Pierre Poilievre, the putative front-runner for the leadership of the Conservative Party of Canada, is wrong about a lot of things. He’s so consistently and noisily wrong, in fact, that being aggressively wrong has become his stock in trade. But one thing he’s right about is the sorry state of Canada’s housing market and the negative impact it’s having on young people, new Canadians and anyone else who doesn’t already own real estate.

It’s no secret that house prices in Toronto and Vancouver have reached utterly preposterous levels, and they definitely helped pull the national average up to a record high of $816,720 in February. That’s a 20 per cent increase from a year earlier, and it’s made finding a detached house under $1 million in those markets about as difficult as qualifying for the national Olympic team. But the MLS Home Price Index, which tries to create a national average that isn’t unduly influenced by markets like Vancouver and Toronto, is rising even faster. It’s up a record 29.2 per cent compared to February 2021, and it rose 3.5 per cent in the last month alone — yet another new record.

This isn’t, as Poilievre has repeatedly suggested, entirely due to “money printing” by the federal government (the federal government, for one thing, doesn’t actually control decisions made by the Bank of Canada). Local zoning decisions, the toxic influence of NIMBYism and provincial housing policies have all contributed to this stew of unaffordability. From Vancouver Island to Prince Edward Island, soaring home prices are becoming an unavoidable issue for the elected officials who have tried desperately to avoid it for years.

This isn’t a partisan thing, either. Whether it’s Doug Ford in Ontario, John Horgan in British Columbia or Justin Trudeau in Ottawa, leaders of every conceivable stripe have failed to take this as seriously as it demands, much less take on the entrenched interests that are standing in the way of meaningful progress.

If Poilievre wants to make it a signature issue of his campaign, and perhaps his future leadership, then it’s up to the Liberal government to get out in front of it. Trudeau’s pact with Jagmeet Singh buys him some time here, and it includes two agenda items specifically aimed at housing and affordability. The commitments to extend the Rapid Housing Initiative, which was a pandemic-era plan to create more affordable housing units, and top up the Canada Housing Benefit are good. But it’s the suggestion they’ll be “tackling the financialization of the housing market” that will be the real litmus test.

Their agreement didn’t spell out how they plan to do said tackling, but Trudeau and Singh won’t have to look far for ideas. Generation Squeeze, a Vancouver-based organization focused on affordability and intergenerational equity (and which received funding from the Canada Mortgage and Housing Corporation and its Solutions Labs program), offered up four potential solutions in a report it released in January.

The government, it says, should make bigger investments in green, affordable, purpose-built rental and co-op housing — and leverage the Canada Infrastructure Bank’s resources to do it. It should take low-density housing and use it to create a pool of permanently affordable rental units, along with a so-called “Perpetual Affordable Housing Bond” that could fund the expansion of that pool. And in a suggestion that should be music to Poilievre’s ears, Generation Squeeze thinks the government should direct Statistics Canada to report annually on the relationship between monetary policy and house prices.

But it’s the group’s fourth suggestion that deservedly got most of the attention — and generated much of the pushback. Generation Squeeze proposes the creation of a small surtax (starting at 0.2 per cent and rising to one per cent) on homes valued over $1 million. This has nothing to do with the massive untaxed capital gains that many older homeowners have built up. The proposal even suggests this modest tax could be deferred by homeowners.

As Generation Squeeze said in its report, “It’s time to ask the 10 per cent owning Canada’s highest value real estate to tolerate a small price on housing inequity in order to demonstrate allegiance to the Canadian dream that a good home should be in reach for what hard work can earn, whether in rental or co-op housing, or as owners.”

Some responses the group has received haven’t exactly been reasonable, though.

Opinion: For all his bluster and bravado, Pierre Poilievre is gifted at harnessing anger and putting it to work on his behalf, writes columnist @maxfawcett. #Canada #HousePrices

STEPUP, a Vancouver-based anti-tax group that calls itself “the leading voice for current and future homeowners in British Columbia and across Canada,” described Generation Squeeze head Paul Kershaw as a “radical left UBC academic.” It suggested, “Those of you familiar with Karl Marx’s work will also recognize the Communist undertones in Kershaw’s proposal.”

