In an election that looks increasingly like it will be defined by growing concerns about affordability, housing is beginning to take its rightful place at centre stage. But while there’s rare consensus among all major party leaders on this issue, their actual proposals still leave much to be desired. Some of them, in fact, stand to do more harm than good.
Case in point: Over the weekend, NDP Leader Jagmeet Singh suggested that rising rents across the country are the prime minister’s fault and that he would throw money at renters in order to help fix the problem. “We will give $5,000 to people who rent, and close loopholes that protect and allow rich developers to build unaffordable apartment buildings,” Singh wrote on Twitter.
Never mind, for the moment, that rising rents are almost entirely a function of municipal and provincial policies. The real problem here is Singh’s proposed solution would add demand to an already overheated rental market while simultaneously suppressing potential sources of additional supply. He may have diagnosed the problem correctly, and it’s good to see such explicit support for renters and renting, but Singh’s prescription here would only end up killing the patient.
Homeowners shouldn’t feel left out, though, because Singh has some bad medicine for them as well. His party’s platform includes a promise to reintroduce 30-year mortgages for first-time buyers, and doubling the Home Buyers’ Tax Credit rebate to $1,500. How this would help cool markets like the ones in Vancouver or the Greater Toronto Area is a mystery, but Singh is hardly the only New Democrat who seems to think the best way to make housing more affordable is by increasing demand. The Ontario NDP’s housing plan, after all, would give homebuyers an equity loan of up to 10 per cent of the price of their first home — a policy that would only add more fuel to the flames.
Singh and the NDP aren’t the only ones trying to fight a fire with gasoline, though. While Erin O’Toole’s housing plan makes a far bigger point of supporting the development of new housing supply, it also includes incentives aimed at expanding access to mortgage insurance and reducing the stringency of the mortgage stress test, both of which are clearly supportive of demand. It also, once again, makes a bogeyman of the idea of taxing excess capital gains on people’s homes — one that would actually do something to cool markets and help younger Canadians.
The Liberal plan, meanwhile, is still conspicuously light on details about how it would improve affordability. All the Liberals have to offer so far is a pledge to “undertake a review of escalating home prices in high-priced markets … to determine whether speculation is driving up the cost of housing,” and a promise to expand a GST rebate on residential rental properties, which would amount to an estimated $125 million per year. They may not be promising to douse the fire in more gasoline, and their recent changes to the mortgage stress test helped remove some of the fuel from Canada’s housing market, but when it comes to their firefighting efforts, they seem to be using an eyedropper rather than a bucket.
None of the major parties are acting with the sort of urgency that’s required, and none seem to understand what’s really necessary to deliver meaningful progress when it comes to housing affordability in Canada. As economist Mike Moffatt said on Twitter, “There’s only two real solutions to housing costs: Increasing housing supply (or) decreasing housing demand (vacancy tax, taxes on speculation, etc.) Yet every party wants to ‘solve’ the problem by *increasing* demand. It’s bananas.”
Even the demand-side solutions that have been proposed aren’t nearly strong or stringent enough to move the needle very far. Cracking down on foreign speculation is a useful way for governments to raise revenues and protect Canadians, but B.C.’s recent experience (where a speculation tax hasn’t exactly crashed prices) should be proof that it can’t do the job on its own.
As Moffatt says, the real solution here is supply. And if we’re going to build it without massively increasing urban sprawl and the environmental toll that incurs, we’re going to have to add density in Canada’s biggest cities. That won’t happen without a fight, especially from existing homeowners who don’t want to see it added to their neighbourhoods. Even Margaret Atwood, the patron saint of progressive politics in Canada, can fall prey to the lure of NIMBYism.
But if we want to see housing become more affordable for younger Canadians, this is the fight our federal politicians need to focus on. Millennials, for their part, need to make this a ballot issue — and force their elected officials to move past the more comfortable demand-side policies and get serious about supply.
Demonizing landlords and foreign buyers make for easy politics, and promising to help new homebuyers is an obvious winner. Actually solving Canada’s affordability crisis will require leadership and courage, and we’ve yet to see much of that from anyone so far.