s housing crisis? Boost immigration - The Globe and Mail - "A recent federal plan to specifically prioritize construction workers for immigration applications is similarly enlightened yet tepid. It comes with no targets. Were we genuinely committed to solving the housing crisis, we would aggressively recruit the people who can do so, and in huge numbers. Where would they live upon arrival? Are we really so bereft of purpose and creativity? In Sifton’s day, newcomers lived in government-operated immigration halls until they found their feet. Hardly glamorous, but sufficient. Calgary is pioneering the conversion of vacant office space to residential use. Given the severity of the housing emergency, we should also consider unconventional options, including convention centres and military facilities. It just makes sense to house those whose labour could house us all."
Of course, no one will complain about racism, exploitation or modern slavery if this is done
Feds commit $10 million to help 200 Black families in GTA buy their first home - "The Canadian government is committing $10 million in federal funding to help 200 Black families in the Greater Toronto Area purchase their first home. Ahmed Hussen, the minister of housing, diversity and inclusion, made the announcement during a news conference Friday morning, saying the funding will be given to the BlackNorth Homeownership Bridge Program in partnership with Habitat for Humanity GTA."
Racially-based policies are clearly the way to go!
It's telling that the Liberals keep rolling out demand-side measures, not supply side ones
Globe editorial: Cities promise housing – and then make new rules that prevent it - The Globe and Mail - "Victoria early this year approved a citywide overhaul of its restrictive zoning to get more housing built. And, then, nothing happened. Vancouver is poised this fall to approve a citywide overhaul of its restrictive zoning to get more housing built – and city planners predict very little will happen. How is it that splashy plans to enact major changes lead directly to an entrenchment of the status quo? It’s the difference between the headline goal – loosening rules to permit multiple homes on lots long reserved for a detached home – and the detailed regulations that end up undermining that goal and effectively ensure nothing much changes. The housing market is tilted against new buyers and renters, with existing and new supply running well below demand. This is the root cause of Canada’s housing supply squeeze and blame can be pinned on local politicians who oversee rules that allow – and mostly disallow – new housing. For decades, the only thing you could build on most residential land was a detached home. Vancouver is a good example. More than 80 per cent of the land has been occupied by 35 per cent of the people... Victoria at first appeared to be the leader of change. The city’s missing middle policy – multiunit housing of several storeys in height – was approved in January. It allows six homes on one lot and in some cases as many as a dozen, without a contentious, expensive and elongated rezoning process. Yet the city then piled on numerous rules, including building height, parking and added costs. It’s akin to opening a door and immediately bolting it shut. The result is a policy that was supposed to help get many new homes built led to development applications of zero new homes. Vancouver expects a similar result... While Victoria and Vancouver make missteps, Toronto shows some promise. The city in May allowed up to four homes on one lot and didn’t layer on onerous restrictions. It is a good although modest first step. Olivia Chow, the new mayor, has pledged to back new housing. A push from the province, with specific housing targets, has made a difference, too. Data indicate Toronto is opening up to new homes: housing starts in the city are up about 50 per cent since the start of 2022, compared with the two previous decades. Toronto, however, is an exception. Most other cities in Ontario are way behind."
Canada Housing: Justin Trudeau Blames High Costs on Interest Rates, Provinces - Bloomberg - "Canadian Prime Minister Justin Trudeau heaped some of the blame for skyrocketing housing costs on high interest rates and inaction by other levels of government, signaling a more defensive tone on an issue where his main political rival has hit him hard... “I’ll be blunt: Housing isn’t a primary federal responsibility,” Trudeau said. “It’s not something that we have direct carriage of, but it is something that we can and must help with.” The rhetoric is a shift for Trudeau, whose government jumped into the housing arena when it was first elected in 2015. He has since rolled out an C$82 billion ($62 billion) national housing strategy and made sweeping promises, including doubling the pace of housing starts over the next decade. But his efforts haven’t made a meaningful dent in housing costs, with the benchmark house price reaching C$749,100 ($567,930) in June, up 2% from a month earlier. At the same time, he has set record-high immigration targets, welcoming more than a million people last year and straining already crunched housing supply. The remarks show the government “is giving up on solving the housing crisis it created,” said John Pasalis, president of Toronto-based real estate brokerage company Realosophy Realty. “Our federal government is supercharging the demand for housing by rapidly increasing Canada’s population growth rate without any regard for where people will live and is now blaming the provinces and cities for not doing the impossible – tripling the number of homes they build each year,” Pasalis said... Trudeau said during the 2021 campaign that he doesn’t “think about monetary policy”"
Why a capital gains tax on principal home sales could do more harm than good - "the U.S. allows for mortgage interest tax deductions. Homeowners can, within limits, use the mortgage interest paid to reduce their income tax liability. A CGT on primary residence proceeds will have to be accompanied by a mortgage interest deduction, leading to unintended consequences for net tax revenues... It is plausible that the net tax revenue from a CGT on principal residences might be less than what is naively assumed, once all the deductions and the costs associated with collecting the tax are considered."
