Is Trudeau to blame? Understanding the housing crisis
Scape @ Wed Aug 16, 2023 3:58 pm
Is Trudeau to blame? Understanding the latest data behind Canada’s housing crisis
$1:
Over the summer Conservative Leader Pierre Poilievre has taken Prime Minister Justin Trudeau to task for what he alleges to be an inadequate government response to Canada’s housing and affordability crises. So, when the Canada Mortgage and Housing Corporation (CMHC), a federal Crown corporation, released its most recent set of data on the housing sector, it was not unexpected that the Tories used it a jumping off point to attack Trudeau’s record on housing.
“The CMHC confirmed that housing starts were substantially lower than last month. The facts show a 10 per cent decrease in starts, which works out to nearly 29,000 fewer homes that would be built in a year,” read a statement released by the Conservatives Wednesday morning. “The news is even worse when looking at the numbers for some of Canada’s biggest cities where the housing crunch is worst. In Vancouver, the reality is that housing starts are down 23 per cent from the previous month. In Toronto, it is even worse — with a 29 per cent decline.”
“All these numbers point to one thing, that the Trudeau Government is failing to fulfill their promises on new home construction and that they will not come anywhere close to building the 5.8 million new homes that their own agency says we need to solve the housing affordability crisis that has unfolded under their watch.”
The CMHC found the seasonally adjusted annual rate (considered the most accurate metric for evaluating housing starts) for new builds was down considerably in major metropolitan areas like Toronto and Vancouver. The numbers also show that housing starts over the first seven months of 2023 are down in every province except Ontario and B.C. compared to the same time period last year.
However, contrary to the position put forth by the Conservatives, several housing experts said it’s not that simple, noting how the current housing crisis was caused by a multitude of factors and, therefore, will require an equally comprehensive approach to resolve.
In fact, Frank Clayton, the co-founder and senior research fellow at Toronto Metropolitan University’s centre for urban research and land development, described the CMHC’s latest numbers as “pretty good.”
“I’m surprised that they’re as strong as they are,” Clayton told iPolitics.
“Basically, we’re holding up not not badly. The last two months, June and July in particular, the seasonally adjusted starts have been pretty high.”
In particular, he referenced how new housing starts across the country have jumped dramatically from earlier this year, including in cities like Montreal, Winnipeg and Edmonton. It should be noted Toronto and Vancouver saw an equally dramatic decrease this month, especially in dwellings like apartment buildings and townhouses.
According to Clayton, Canadians are not seeing nearly enough new houses or apartment buildings being built to combat the affordability crisis, but considering the high interest rates set by the Bank of Canada in an effort to bring down inflation, he argues the current situation is not as bad as could be.
“We’re not we’re not producing enough housing to make a difference for affordability and to accommodate all the new people coming to Canada,” said Clayton. “The housing market is suffering to some degree because people can’t afford to buy homes, resale or new, so you expect things to be tapering off, but it’s pretty strong.”
Clayton also said the responsibility to have more new housing builds does not solely lie with the federal government, as “the market provides most of the housing.”
Meanwhile, Aled Ab Iowreth, the deputy chief economist at the CMHC, advocated for an “all hands on deck” approach to housing.
“This is the responsibility of everyone,” he said in an interview. “We need all levels of government, the business sector, everybody.”
In the Conservative statement, the opposition party described the situation as “Justin Trudeau’s housing crisis” and criticized the federal government’s housing accelerator program.
“They are spending $4 billion on a ‘Housing Accelerator’ program but things keep going in the wrong direction. They refuse to confront the bureaucrats and gatekeepers that are preventing housing construction in our big cities,” read the statement.
Last year, the CMHC released a report saying the country will need 5.8 million additional homes for the housing market to become affordable.
On Wednesday, Ab Iowreth said “by that metric, we need a drastic increase in supply,” but echoed Clayton’s sentiments that, in the context of the high interest rates, the latest data provides some reason for optimism.
“Things could have been a lot worse,” he said. “We started the yar being quite concerned about housing starts and how much would be built because of the…rising interest rates, so we projected quite a sharp decline in housing starts because you need a lot of construction financing to get stuff built.”
“In that respect, the numbers are fairly good.”
That being said, both Ab Iowreth and Clayton were less hopeful with regards to major metropolitan areas like Toronto, Vancouver and Montreal.
“[The CMHC] is really concerned about Vancouver and Toronto,” said Ab Iowreth. “We’re increasingly concerned about Montreal, as it’s starting to creep up there.”
“This problem has been a long time coming. It’s taken us a lot of years to get into the current situation,” he noted, adding that regulatory hurdles in these cities demonstrate why a collective effort from municipal, provincial, federal and private sector entities is necessary.
“Please don’t hesitate to call it a crisis… stuff needs to change.”
