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Prime Minister Justin Trudeau tours a new housing development in Toronto on Dec. 21.Carlos Osorio/Reuters

Mike Moffatt is the founding director of the PLACE Centre and the co-host of the Missing Middle podcast with Cara Stern.

The housing crisis has left Canadians frustrated, angry and looking for someone to blame. At this point, the data illustrating the problem feel familiar: The Canada Mortgage and Housing Corporation currently projects that Canada will have a 3.5-million-unit housing shortage by 2030; last November, in a report commissioned by the Federal Housing Advocate, expert Carolyn Whitzman found that Canada has a pre-existing shortage of 4.4 million homes, including three million that would be affordable to very low- and low-income households. And our housing needs are only rising: Canada’s population grew by more than 430,000 in the third quarter of 2023 – the most significant growth of any quarter since 1957.

Fingers have been pointed at everyone from foreign investors to short-term rental-housing providers to municipal politicians. But in recent months, a new villain has emerged: the higher-education sector, particularly colleges, which have enabled a relatively recent surge in international students – and the need to house them.

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Students and pedestrians navigate the Toronto Metropolitan University campus on Jan. 22, the day the federal government announced a cap on new international student visas.Fred Lum/The Globe and Mail

In recent years, much of Canada’s record levels of population growth have come from an increase in non-permanent residents, rather than through traditional immigration. In the past 24 months alone, Canada’s non-permanent resident population has risen from 1.375 million to more than 2.5 million. These additional 1.1 million residents are equivalent to adding Saskatchewan’s population to Canada in just two years, with the newcomers disproportionately living in Southern Ontario and lower-mainland British Columbia.

Most of these 2.5 million non-permanent residents can be tied back to Canada’s higher-education system, as current international students, spouses of students or graduates of Canadian schools staying here on a postgraduation work permit. As a result, experts have connected the sharp increase in international student enrolment with housing shortages, as decisions by postsecondary education institutions have caused rents to spike and a wave of investors to buy up single-family homes to turn into student rentals.

Perhaps the biggest victims of this housing shortage are the international students themselves, who have to pay sky-high tuition fees and become vulnerable to exploitation. The evidence of these sardine-can living conditions is mainly anecdotal, but there are enough verified stories to make one’s stomach flip. Ashish Sharma, a Nepalese civil engineer studying construction management at George Brown College, told CTV News last summer about what he described as “torture,” living in his decrepit and overcrowded room in a small Scarborough bungalow with 14 other people; in February, 2022, an overcrowded bungalow in London, Ont., caught fire in the middle of the night, with fortunately no fatalities among the 15 students living there.

“These are international students being taken advantage of. Essentially this has become an ATM for these colleges,” Brampton, Ont., Mayor Patrick Brown said last month. “You’re not coming to Canada to live in Third World conditions.”

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Kitchener, Ontario (August 25, 2023) - Four international Conestoga College students from India share an apartment in Kitchener, ON. Kartik Purani shows what’s in his cupboard in his shared apartment. Alicia Wynter/Globe and Mail

Four Conestoga College students from India look through the food cupboard at the small apartment they share in Kitchener.Alicia Wynter/Globe and Mail

The discussion over international students and housing is not groundless. Although public college enrolment decisions did not start Canada’s housing crisis, they worsened the situation in many parts of the country, particularly in Southern Ontario, where municipalities such as Mr. Brown’s Brampton are struggling to manage surging population growth. So in late January, federal Immigration Minister Marc Miller announced a significant change to Canada’s international study permit program: For the next two years, there will be a cap on the number of permits issued to foreign college and undergraduate students – reducing the number of new student visas by 35 per cent this year – and permits will be allocated to the provinces on a per-capita basis. Many provinces will still have room to grow under the new system, but B.C. and Ontario will see the number of permits they can issue substantially reduced, with Ontario’s allocation being reduced by an estimated 50 per cent. (The federal government has left it to each province to allocate permits by institution.)

Ottawa is also cracking down on public-private college partnerships (PPP), where public colleges outsource their teaching to private institutions. Under these reforms, students enrolling in these partnership institutions will no longer be eligible to apply for coveted postgraduation work permits, which allow the student to continue to work in Canada after graduation and are a pathway to permanent residency. The measure should significantly reduce enrolment and housing demand in the City of Toronto and Peel Region, where most of the PPP colleges operate; in B.C., meanwhile, the province announced that new institutions may not enroll new international students for two years.

Ottawa’s cap may be a blunt, temporary and imperfect measure, but it was necessary for the federal government to step up when the provinces wouldn’t, and deal with a system that has gotten out of control. But the policy threatens to distract us from the bigger picture in dealing with the housing crisis: We need bright, ambitious people from all across the world to come to Canada to enrich our culture and counteract the effects of population aging, and colleges and universities should play a critical role in our immigration pipeline to give newcomers both the credentials and soft skills necessary to succeed in Canada. The cap tackles an immediate crisis, but it should never have come to this. Instead, we need longer-term reforms to poorly designed systems riddled with perverse incentives in both our higher-education and housing sectors.

