With urban housing costs being inflated by gentrification, supply shortages and the global corporatization of short-term rentals, housing may be shifting from a millennial niche issue to a top-tier ballot question in the upcoming federal election. Before the Bell examined the topic of whether or not there is a brewing housing crisis in Canada.
David Coletto, CEO of Abacus Data, said that in a survey of Canadians, 26 percent of them felt that housing was one of their top three election issues, with cost of living coming in at 39 percent – something Coletto says is an interchangeable issue.
Just over a month ago, the 2019 federal budget unveiled the First Time Home Buyer Incentive — a measure widely seen to be aimed at millennials whereby the Canada Mortgage and Housing Corporation (CMHC) will use up to $1.25 billion over three years to help lower mortgage costs for eligible Canadians.
The Abacus survey of millennials found that 64 percent of them felt that the federal government was making housing affordability a high priority and that this was a national concern — not just concentrated in Toronto and Vancouver. Millennials also said that housing affordability is one of their top issues across the country.
During the pulse segment with host David Akin, Martin Joyce, KPMG’s Canadian national leader for human and social services, said that a national housing strategy — something his native Australia doesn’t have — is a good first step for Canada.
“It’s an infrastructure play at its heart, so you have to build houses and maintain and repair housing, and that’s a long-term investment,” said Joyce. “My worry is that it makes through different political cycles. The risk is, if you change governments, you could change the path of a strategy like this.”
Jennifer Stewart, president and founder of Syntax Strategic, said that governments need to be cautious that they’re not simply providing a band-aid solution to housing affordability by providing too many subsidies.
“Look at what happened in the U.S. in 2008 — a whole economic collapse due to mortgage rules,” said Stewart. “It’s not black-and-white. It’s a very multi-pronged strategy in terms of how you approach is so that there’s not one response, and the government is approaching it from that point of view, and I think that’s smart.”
Jeff Morrison, executive director of Canadian Housing and Renewal Association (CHRA), said that the recent imposition of a stress test for first-time home buyers is, in the words of the CEO of the Canadian Mortgage and Housing Corporation (CMHC), akin to Buckley’s medicine in that it tastes awful but works to reduce the risk of a future housing collapse.
“He even went onto suggest that because of that reduced demand, it’s had an impact on prices, and that in Toronto, because of the stress test, prices have come down approximately five percent,” said Morrison. “Is it working, is it a barrier, is it a help? It depends on what you want to achieve both in the housing market and the economy overall.”
During the policy segment, hosted by Catherine Clark, Kevin Lee, CEO of the Canadian Home Builders Association said that the federal housing strategy is more geared toward social housing than home ownership, and mortgage rules have been compounding since 2008 and they have all now taken root.
“We need to be really careful not to compare ourselves to the United States, because our financial system is entirely different and did incredibly well in 2008 and 2009,” said Lee. “Were there accelerated house prices in some markets? Yes. Did we need to do something about it? Yes. Lots has been done, but we’ve overshot now.”
Michael Bourque, president and CEO of the Canadian Real Estate Association, said that since the stress test was introduced, the volume of sales in Vancouver has gone down 44 percent, and in places like Calgary and Edmonton, it has dropped by 18 percent. Similarly, Toronto has seen a 20 percent drop.
“There’s no doubt that it’s had an impact,” said Bourque. “We understand the concerns of policy makers about household debt, but the question is how do you balance? We think the government in their budget did a very good job of identifying balance with the shared equity program, and they also increased the home buyer’s plan – these are good measures.”
Catherine McKenney, councillor for Ward 14 (Somerset) in Ottawa, said that the private rental market in the capital is so tight that the low-to-medium affordability range is no longer absorbing as many people transitioning from community housing.
“We need capital dollars – we need to build more affordable stock,” said McKenney. “We also need our systems to integrate. If we’re going to take people out of shelters and house them, we need health dollars, and we need supports for people with mental health and addiction issues. And we need [income] supplements – in Ottawa, we have 50,000 households who are in poor housing need, spending more than thirty percent of their income on housing.”
The Hon. Jean-Yves Duclos, MP for Québec City and Minister for Families, Children and Social Development, said that the government’s national housing strategy is thanks to the collective effort of stakeholders in the sector who have been doing the groundwork for the past twenty-five years.
“When you look at the whole continuum of housing conditions in Canada through the national housing strategy, we achieved the goal of working for everyone in the context of the incredible benefits that investments in housing makes when it comes to making our communities more livable, our housing more affordable, and our partnerships more sustainable,” said Duclos.
Watch the show here.