Housing is one issue electioneering won’t solve
Jagmeet Singh thinks he is on to something.
One day this week, thanks to the speed of virtual travel, he held town hall meetings in Windsor, Ont., Saskatoon and Kamloops, B.C., to tell voters in those ridings that they couldn’t afford a place to live — and they should listen to him for some solutions.
Why those three cities? Housing is expensive everywhere these days, not just Toronto and Vancouver. But Singh was making his case in three Conservative-held ridings, convinced that his solutions for the housing crisis will sway those voters sitting on the fence, and deliver him three more seats in the next campaign.
“Everyone is struggling,” Singh says. “The Liberals have talked a lot about housing, made announcements on housing. But it hasn’t made people’s lives better.”
The campaign hasn’t officially started yet, and house prices are already a central issue. That makes sense given how central home ownership is in our personal finances and how high prices are climbing in every part of the country. And indeed, it would be irresponsible for political leaders to ignore how rising prices squeeze out young people, single people and newcomers to Canada, exacerbating inequality at a time when the pandemic is already taking a brutal toll on that front.
Solutions, however, are far easier to coin in a stump speech or a Zoom rally than to implement and actually make a difference. We already fought one election partly over that issue, and here we are again.
With interest rates at rock bottom, pandemic-confined families looking for bigger homes to stretch their legs, and real estate on the upswing, buying houses — and bidding up prices — has become our national pandemic pastime.
But election fixes have proven to be weak answers in the past and are shaping up to be that way again in the future.
In 2019, the Liberals’ marquee home-buying commitment was to enhance the First-Time Home Buyer Incentive, where the federal government takes an equity stake so that firsttime buyers don’t have to shoulder such a big debt.
But the uptake has been far less than expected. And besides, even if the program worked as intended, it wouldn’t do much to confront the root of the problem: the supply of homes.
The Conservatives said they would remove the mortgage stress test and encourage longer-term mortgages — both measures that would encourage demand rather than supply.
And the NDP wanted to go big on building affordable housing — which is actually what the Liberals have done, without much effect on the relentless rise in prices we’ve seen since then.
This time around, the NDP has added on a few more solutions to its offering, in addition to ramping up social housing over the course of the next decade. They want to tax foreign buyers, and also help first-time homebuyers by allowing 30-year insured mortgages and by doubling homebuyers’ tax credits.
So, extra measures to immediately boost demand along with a 10-year plan to boost supply at the low end of the market.
The Conservatives are gearing up, too. They blame the Liberals for overheated housing markets, accusing the Bank of Canada of printing money to encourage inflation, especially in the housing market, in their zeal to pander to the Liberals and their big-spending habits. It’s an argument that makes little sense and begs the question: what would the Conservatives have done during the pandemic instead of allowing an independent Bank of Canada to cut interest rates and engage in quantitative easing to smooth financial market conditions?
The pandemic — with its low interest rates and the increases in disposable income it has brought — has undoubtedly been a factor in driving up the cost of homes. But the deeper, underlying problem is that there are not enough homes, and our population keeps growing.
That’s something that no political party has yet to address in a holistic way.
Immigration Minister Marco Mendicino talks a lot about how he is driving ambitious immigration targets, hoping to propel Canadian economic growth by expanding the workforce — especially as older workers retire. As he told the Toronto Star this week, attracting new immigrants is central to Canada’s post-pandemic recovery.
But where will all the newcomers live? Will they still want to come if finding a home near their job makes them house-poor or requires them to commute huge distances? Where’s the bigger vision here?
We do have the beginnings of some policy measures to improve the situation. Federal regulators are making it more difficult for borrowers to qualify for mortgages, starting on June 1. The Bank of Canada is publicly urging homebuyers not to get in over their heads.
And Finance Minister Chrystia Freeland is ramping up discussions with provinces and mayors in an effort to persuade them to build more homes, cut red tape, put an end to blind bidding, and allow more development close to where the jobs are. The real estate market, meanwhile, is losing some of its steam — although most predictions are for prices to stabilize high.
But unfortunately for our political leaders who sense an opportunity to tap into public angst, none of those earnest but boring steps toward a housing-market repair lend themselves to election rhetoric. This is one issue that electioneering won’t solve.