We need a national housing strategy. Supply and demand are seriously out of balance, with rents at record highs. Immigration and high interest rates brought on by inflation are making our housing situation worse. Letting ‘market forces’ determine supply while massively raising immigration quotas does not serve the public good. The current shortfall in housing will grow to 3.5 million units by 2030. Governments across the nation need to get back to building and funding housing.
Inflation in Canada, and pretty much everywhere else, is still higher than it should be. The Bank of Canada’s official target range is 2 percent, with inflation coming in over 3 percent this summer. This global phenomenon is the result of 2 decades of cheap money policy drastically worsened by the global pandemic.
Central banks, in response to covid induced stock market turmoil, slashed rates to nothing and then left them there for far too long, leading to runaway inflation that surged across the globe. While Canada has fared better than most, inflation here hit 8% just last year.
Since early 2022, we’ve seen 10 increases to the overnight rate in the last 12 policy meetings, held every 45 days at the Bank of Canada. This rate directly affects mortgage qualification and financing.
Local Housing Market
Our local market is definitely feeling the impact of these increases. There’s more months of inventory than we’ve seen in years and we’re not far from being a balanced market, defined as 3 to 5 months available inventory.
On average prices are in line with 2021 values, down considerably from the highs seen in early 2022. Market activity has returned to the usual cyclical behaviour we see, with busy spring and fall selling seasons contrasted with a drop in activity over the summer and winter months.
Housing is still expensive in comparison with twenty-teen prices, with support being fuelled by a housing shortage clear across the nation. Rents are sky high as well, with the national average now coming in at $2000 a month.
Immigration and Supply
High levels of immigration, international students coming to study and temporary foreign workers brought in to fill low wage or otherwise undesirable work are massively exacerbating the scarcity of housing we’ve been faced with over the last few years.
And higher financing costs have led to a slowdown in building activity at the worst possible time. 70,000 construction jobs have been lost so far this year. Canada Mortgage and Housing Corp. forecasts a need for almost 6 million new homes by 2030 to meet demand, far above the 2.3 million that will be built at present levels.
Obviously a reduction in the numbers of newcomers is needed along with a meaningful national housing strategy that will actually get things done. At present there’s a lot of talk about housing and not much more.
The Century Initiative
One thing that might surprise you is how hard the business community is pushing for higher immigration, ostensibly to fund the demographic surge of aging boomers moving into retirement. A powerful lobby group known as the Century Initiative aims to raise Canada’s population to 100 million by the turn of the century.
Here’s one of their fundamental goals “Growing our population to 100 million by 2100 would reduce the burden on government revenues to fund health care, old age security, and other services”
In my opinion their agenda does not line up with the needs of average Canadians but instead seek to improve competitive advantage for the business community through cheap labour and lower tax rates on corporations and the wealthy.
Is it a surprise that this initiative is supported by Brian Mulroney and the likes of Bill Morneau, the former finance minster? The board of the Century Initiative is a who’s who of Canada’s powerful elites.
Just so I’m not accused of being partisan, at the federal level the Tories are just as much in favour of high immigration as the Grits are. Harper, back in 2014, expanded the scale of the TFW program, with Trudeau just this year making further changes to let even more workers in.
Provincially we have one of the Ford brothers yet again surrounded in some type of controversy, this time concerning developers and the greenbelt. Of note to renters, Ford lifted rent caps on buildings newer than 2018 adding to the rental nightmare we are facing now.
Helping Canadians Instead
Instead of catering to the wealthy and powerful by trying to artificially grow our country I’d advocate that we work to make life easier on ordinary Canadians.
We need a national housing strategy now, with shovels in the ground yesterday. If that has to be government legislated and funded so be it. At the same time we need to tighten up the borders and reduce the amount of newcomers coming in, particularly students and temporary foreign workers.
‘Needing’ foreign students to fill our universities and colleges is a direct result of under-funding these post secondary institutions. And temporary foreign workers for the most part end up in low wage jobs owned by large multinational corps. Who benefits here?
Why does the government allow these two groups take up valuable housing stock needed by Canadians or by people choosing to live here permanently? The need for extra accommodation and infrastructure is certainly at the public’s expense.
The Century Initiative’s goals are clearly in conflict with the need to balance demand with available housing stock. As I’d mentioned earlier in this post we will be short by 3.5 million units if building continues at its current pace.
Sky high demand will keep prices high, putting housing out of reach for the vast majority of young people across our country. They cannot afford a place to rent, let alone buy. How could they even think about starting families? The situation we’ve created for our children and grandchildren is a national disgrace.