Canada is losing tens of thousands of constructions jobs - "Construction has lost more jobs than all major sectors, followed by public administration; information, culture, and recreation as well as transportation and warehousing. The construction industry is short tens of thousands of workers, and experts say a coming wave of retirements could make the problem worse. Meanwhile, Canada is millions of homes behind what’s needed to reach housing affordability this decade... Canada Mortgage and Housing Corp. forecasts a need for 3.5 million more homes by 2030 than the country is currently on track to build. The number of new homes built, however, has been in decline, from just over 271,000 in 2021 to 260,000 in 2022. And in May this year, the annual pace of housing starts dropped 23 per cent month over month, leading the CMHC’s chief economist to predict that just 210,000 to 220,000 new homes will be built by the end of the year."
Clearly accelerating immigration will definitely fill the vacancies, because IT analysts and minimum wage service workers will help build houses
Does Justin Trudeau’s team really think housing is not their job? - "No one is paying me for political communications strategy advice, I admit. But if I was advising a federal government who had fallen behind in polls and was trying to reverse that trend ahead of an upcoming election, I would have a fairly simple message to start: Whatever you do, do not say again and again that you consider dealing with the biggest issue of concern to Canadians to be someone else’s job. This may seem obvious. But the current Liberal government of Justin Trudeau seems insistent on claiming housing affordability isn’t their department... if you keep telling voters the big issues are someone else’s job, they may soon decide during an election to make those issues someone else’s job — by relieving you of your own job. Voters in general do not give a crap about jurisdictional niceties, and do not accept arguments about them in response to their complaints. I’ve long heard from municipal politicians who hear complaints about the HST and Bank of Canada interest rates or about hospital waiting times — areas the city has no control over whatsoever — on doorsteps. The smart ones don’t try to pass the buck (even to where it belongs), they talk about what they will do in areas they can control: dealing with affordability and tax concerns at the municipal level, advocating strongly to the other levels of government demanding better for city residents, softening the edges of these problems using city agencies like public health or shelter and housing. You don’t say, “Your problem is not my job.” You say “I’ll make it my job to use the tools I have available to help you with your problem.” But more than that, housing is an area of federal responsibility, and has long been accepted to be such. For instance, during the Second World War, the federal government sought to guarantee housing for every returning veteran and their family, which led to the construction of all those “strawberry box” bungalows that define the single-family streetscape of Scarborough, North York and Etobicoke... Aside from that, the federal government controls immigration that affects demand for housing. And I was told this week by housing economist Shaun Hildebrand of Urbanation that one of the biggest things that could happen to spur massive development of rental housing units is for the federal government to waive or defer the HST on those units. Here’s a quote from the CMHC website: “CMHC exists for a single reason: to make housing affordable for everyone in Canada.” Does that federal agency seem to be describing an issue that is not a federal responsibility? Well here’s another quote: “Federal, provincial and territorial governments are primary partners in housing and have a shared responsibility and complementary roles for housing.”"
Weird how they campaigned on housing then after the election claimed it wasn't their responsibility
How do the "feds can't do anything" people explain away close to a decade of promises? : canadahousing - "Trudeau promises affordable housing for Canadians" - 2015
Modular housing cost Toronto up to twice as much as originally budgeted, says city watchdog : toronto - "At this point, why don't we automatically assume anything the city budgets is going to cost 3x more than projected?"