“The CMHC confirmed that housing starts were substantially lower than last month. The facts show a 10 per cent decrease in starts, which works out to nearly 29,000 fewer homes that would be built in a year,” read a statement released by the Conservatives Wednesday morning. “The news is even worse when looking at the numbers for some of Canada’s biggest cities where the housing crunch is worst. In Vancouver, the reality is that housing starts are down 23 per cent from the previous month. In Toronto, it is even worse — with a 29 per cent decline.”
“All these numbers point to one thing, that the Trudeau Government is failing to fulfill their promises on new home construction and that they will not come anywhere close to building the 5.8 million new homes that their own agency says we need to solve the housing affordability crisis that has unfolded under their watch.”
The CMHC found the seasonally adjusted annual rate (considered the most accurate metric for evaluating housing starts) for new builds was down considerably in major metropolitan areas like Toronto and Vancouver. The numbers also show that housing starts over the first seven months of 2023 are down in every province except Ontario and B.C. compared to the same time period last year.
However, contrary to the position put forth by the Conservatives, several housing experts said it’s not that simple, noting how the current housing crisis was caused by a multitude of factors and, therefore, will require an equally comprehensive approach to resolve.
In fact, Frank Clayton, the co-founder and senior research fellow at Toronto Metropolitan University’s centre for urban research and land development, described the CMHC’s latest numbers as “pretty good.”
“I’m surprised that they’re as strong as they are,” Clayton told iPolitics.
“Basically, we’re holding up not not badly. The last two months, June and July in particular, the seasonally adjusted starts have been pretty high.”
In particular, he referenced how new housing starts across the country have jumped dramatically from earlier this year, including in cities like Montreal, Winnipeg and Edmonton. It should be noted Toronto and Vancouver saw an equally dramatic decrease this month, especially in dwellings like apartment buildings and townhouses.
According to Clayton, Canadians are not seeing nearly enough new houses or apartment buildings being built to combat the affordability crisis, but considering the high interest rates set by the Bank of Canada in an effort to bring down inflation, he argues the current situation is not as bad as could be.
“We’re not we’re not producing enough housing to make a difference for affordability and to accommodate all the new people coming to Canada,” said Clayton. “The housing market is suffering to some degree because people can’t afford to buy homes, resale or new, so you expect things to be tapering off, but it’s pretty strong.”
Clayton also said the responsibility to have more new housing builds does not solely lie with the federal government, as “the market provides most of the housing.”
Meanwhile, Aled Ab Iowreth, the deputy chief economist at the CMHC, advocated for an “all hands on deck” approach to housing.
“This is the responsibility of everyone,” he said in an interview. “We need all levels of government, the business sector, everybody.”
In the Conservative statement, the opposition party described the situation as “Justin Trudeau’s housing crisis” and criticized the federal government’s housing accelerator program.
“They are spending $4 billion on a ‘Housing Accelerator’ program but things keep going in the wrong direction. They refuse to confront the bureaucrats and gatekeepers that are preventing housing construction in our big cities,” read the statement.
Last year, the CMHC released a report saying the country will need 5.8 million additional homes for the housing market to become affordable.
On Wednesday, Ab Iowreth said “by that metric, we need a drastic increase in supply,” but echoed Clayton’s sentiments that, in the context of the high interest rates, the latest data provides some reason for optimism.
“Things could have been a lot worse,” he said. “We started the yar being quite concerned about housing starts and how much would be built because of the…rising interest rates, so we projected quite a sharp decline in housing starts because you need a lot of construction financing to get stuff built.”
“In that respect, the numbers are fairly good.”
That being said, both Ab Iowreth and Clayton were less hopeful with regards to major metropolitan areas like Toronto, Vancouver and Montreal.
“[The CMHC] is really concerned about Vancouver and Toronto,” said Ab Iowreth. “We’re increasingly concerned about Montreal, as it’s starting to creep up there.”
“This problem has been a long time coming. It’s taken us a lot of years to get into the current situation,” he noted, adding that regulatory hurdles in these cities demonstrate why a collective effort from municipal, provincial, federal and private sector entities is necessary.
“Please don’t hesitate to call it a crisis… stuff needs to change.”
This crisis has been a bill left unpaid for decades now but it has come due on his watch. He has tools to address the problem, same as the groceries inflation issue, but as a neo-con light he isn't the right tool for the job.
herbie @ Thu Aug 17, 2023 9:08 am
My Suggestion:
Cancel the GST on all building materials and on new home sales. Make a federal law preventing Provincial Sales taxes or Property Title Transfer fees on all first time home buyers.
For a start!
Or if you want to stop speculators, make the sale of the land value of an existing property Capital gains taxable.
DrCaleb @ Thu Aug 17, 2023 9:29 am
herbie herbie:
Or if you want to stop speculators, make the sale of the land value of an existing property Capital gains taxable.
