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Trudeau’s bashing of real estate investors shows lack of understanding about housing

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Trudeau should be the lead cheerleader in attracting investments to the housing sector, not the enemy

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.

 

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Greater Toronto home sales jump in October after Bank of Canada rate cuts: board

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TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.

The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.

The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.

“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.

“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”

The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.

New listings last month totalled 15,328, up 4.3 per cent from a year earlier.

In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.

The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.

“I thought they’d be up for sure, but not necessarily that much,” said Forbes.

“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”

He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.

“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.

“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”

All property types saw more sales in October compared with a year ago throughout the GTA.

Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.

“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.

“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”

This report by The Canadian Press was first published Nov. 6, 2024.

The Canadian Press. All rights reserved.

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Homelessness: Tiny home village to open next week in Halifax suburb

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HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.

Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.

Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.

The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.

Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.

They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.

The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.

This report by The Canadian Press was first published Oct. 24, 2024.

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Here are some facts about British Columbia’s housing market

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Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.

Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.

Average residential home price in B.C.: $938,500

Average price in greater Vancouver (2024 year to date): $1,304,438

Average price in greater Victoria (2024 year to date): $979,103

Average price in the Okanagan (2024 year to date): $748,015

Average two-bedroom purpose-built rental in Vancouver: $2,181

Average two-bedroom purpose-built rental in Victoria: $1,839

Average two-bedroom purpose-built rental in Canada: $1,359

Rental vacancy rate in Vancouver: 0.9 per cent

How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent

This report by The Canadian Press was first published Oct. 17, 2024.

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