Trudeau should be the lead cheerleader in attracting investments to the housing sector, not the enemy
Prime Minister Justin Trudeau during a news conference in Ottawa.Photo by Sean Kilpatrick/THE CANADIAN PRESS files
Housing construction in Canada has not kept pace with population growth since the early 1970s. But despite the evidence and the realization that insufficient housing supply has contributed the most to worsening housing affordability, Prime Minister Justin Trudeau is now blaming investors and corporations for contributing to the crisis.
Trudeau believes housing has been commodified by investors and corporations that use “homes as an investment vehicle — rather than families using them as a place to live, grow their lives and build equity for their future.”
The prime minister’s comments, which reflect his understanding of the housing crisis, or lack thereof, should alarm Canadians, especially those facing acute affordability challenges. Canada Mortgage and Housing Corp. (CMHC), the federal government’s housing agency, believes 5.8 million homes must be constructed by 2030 to restore housing affordability. CMHC further estimates, rather conservatively, that this construction will require more than $1 trillion.
If it doesn’t come from investors, where will $1-trillion-plus come from in the next eight years?
Trudeau was in Brampton, Ont., announcing $114 million in funding for housing initiatives from his government’s $4-billion Housing Accelerator Fund when he made his comments this week. Now, $4 billion may sound like a lot, but the cost to build enough housing to restore affordability is more than $1 trillion, leaving someone, somewhere, to come up with the other $996 billion.
If the prime minister truly believes housing investors are part of the problem, Canada’s housing woes are likely to worsen, and the targets to restore affordability will certainly remain elusive. Vilifying investors is why investment in housing in this country has been lacking for decades. His comments do not help at a time when the nation desperately seeks housing investment on an unprecedented scale.
Trudeau could have been justified in his critique of investors if he had identified alternative funding sources. But he didn’t.
Let’s face it, housing is a commodity. Homes are bought, leased and sold. Every housing transaction involves an exchange of money. To suggest anything but is a disservice to the nation’s unmet housing needs.
Housing in great cities has historically been financed by investors. Even Paris is no exception. In 2018, we wrote about how the much-admired built form of Paris was a result of investments by, you guessed it, investors and speculators.
In Selling Paris, University of Manchester professor Alexia Yates chronicled “the people, practices, and politics that spurred the largest building boom of the nineteenth century, turning city-making into big business in the French capital.” She described “the ways housing and property became commodities during a crucial period of (French) urbanization.”
How is it that the urban planning literature in North America is saturated with praise for French cities — their high density, their bike, pedestrian and transit-friendly transport systems, and their Haussmannized boulevards — but completely disregard the enabling contributions by investors and speculators?
Almost every single renter in Canada lives in a dwelling unit owned by an investor. From British Columbia to Newfoundland, five million households are sheltered in dwellings provided by investors, many of whom are corporations that own purpose-built rental housing. Yet Trudeau believes investors and corporations are part of the problem.
Since 2015, when the Liberals took charge in Ottawa, investment in housing has been mostly flat, except for an unexpected COVID-19 boom-and-bust cycle. Since March 2021, the value of single-family dwelling permits has been declining. During the same time, housing prices and rents have increased beyond the reach of low-income households.
Consider that the average house price in Canada, according to the Canadian Real Estate Association, jumped to $703,574 in 2022 from $441,766 in 2015, an increase of 60 per cent.
The federal government has been active in housing with a 10-year, $75-billion National Housing Strategy, unveiled in 2018. But the federal government’s investments have been unable to move the needle on affordability, suggesting the feds can’t do the job alone.
Canada needs massive investment and tons of investors to make progress on housing affordability. It doesn’t help if the highest office in the country accuses investors of contributing to worsening affordability.
The Prime Minister’s Office needs to pivot and adopt a different narrative that acknowledges the federal and other governments’ inability to provide sufficient funds to build the housing Canada needs. The PMO should be the lead cheerleader in attracting investments to the housing sector, not the enemy.
Murtaza Haider is a professor of real estate management and director of the Urban Analytics Institute at Toronto Metropolitan University. Stephen Moranis is a real estate industry veteran. They can be reached at the Haider-Moranis Bulletin website,www.hmbulletin.com.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