Corporations are the largest purchaser of real estate in Canada. Venture Capital backed real estate holding companies buy properties and rent them out for profit. That is just one problem.
'A new phenomenon': Big investors eye Canada's home market, ReMax president says
Make owning more than 'X' single family properties illegal for corporations. That lets people have a couple homes for income, but they can't buy the whole town.
Scape @ Thu Aug 17, 2023 1:13 pm
Liberals called on to boost social housing stock in line with peer nations
Thanos @ Thu Aug 17, 2023 3:33 pm
The cost of a home has gone up an average of 85% since 2015, which was the start of the Trudeau era. He probably didn't do any of this on purpose, and in no way could control the real estate insanity that erupted spontaneously during COVID as investors parked as much of their money as they could into property in order to protect it from a potential market meltdown. But the Liberals have also done absolutely nothing to stop these increases in housing costs either. And on top of it their anti-inflation strategy has been a massive failure as prices on everything are still rising every month.
That's going to be the hammer going forward for the Canadian middle and working classes - even if inflation stabilizes someday it doesn't mean that prices are ever going back to what they were pre-COVID. All it means is that costs will stop increasing exponentially, it doesn't mean that they won't stop rising altogether, and there is certainly no rollback to 2020 prices that is going to happen except as some sales gimmick at an auto dealership or electronics store. This situation is permanent and the Liberals are going to have to wear the crown of thorns for it, not because they encouraged it but because they did so damn little to slow it down.
So congratulations to anyone who gets to sell a 700 square foot apartment they bought for $150K in 2000 for $400K today. It's great to be you, superstar, as opposed to being the poor doomed bastard who has to buy a brand-new 500 square foot apartment for a "measly" $300K, plus probably at least $500 per month in condo fees on top of the mortgage, assuming the guy even gets approved for financing in the first place if he doesn't have a six-figure per year salary going on. COVID, market greed, and government disinterest/lack of concern/ineptitude have probably killed off the dream of home ownership for the majority of Canadians going forward, at least for those who live & work in the cities.
Yay, us? 
xerxes @ Thu Aug 17, 2023 4:08 pm
That would be me. I bought my condo in the mid 2000’s. I got it for $155k. 1000 sq. ft. and in a geographically favourable location in town. It’s now worth $450k. Thing is though, I’ve been priced out of the market too. Years ago my wife and I were looking at a townhouse we fell in love with and it was listed at $379k and we thought it was too rich for our blood. Units at that complex are being listed at nearly a million dollars. Everything has gone in insane and it’s time for a revolution.
And the not the one PP would bring.
Scape @ Thu Aug 17, 2023 5:32 pm
Thanos @ Thu Aug 17, 2023 6:24 pm
xerxes xerxes:
Everything has gone in insane and it’s time for a revolution.
And the not the one PP would bring.
And the not the one PP would bring.
It's actually the people who in normal circumstance who'd favour the great revolution who are the ones most likely to use every bit of power they have to stymie the construction of new homes as much as they possibly can. Even in Alberta the councils of the big cities are dominated by those who skew much closer to the NDP than they do to PP & the CPC. And these people over the last fifteen to twenty years, in Calgary anyway, have done everything they can to push densification of existing neighbourhoods over building new subdivisions. They do it for multiple reasons:
- connections to anti-expansion environmental groups who openly hate any sort of sprawl
- some construction ends up inside the borders of a next-door municipality, which means the city loses all of it's tax potential that it would gain if the construction occurred within the city boundaries; they also currently have a foe in some of the provincial governments who no longer allow the cities to casually annex land that's been developed in the municipality next door, the way it used to happen regularly up until the 2010's
- they're fully committed ideologically to the build-up-not-out dogma and will go to war to defend this belief system; e.g., Naheed Nenshi, who somehow inexplicably became a hero to millions across Canada, hired in 2010 at the start of his first mayoral administration a chief urban planner from Vancouver who openly said that he detested suburbs and would do everything he could to prevent any more of them from being built, regardless of the fact that Calgary is surrounded by open farm & light industrial land that can easily be purchased & rezoned for new housing development; this was accompanied simultaneously by a bitter war of words between the city and house building companies, a fight that exploded out in the open when Nenshi got sued for defamation and had to pay a large penalty to one of his targets; I can't speak for any other city but in Calgary's case it's clear right now that the anti-development side still holds sway on the current council, and it will be an easy bet that they'll continue the policies that Nenshi put into place to make the approvals process as difficult as possible
- there are a large number of local & provincial politicians who are in so deep with the heavy hitters in the real estate sector that they basically write policy on behalf of these business people; if the real estate people want prices to keep getting higher because it increases their own profits, and they want the politicians to do whatever they can to make new developments as difficult as possible to build in order to protect their source of income, then odds are very good that they're going to get their way
I won't even assume that anyone in the federal Liberals or CPC are even slightly honest about this crisis either, mostly because the same interests locally or provincially that block & reject new developments are just as active on the federal level. This isn't just big business calling in all it's connections, it's massive business that now forms a large part of the national economy. More supply threatens their profitability, so they'll naturally do whatever it is they can to protect themselves. If they have to do it with a left-wing tactic, like using environmental concerns to slam the brakes on as many projects as they can, then they'll do it. If they have to do it with a bureaucratic tactic, like making code requirements so stringent that building a new home becomes just as expensive as buying an already over-priced existing home, then they'll do that too.
