Housing prices are skyrocketing across the country. Many younger Canadians find the cost of a first home beyond their means. Governments at all levels struggle to find money – taxpayers’ money – to build affordable housing.
There’s an easy solution. Lift restrictions on new housing on the urban periphery. Free developers to build as much as the market will bear. Pave more farmland. Build more highways.
Let cities sprawl.
This housing shortage is entirely manufactured: the result of an aggressive immigration policy and well-meaning but counterproductive restrictions on development.
Canada landed a record 401,000 new permanent residents last year, despite pandemic border controls. The target this year is 411,000 and for next year, 421,000. We are bringing in the equivalent of Greater Halifax every year.
Those immigrants fill job shortages and pay taxes that sustain our aging population. But they need a place to live. More than a third of all immigrants settle in the Greater Toronto Area. If you add that many people to the GTA every year, without increasing the housing stock by an equal amount, you get the problem that Greater Toronto and Greater Vancouver and other cites have right now.
Housing prices across Canada increased by 11.7 per cent between November, 2020, and November, 2021. In Montreal, the figure was 18.5 per cent; in Oshawa, part of the GTA, 12.8 per cent.
Clearly there are not enough houses on the market to meet demand, in part because municipal and provincial governments increasingly discourage expansion on the edges of cities.
“When you increase the price of land on the fringe, you telescope that increase through the entire market,” said Wendell Cox, an American urban theorist who is a senior fellow at the Frontier Centre for Public Policy, a Winnipeg think tank, in a webinar last autumn.
In the case of Greater Toronto, the Ontario government in 2005 established a greenbelt with strict limits on development. British Columbia’s Agricultural Land Reserve has protected lands from development since the 1970s. Both measures have increased housing prices by restricting sprawl.
Planning departments try to compensate by intensification of existing neighbourhoods. But local residents often fight proposals, and red tape can stall projects for years.
A report last year for the Macdonald-Laurier Institute, an Ottawa-based think tank, cited Bank of Nova Scotia data that said Canada would need to build 1.8 million units to achieve a per-capita housing stock comparable to the G7 average.
“The primary driver of rising housing prices is a lack of housing supply,” the report stated. What is causing that supply shortage? “For one, urban planners often view builders and land developers in pejorative terms, and hold the industry responsible for promoting urban sprawl.”
Urban sprawl is blamed for taking prime farmland out of production; for encouraging people to use cars – which contribute to global warming – rather than public transit; for creating dreary, cookie-cutter communities devoid of human connections.
But more than two-thirds of us live in suburbs. They are where young people, for generations, have purchased a housing foothold. Limiting growth on the urban fringe limits social mobility and increases inequality.
Increased agricultural productivity compensates for land taken out of use for housing. However much urban elites discourage car use, most people would rather drive to pick up groceries than take a bus; electric cars will reduce carbon emissions.
The pandemic introduced new wrinkles. The three-bedroom house with a back yard is generally preferable to a high-rise condominium, if a couple is working from home. Once the need to commute is removed, people feel more comfortable living far from the core, even outside the city itself.
Federal and provincial governments are responding to rising housing prices with polices that only make things worse. Supporting people seeking to buy their first home by loosening mortgage requirements only increases demand for housing.
Building subsidized housing is a classic example of government creating a program to fix a problem created by government.
The simpler solution would be to return to sprawl. Let developers flood the market with cheap housing built on the fringe. Lay down the highways – such as the 413 and Bradford Bypass proposed by Ontario Premier Doug Ford – needed to serve them.
And if you don’t like the look of them, stay downtown.
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John Ibbitson