Is Trudeau finally getting something right on the housing file?

There’s been a flurry of Fluffy announcements of late about our housing crisis. The last one I heard was $15 billions to subsidize the mortgages of 30,000 rental apartment units over the next ten years. In 2015, Canadian author Hilliard MacBeth published a book called “When the Bubble Bursts; Surviving the Canadian Real Estate Crash.” A few months later Justin Trudeau became PM. The real estate market follows the laws of supply and demand. When more people want housing, there is upward pressure on price, whether you’re renting or buying. As Hilliard argues in his book, supply and demand were out of sync well before 2015. When PM Fluffy came in, he opened the floodgates for foreign students and foreign workers. In 2015, the average house price in Canada was about $400k. Today it’s over $700k. In 2015, the population of Canada was 35 million and change. We just passed 41 million. Along the way, the building industry has been plodding away at roughly 200,000 starts per year. Do the math. When you build 1.8 million units while increasing the population by 6 million, you’re completely destroying the demand/supply equation. That’s why the crash MacBeth predicted nine years ago has not happened yet. In conclusion, the Liberal’s goosing the supply side with incentives, while also restricting demand by reining in student and temp worker numbers, is clearly a step in the right direction. But we have a long, long way to go.

The real reason housing is so expensive

Supply and demand!

Canada is a nation of immigrants. That's cool; I'm an immigrant myself. Current immigration policy is aiming to bring a further 300-350 thousand immigrants per year into the country going forward. On top of that you have TFWs and International Mobility permit holders adding a further 250-300 thousand per year. Presumably they need to live somewhere too.

All told, we've got somewhere around 600,000 new folks looking for a roof every year. That doesn't mean we need 600,000 new homes of course. Average household size is about 2.5 persons. Do the math and you'll find that Canada needs at least 240,000 new housing units per year just to keep up with immigration.

The latest numbers I can find show housing starts at an annualised rate of 194,000 as of May 2017. In other words, the housing stock is falling behind at the rate of roughly 50,000 units per year compared to the growth of the population.

That tells me we're in a national housing crisis that's only going to get worse. And where is our federal government on the matter? Missing in action, that's where.

There is no federal housing policy whatsoever.

Mind you, they've got policy initiatives galore when it comes to boosting immigration. After all, more workers means downward pressure on wages. Employers are hunky-dory with that. Employers tend to have a louder voice in Ottawa than do employees.

And you don't hear a lot of uproar about over-priced housing from the big developers and homebuilders and landlords. Like the employers, they've got loads of schlep at every level of government too, whereas you don't.

That needs to change.