Housing prices increased by 60 per cent over Stephen Harper’s nine years as prime minister. They have since increased another 59 per cent on Justin Trudeau’s watch. Clearly, the policy positions of the two main parties in Canada share responsibility for home prices having left behind local earnings. To fix this problem, our National Housing Strategy needs a serious upgrade.
The Trudeau government launched the housing strategy in 2017. This was historic, because the country had been without one for decades. The strategy offered government loans and grants to build more housing below market prices, while also providing subsidies for those struggling most to pay rent. But the original plan missed the mark by pretending that a national strategy for non-profit housing is the same as a national housing strategy.
Statistics Canada reports that just 3 per cent of Canadians live in subsidized housing. This number likely under-reports the range of Canadians accessing a broad range of non-profit housing options or supports. Still, the figure rightly signals that even if we double, triple or quadruple the amount of non-market housing in this country, which we should, the vast majority of Canadians will continue to rely on the regular market to make our homes.
To rejuvenate the ability for young people to pay for housing, version 2.0 of the National Housing Strategy must focus more on the regular market, starting with a clear goal that has wide public support: Home prices should stall.
The original strategy was hobbled from the outset because it didn’t offer this clarity. Too many hoped that Canada could achieve affordability by just building more non-profit housing regardless of what happens in the regular market.
That proved impractical. We simply cannot scale up enough affordable housing if the cost of land and buildings in the regular market surges ever higher, because the regular housing market drives the expenses with which non-profit and co-operative providers must wrestle.
Even now, the federal government is engaging in consultations about what is working (or not) with its National Housing Co-Investment Fund and Rental Construction Financing Initiative. There are many ways that these programs should be administered better, or their financing improved.
But none of these tweaks will be sufficient to scale up affordable housing if our politicians don’t commit to the goal that average home prices should stall, and use every policy tool at their disposal to give earnings a chance to catch up somewhat. These tools include increasing housing supply, revamping tax policies, protecting renters, ensuring that accurate information about housing inflation drives our monetary policy, and incentivizing shifts in lending and borrowing from mortgage loans to business loans.
As we upgrade the National Housing Strategy, the plan must still prioritize housing for “those most in need.” But we should not repeat the mistake of the original document by including “seniors” in that list. Had it identified “seniors who are renters,” or “seniors in extended care,” then, yes, those subgroups risk struggling with housing, and should benefit from investments in non-profit homes and rental subsidies.
However, seniors, more generally, are not the “most in need” of housing supports.
Statistics Canada shows retirees are more likely to be owners than younger Canadians, and they are especially likely to have gained substantial wealth in the homes they own – most of which has escaped taxation because of the Home Ownership Tax Shelter. Canadians at the age of 55-plus are also the majority of locals who purchase additional homes as investments.
The original housing strategy suffers a fatal flaw because it never mentions the word “wealth.” It depicts rising home prices only as an affordability problem for vulnerable populations – ignoring those same prices has been a boon for homeowners like me.
Housing price inflation delivers easy wealth windfalls for owners, which is why politicians of all stripes have tolerated rising home prices for so long.
But the current owner’s gain is a loss for their children and grandchildren. Home prices rising faster than earnings, by definition, erodes affordability for those who follow. The National Housing Strategy 2.0 must start with this recognition.
This doesn’t mean we can no longer count on growing wealth by paying off a mortgage. It does mean that we should critique any policy that incentivizes us to bank on home prices surging faster than local incomes.
Older Canadians like me who have benefited from surging home prices must actively join the fight to restore housing affordability for those who follow. We must use our voices to help champion an upgrade to the housing strategy, and be open to a modest price on housing inequity to help pay for it.
If we remain on the sidelines, or sustain the myth that older people are especially vulnerable in the housing market, we should not expect history books to write well of our generations, nor be surprised when our children write those critiques.
Paul Kershaw is a policy professor at University of British Columbia and founder of Generation Squeeze, Canada’s leading voice for generational fairness. You can follow Gen Squeeze on Twitter, Facebook, Instagram, and subscribe to Paul’s Hard Truths podcast.