Federal Conservative leadership candidates are getting a lot of attention these days for their proposed solutions to Canada’s housing crisis.
A couple of weeks ago, Conservative MP Pierre Poilievre gained nationwide plaudits for a slick video denouncing insane house prices across the country. He blamed them on “gatekeepers” – municipal politicians – who he said are adding hundreds of thousands of dollars to the cost of every new home built. Mr. Poilievre never says how he would get rid of these extraordinary (or, more accurately, imaginary) costs these “gatekeepers” are adding to the price of housing – but hey, it’s the soundbite that’s important.
Meanwhile, Scott Aitchison – the Parry Sound—Muskoka MP also seeking the Tory leadership – believes ending exclusionary zoning to get shovels in the ground faster is the solution to things. And the Conservatives are not alone: the federal Liberals have said that getting municipalities to approve housing faster is the answer to all that ails us.
But they’re all empty and simplistic words. In fact, not one thing these folks are recommending is going to rein in house prices on their own.
A massive new condominium complex being built in the heart of Vancouver by the developer Westbank shows us why. The project will add 3,323 homes to the city – so it’s exactly the kind of boost in housing supply that everyone’s talking about.
There’s only one problem: only 13 per cent of the homes for sale or rent are deemed “affordable” – i.e. those that can be obtained on a low-to-middle-class family income. The rest are luxury units being sold between $2,000 and $2,500 per square foot. So a two-bedroom 1,000-square-foot condo built at $2,250 per square foot would go on the market at a minimum of $2.25-million. The units are being marketed to the wealthy, even if they don’t live in Vancouver or even in Canada – and they’re going to sell.
Dozens of similar condo towers are being planned for Vancouver over the next few years. Does anyone think the developers behind them are going to decide to build their units at half the cost as Westbank? Not a chance. They’re in the game to make money, too. All new housing supply is going to be priced at current market rates at a minimum, and most likely higher.
Politicians are lying to us all about housing prices: taming the problem will not exclusively entail adding supply. So what should be done?
For starters, there needs to be a crackdown on individuals and corporations buying up real estate for their investment portfolios. In places like Toronto and Vancouver, this represents as much as 30 per cent of the market. Put a hefty surcharge on these purchases as they’ve done in other world cities, and watch the demand soften.
So what if several of our federal and provincial politicians are among those investors who own multiple properties? They are also among those flipping homes, an activity that is also contributing to rising valuations. Yet, nothing gets done about it.
Real estate investment trusts (REITs) are all the rage, too. These trusts, which have been making shareholders very wealthy for years now, are also benefiting from favourable tax treatment from Ottawa. In other words, REITs are getting help to reap profits while fuelling the housing emergency. Why are they even allowed?
Why aren’t Conservative politicians talking about this issue as a contributor to rising housing costs? Well, it might hit a little close to home, and prove too controversial with certain segments of the party. But that’s just another form of NIMBYism: solve the housing problem, just so long as it doesn’t affect me or my family’s ability to become even richer.
The federal government recently announced a two-year ban on foreign buyers, but there are more holes in the legislation than in a fashionable pair of jeans. For instance, foreign students can still buy real estate. We’ve seen this movie before in Vancouver, where kids at the University of British Columbia were buying $30-million mansions. Even if the percentage of foreign buyers in Canada is relatively small – 7.6 per cent in Vancouver proper, 8 per cent in Toronto – it’s still a complete joke.
There are other issues that aren’t easily fixable. More than 100,000 people poured into B.C. in the last year. You’re never going to build enough housing quickly enough to satiate the soaring demand those kind of immigration levels create.
Supply issues do result in rising prices. Immigration is the lifeblood of this country, but it will continue to come at a cost, surging house prices among them.
Canada’s politicians know that it will take various complex solutions to make real inroads in addressing our housing crisis. But it seems they’re too gutless to go there.
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Gary Mason