I have no faith in the ability of this country to solve this crisis. In fact, with what Canada's turned into over the past several decades, I have no faith in this country to ever solve any of our various crises ever again. The rot & stagnation & damnable complacency & putrid NIMBYism have won a near-total victory in this land.
Tricks @ Fri Aug 18, 2023 8:59 am
Well there are three main reasons that housing prices increased.
Interest Rates: Not controlled by Trudeau
Supply: Not controlled by Trudeau
Demand: Can be affected by Trudeau.
So at best an inaction by him "caused it". But making broad legislative changes to home ownership at the beginning would have probably caused people to freak out.
Zipperfish @ Fri Aug 18, 2023 9:36 am
xerxes xerxes:
That would be me. I bought my condo in the mid 2000’s. I got it for $155k. 1000 sq. ft. and in a geographically favourable location in town. It’s now worth $450k. Thing is though, I’ve been priced out of the market too. Years ago my wife and I were looking at a townhouse we fell in love with and it was listed at $379k and we thought it was too rich for our blood. Units at that complex are being listed at nearly a million dollars. Everything has gone in insane and it’s time for a revolution.
And the not the one PP would bring.
And the not the one PP would bring.
Oh it is going to be the one PP would bring. I live in ranching country. Most people here are convoy sympathizers. They have social get togethers, they meet every week, they solicit new members. I get asked every couple of weeks if I want to go to a "meeting." Their message: "They're coming for your guns, their coming for your cars and they're coming for your kids." And it sells up here. They are organized, and they are patient, and they are waiting for a crack in the social fabric to step in.
This revolution will not be from the left who have collectively decided to untether themselves from reality.
xerxes @ Fri Aug 18, 2023 11:28 am
I know. And that’s the sad part. People are upset with the status quo; and rightly so. And in punishing the current party in power who had nothing to do with the problems at hand (though isn’t doing much to alleviate them) is going to be replaced by a right wing reactionary who won’t deliver on any of his promises but will make sure that the richest among us pay less in taxes and get to pollute even more. And then blame the gays for existing and causing the mess.
Zipperfish @ Fri Aug 18, 2023 12:01 pm
Fair to say the Liberals offer all assistance short of actual help. We need immigration to replace an aging demographic and keep the GDP growing, but the scale of immigration the Liberals are pushing is not a good look, when people working in Vancouver can't afford to live there. Hard to see how adding 200,000+ immigrants/year is going to improve the situation.
DrCaleb @ Fri Aug 18, 2023 2:49 pm
Sure will improve the tax base though. Studies show that immigrants contribute more than they ever receive from social benefits, and the next generation is even more productive.
Zipperfish @ Fri Aug 18, 2023 3:24 pm
DrCaleb DrCaleb:
Sure will improve the tax base though. Studies show that immigrants contribute more than they ever receive from social benefits, and the next generation is even more productive.
Absolutely. But where are they going to live? If they have no money--well that's bad news because Vancouver already has a huge unhoused people problem. If they got money, they are going to drive up housing prices and rents even more.
And pretending these affordability problems don't exist has not been doing the Liberals any favours in the polls.
DrCaleb @ Fri Aug 18, 2023 3:34 pm
Zipperfish Zipperfish:
DrCaleb DrCaleb:
Sure will improve the tax base though. Studies show that immigrants contribute more than they ever receive from social benefits, and the next generation is even more productive.
Absolutely. But where are they going to live? If they have no money--well that's bad news because Vancouver already has a huge unhoused people problem. If they got money, they are going to drive up housing prices and rents even more.
Where am I going to live? I sold my place a couple years ago, so I could buy something else. I can't find anything I can afford within 1 hour of the city. If the government signs a long term contract with the company I work for, I might be able to buy something further away and still work from home. But I'm not getting any younger. Soon banks won't give me a mortgage because I'm too old.
Zipperfish Zipperfish:
And pretending these affordability problems don't exist has not been doing the Liberals any favours in the polls.
To be fair, it doesn't change my vote at all. I am never going to vote for anyone named Trudeau. But it will definitely hurt them with the undecided.