Modular housing cost Toronto up to twice as much as originally budgeted, says city watchdog : toronto - "Because then all affordable housing projects would make no financial sense, it would just be cheaper to pay people to live in private apartments. But people want public housing, so the city builds them and it costs 3X more."
Leftists keep pushing public housing not because it is going to work, but because they hate the market
Redevelopment of Birch Cliff Quarry offers contrast to Toronto’s push for higher density - The Globe and Mail - "When Housing Now launched in early 2019 with 11 city sites, it had plans to start building as soon as 2020, but its real-world record has been less impressive. There are now 21 sites in the Housing Now pipeline, with close to 3,700 affordable rental apartments planned, but not a single site has begun construction. Toronto also has no timeline on when it will build the rental building on quarry land. Planning for the 124-unit rental project won’t begin until 2024. “Details are still being finalized, but once complete, the city will issue a request for proposals to award the contract to a developer, after which the city will establish project timelines,” city spokesperson Jessamine Luck said in a statement."
Luckily greedy developers aren't making money from this since this is a government project. When you hate the free market more than you love people...
Dream of buying first home now more elusive than ever | Toronto Sun - "Some are questioning whether we can bring the situation back from the brink. A report from RBC Capital Markets, prepared by Geoffrey Kwan, has warned that housing affordability in Toronto and Vancouver is irreparable. “Fixing housing affordability, particularly in Toronto and Vancouver, is likely past the point of no return,” the report reads... it has become increasingly challenging for residential builders to build in Toronto. High taxes, fees and levies which account for 31 per cent of the cost of a new home, are making the act of building market housing more unaffordable by the day. A Canada Mortgage and Housing Corporation report last year indicated that government fees were crippling construction. In Mississauga, the Ontario government had to step in with minister’s zoning orders to get the ball rolling on projects that will add thousands of new housing units to the Lakeview neighbourhood. Some municipal politicians had objected but the province opted to order that a community destined for Lakeshore and Dixie roads be allowed to double its residential units to 16,000. Toronto must act quickly to deal with the crisis. It must expand the current three-storey limit on housing on minor arterial roads to eight storeys, and to 15 storeys on major arterials."
TD report predicts higher interest rates and an affordability crisis - The Globe and Mail - "If Canada’s population boom continues at its current frantic pace, interest rates will face upward pressure and the massive influx of people will significantly worsen affordability for homebuyers and renters, a new report from TD Bank warns. And the bank’s economists are calling on the federal government to restore “balance” to its immigration policies... According to TD, if Canada’s population boom continues, the neutral interest rate – which is sometimes described as the Goldilocks level of interest that neither stimulates economic demand nor holds it back – will need to rise by 50 basis points, or half a percentage point, compared with under earlier assumptions about how Canada’s population growth would unfold... Ms. Caranci said a jump in population like Canada has witnessed wouldn’t be such a problem if there was a similar surge in productivity; however, the country’s track record on that front is not promising. And what she called the “government guarantee” that it will bring in new workers to fill labour gaps only reduces the incentives companies have to invest in technology that would make them more efficient. Rather than view immigration as the “be-all and end-all solution” to Canada’s aging work force, the TD report urged policy makers to focus on reforms that would remove barriers to the work force for people already here, giving the example of how flexible work arrangements and the expansion of daycare has lead to a big jump in the number of mothers with young children taking jobs. Measures aimed at making medical and engineering credentials more transferable would also allow recent immigrants who are underemployed to fill critical gaps in the labour force, it added. “If the purpose was to put a stop-gap in what was an extreme shortage of labour revealed by the pandemic, at some point you have to take your foot off the gas and let the supply side catch up,” Ms. Caranci said. “If you don’t, the benefits of that population increase will erode over time. Someone has to do the math here that we have a system that can accommodate everybody.”"
Racists!