But first, we need to understand how we got here.

For decades, highly qualified people have immigrated to Canada, only to find that employers did not recognize their credentials from back home. Successive governments at every level have attempted an endless series of reforms to address this, but only with moderate success. Federal policy makers, however, developed a clever workaround to this problem: Instead of having foreign talent migrate to Canada at age 28 or 29, they would have them come to Canada at age 18 or 19, get their degree or diploma at a Canadian institution, work for a few years, then apply for permanent residency. This workaround not only bypasses the foreign credential problem entirely, but also gives newcomers years’ worth of workplace and cultural experiences before becoming permanent residents of Canada. In 2008, the Canadian Experience Class was born, giving international students a pathway to permanent residency – and it was a success, with students worldwide becoming increasingly interested in studying in Canada.

At the same time, in Ontario, the 2008 recession was putting the country’s most populous province in a precarious financial position. As a result of efforts to balance the books, provincial government funding to postsecondary institutions failed to keep pace with inflation, leading to a cut in real terms. Colleges and universities needed a new revenue stream, and international students fit the bill. While institutions were constrained on tuition-fee increases for domestic students, they were free to charge international students as much as they wanted – and they did, with levels reaching roughly five times higher than what Canadian students pay.

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Signs advertise language and immigration services in Patiala, in India's Punjab state, a growing hub for students taking the English proficiency tests needed for admission to Canadian universities and colleges.Priyanka Parashar/The Globe and Mail

Institutions farther afield from Toronto were left out of the gold rush, however, as students from India and China were particularly attracted to studying and living in the Greater Toronto Area. But the province had a solution: partnerships between public institutions and private colleges, to allow a non-GTA school to attract students interested in moving to Toronto.

“A public college from outside the GTA contracts with a private institution located in the GTA. Under this contract, the public institution admits students (thus making it possible for them to get a visa) and takes their tuition money,” writes higher-education consultant Alex Usher. “It then turns around and sends these students to the GTA-located private college. The private college is contracted to teach these students according to the public college’s curriculum and receives a fee-per-student. Because this fee is less [than] what colleges charge in tuition, what is effectively happening is that colleges are receiving a couple of thousand dollars per student simply for admitting the student: the bulk of the money is used by the private college to do the actual teaching.”

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Algoma University, whose Brampton campus is shown in 2021, is one of the postsecondary institutions whose international enrolment has surged since the mid-2010s.Fred Lum/The Globe and Mail

As a result of these policies, international students became seen as a magic money tree that institutions could shake when they wanted to meet budgetary needs or generate a surplus – and when Doug Ford’s Ontario government cut tuition fees by 10 per cent in 2019 and instituted a freeze on how much domestic students pay, the province’s institutions started vigorously shaking that tree. Algoma University, which had 331 international students in the 2014-15 school year, saw its number surge to 1,664 by 2021-22; Loyalist College went from 79 to 3,769 over that period. And Canadore College’s numbers reached 6,182 in 2021-22 – a 1,740-per-cent increase from 336 in 2014-15. Colleges became so reliant on the money tree that Mr. Usher estimates that students from India now fund more of Ontario’s college system than the provincial government.

The international student boom is disproportionately an Ontario college phenomenon. Data obtained from Immigration, Refugees and Citizenship Canada revealed that more than 30,000 new student visa applications to Conestoga College were issued in 2023, more than twice as many as any other institution in Canada. Of the 18 Canadian institutions that had more than 5,000 international student visas issued in 2023, 15 were Ontario public or public-private partnership colleges. Lambton College, headquartered in Sarnia, Ont., had more international student visas issued than the University of British Columbia and York University combined, two of Canada’s three biggest universities. Western Community College, a small private institution based in British Columbia, had more international student visas approved than Western University, Canada’s fourth-largest university by full-time undergraduate enrolment.

Little wonder, then, that Ontario faces one of the worst housing deficits of any province, according to a Bank of Nova Scotia report. More than 40 per cent of the CMHC’s estimated 3.5-million-unit national housing shortage is happening in the province; other estimates put the need even higher.

The rapid increase in the number of foreign students – and, thus, an increase in the need for student housing – has prompted a flurry of investment activity that, coupled with lousy housing policies at every level of government for a generation, has made Canada the most challenging country to be a first-time home buyer in the entire Group of Seven.

First-time homebuyers are now competing with real estate investors who have the capital and the ability to buy homes on the lower end of the price spectrum near campuses, and then renovate them to effectively become rooming houses to host, say, a dozen students who only need a bed and access to a kitchen, for $600 a month each. How can young, middle-class couples compete for those starter homes, when they generate that level of cash flow for the investors who have them?

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A tradesperson paints at a rental housing development in Vancouver.Darryl Dyck/The Canadian Press

The growth in international student enrolment has also been rapid and unplanned, making it impossible to ensure the construction of enough housing for all. But we should also recognize that even if this growth had been slower and more predictable, housing construction still would not have kept pace with population growth, particularly in Southern Ontario. The problems identified by the Ontario government’s Housing Affordability Task Force, from slow approval processes to overly restrictive zoning, prevent housing growth from keeping pace with population growth.

A study by Alexander Wray and Nick Revington also found that of the 15 Ontario municipalities they examined, only the City of Waterloo had ratified a plan to accommodate student housing physically close to universities. Elsewhere, various rules and policies aimed at corralling the perceived noise and vandalism issues that can come with housing students – including low-density zoning and the establishment of heritage districts – have limited the construction of student-friendly housing over the years, causing rents to increase and access to diminish.

Of course, the housing crisis is bigger than the international-student issue, and fortunately, governments have begun to act on finding and implementing solutions. Some of the policy recommendations in the National Housing Accord – a document drafted last summer for the federal government to create two million new affordable and market-rental units by 2030 – have already been adopted by Ottawa. That includes removing the goods and services tax on purpose-built rental construction and reintroducing the catalogue of preapproved housing designs, an initiative started in the 1940s that was a vital component in addressing Canada’s postwar housing crisis. Others – such as reintroducing the tax incentives of the 1960s and 70s that were so instrumental in facilitating the building of affordable apartment buildings – have yet to become federal policy.

Still, the part of the crisis inflamed by the international-student issue illustrates how any policies that seek to simultaneously grow the population and ensure enough attainable housing for all will require a complex set of trade-offs.

Policies to increase density can receive backlash from existing residents worried about neighbourhood character. Building more social housing raises concerns about government spending when governments want to reduce deficits. Growing our higher-education sector in a sustainable way is going to require investments in on-campus housing and other social supports. This will require provincial governments to either increase their direct funding to institutions or allow domestic tuition fees to rise.

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A model house, fitted with an array of sensors, undergoes wind testing at a Western University's WindEEE lab to see how structures hold up against extreme weather.Melissa Tait/The Globe and Mail

Perhaps the most challenging trade-offs lie at the intersection of Canada’s housing and global climate crises. We need to ensure enough housing for a growing population while not exceeding the country’s carbon budget through emissions from construction, transportation and land use; we also need to ensure that the homes we build can withstand extreme weather events exacerbated by climate change. A group of prominent Canadians, led by former Edmonton mayor Don Iveson and former federal cabinet minister Lisa Raitt, have formed the Task Force for Housing and Climate to advise governments on addressing both crises simultaneously.

There is no shortage of ideas for them to consider. Intelligent public policy could help convert underused office space into housing, particularly dormitory-style housing for students. Government-mandated parking minimums raise the cost of housing construction and restrict the available land to build on; these rules could be abolished. Existing building-code rules make building family-sized apartment units in our cities cost-prohibitive, and Canada could take a lesson from Sweden, which legalized single-exit designs for apartments of up to 16 storeys, allowing for the construction of a more comprehensive array of floor plans with larger units.

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A master builder looks over blueprints for converting Calgary's Barron Building from office space to residential apartments.Jeff McIntosh/The Canadian Press

Beyond individual policies, though, what Canada needs most are co-ordination and alignment between our housing and population growth policies, as well as robust population forecasts to plan our needs not just in housing, but in schools, hospitals and other public infrastructure, too. Capping yearly non-permanent resident growth, in the same way that the country caps immigration, is essential for this planning. Canada may have been caught off-guard by how quickly our population has grown in the past two years, but this failure to forecast cannot happen again, as it doesn’t just affect our housing market – it puts Canada’s entire immigration system in disrepute with Canadians.

The good news is that we have a chance to do it all: simultaneously solve Canada’s housing crisis, grow our population, address the climate challenge and have a flourishing high-education system. We can build enough housing for existing residents and the newcomers who contribute so much to Canada’s economic and cultural vibrancy. And the vision to attract the best and brightest to the country to offset the effects of an aging population is sound, too: Integrating the higher-education system into the immigration system to give newcomers Canadian credentials and experiences is fantastic and should not be abandoned. But to achieve this, we need public policies that meet the ambition of our vision to ensure that everyone in Canada, regardless of how long they have been here, has a safe and secure place to call home. A reactionary cap from one level of government, while necessary, cannot be the limit.

The housing crunch: More from The Globe and Mail

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