Clearly inflation is only about monetary supply
National Bank economist considers ‘housing affordability Armageddon’ - The Globe and Mail
Opinion: The part of our housing conundrum politicians don’t want to talk about - The Globe and Mail - "The Urban Development Institute in Vancouver recently updated a report it did in 2018 that looked at the various taxes and fees developers must accept if they want to build housing in B.C. It’s an eye-opener. We see high housing prices and automatically think that rich, greedy developers are the culprit. And while there are surely some of those around, there may be fewer than you think. When you look at the analysis UDI has done on taxes and fees, it suggests that governments at all levels are laying the blame for the high costs of housing on everyone but themselves. In one example, the institute looked at the costs of an 800-square-foot condo in Vancouver in 2023 and what contributed to the unit’s staggering average price of $1.12-million. Here we go: Per-unit charges include building permits, $1,376; a development permit, $3,992; Empty Homes Tax, $60,000 (to be paid only if a unit sits empty for an extended period of time); development cost levies, $28,368; a per-square-foot property transfer tax, $13,688; property tax including an additional school tax, $11,480; a community amenity contribution, $89,992; a public art fee, $1,584. Other charges upon sale include GST, $56,000; a Greater Vancouver Sewerage development cost, $1,988; a Translink development cost, $1,554; and a per-unit property transfer tax, $20,400. The subtotal for fees per unit is $290,422 just to build, and upon sale, the total climbs to $327,565.53 – or 29.25 per cent of the imagined condo’s cost. Which, on the face of it, seems like madness. You can’t tell me that back in the great residential building booms of the sixties and seventies, builders and buyers were having to factor in fees, taxes and other charges of nearly 30 per cent into the sale price. Even if the charges are 25 per cent, that’s a quarter of the price of a new home in taxes and fees alone. Many of these same levies apply to developers trying to build purpose-built rentals, which are also in high demand"
Clearly the solution is to pile on even more charges since reducing them won't reduce prices because greedy developers will just keep the difference for themselves (because companies are greedy, we know that prices never go down, which is why falling gas prices did not result in lowered inflation)
Opinion: To fix the housing crisis, overhaul city taxes to incentivize building affordable units - The Globe and Mail - "It is necessary to abandon the regressive tax in place today in many municipalities, where the same flat fee is charged to developers regardless of the price of the home, and replace it with a percentage charge. Such a change will result in a higher dollar amount charged to over-sized and high-end luxury homes and a lower dollar amount charged to entry-level homes, providing developers with the profit incentive needed to shift production to homes with a lower price... Most city charges and fees are a fixed amount regardless of the unit price. Housing budgets have a list of over 20 different city fees – all a set amount. This very structure encourages developers to build bigger, high-priced units. Since luxury homes are charged the same development costs as modest priced units, city fees discourage developers from building entry-level housing, which sell for less. Developers need to make money, after all... This system could be even more progressive by setting up three rates: a low rate for truly affordable housing, an average rate and a luxury rate."
The fix for Toronto’s housing crisis: More housing - The Globe and Mail - "Ontario policy has favoured building within cities for almost 20 years. A Liberal government created the Greenbelt, the protected area of Southern Ontario, in 2005 and a new Growth Plan for the Greater Golden Horseshoe a year later. This has clear implications for the climate. Academic studies consistently show that households in urban neighbourhoods have far lower carbon emissions than suburbanites. This is true in Toronto, too, but the city – despite its climate-change mitigation policies – is happy to ignore that fact and send more would-be residents to suburbs such as Milton. Indeed, Toronto’s institutional response to the Growth Plan has been to slow-walk and resist at every turn. There are almost no places in the city where planning regulations explicitly allow an apartment building. Instead, the city chose to cram new apartments into thinly populated corners of the downtown or in industrial zones. City planning leaders and city council chose to protect “neighbourhood character” from new apartment buildings. As a result, the main mechanisms of getting housing built have been the Ontario Municipal Board and its successor, the Ontario Land Tribunal. City government – especially on the left – has defined itself as standing up for local interests, against evil developers and against Queen’s Park. But in truth it is city government, not the province, that is in the wrong."
Crowd of 300 gathers to oppose Chinatown condo proposal - "About 300 people gathered Thursday in Vancouver’s Chinatown to publicly state their opposition to a proposal from a developer to build a nine-storey condo building on a large piece of property in the heart of the historic community."
Historic protests against new housing are labelled racist, while today new housing is still protested (and building new housing is now considered racist too)