Best of all, STEPUP described Vancouver homeowners — many of whom have seen the value of their homes double or triple through no real work or effort of their own — as “beleaguered.”

This might be funny if it wasn’t for the real impact this attitude is having on the lives of so many young Canadians. And while Conservatives have traditionally struggled to break through among voters under the age of 50, this issue might be the key that finally opens that door for them.

For all his bluster and bravado, Poilievre is gifted at harnessing anger and putting it to work on his behalf. And make no mistake: young Canadians are getting increasingly angry about the unfairness and injustice that’s baked into our housing market.

If the Liberals want to avoid losing the next election in 2025, they need to actually do something to address that anger before it consumes them.

Updates and corrections

| Corrections policy
March 25, 2022, 02:01 pm

This piece has been updated to correct the calculation of Generation Squeeze's proposed surtax on home purchases.

March 25, 2022, 10:51 pm

This piece has been updated to remove an inaccurate calculation of Generation Squeeze's proposed surtax on home purchases.

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Taxing property valued over a certain amount is not the solution.

These so-called gains associated with these artificial land 'values' are unrealized, and are already taxed through market value property taxes. The whole idea of being taxed on a gain you've not realized is ridiculous. And nobody who is using real estate to live on realizes the gains associated with their property during their life anyway. Selling your outrageously priced house simply puts you in the buyer's side of the outrageously priced market, sucking up any of these artificial 'profits' in your next property, either directly if you purchase, or indirectly if you rent. You can down-size to retain some of that 'profit', but that's best you can do, besides dying which is the only way to leave the market entirely.

Further, subsidizing affordable housing is simply a solution that puts the cost of the problem onto the public purse and the national debt, and therefore future generations, which is what we're trying to avoid by making affordable housing for young people starting out. The problem is too large to be handled with government subsidies anyway.

The solution is to look at what's causing real estate inflation and deal with it. One of the more obvious causes is foreign money in the Canadian real estate market. This has two effects, the first is to skew the supply and demand balance in select markets, and the second is to influence a local market with international pricing levels. Exposing Vancouver and Toronto real estate markets to international pricing levels results in significant rises in market levels as a result of these Canadian markets appearing underpriced by world standards. Flooding the Canadian real estate market with what amounts to an boundless body of foreign money, creates a supply problem that can't be resolved on a timely basis and generates frenzied real estate inflation, as the article documents.

Another obvious cause of real estate price inflation in key markets is poor city planning which generates imbalances between residential and commercial markets, and between the various price-point components of the residential market, with zoning rules that allow too much commercial development compared to residential development of the various types to provide a mix of housing to support the commercial activity in the local area .
Finally, poor government planning at the provincial levels and federal levels, has allowed cities to grow too much at the expense of smaller communities (provincially), and for overdeveloped areas to grow too much at the expense of underdeveloped areas (federally).

If respective municipal, provincial, and federal governments started to address the historic screwups in their policies with respect to real estate, the market would start to respond with first a reduction in property inflation, then a stability in property pricing that the rest of the economy would eventually catch up with. Too much adjustment too soon would generate a collapse of the whole sad artificial house-of-cards, and would be in nobody's best interests, so a little common sense and judgement would be required at all 3 levels of government.

There are prosperous first world countries with cheap housing. They did not get there by trying to "get the market to respond". They tend to have heavy regulation and a lot of government-built and government-owned housing.

Regulation because markets aren't actually magical mechanisms for getting everything wonderful, and even if they were for commodities, land isn't a commodity--you can't manufacture it, there's a fixed supply. All the economic nonsense about efficient markets doesn't even apply to land issues, they're a different category where the math works differently. So regulation is required to force markets not to be as perverse as they would naturally tend to be. Government-built housing because supply and demand still has some foothold, and increasing supply does have an impact. Government-owned housing because then it can set rent levels at "affordable" and then if supply is adequate and there's a large pool of low-rent homes available, it's harder for the privately owned stuff to jack up the rent to ridiculous levels since people would just turn to the cheap government stuff, and then if rents are low it's harder to push property prices all that high because would-be landlords won't pay because they wouldn't make money and would-be normal homeowners won't pay if it costs twice as much as renting.

It may be that I'm wrong about just what the dynamics are. But whatever the reason, countries--Austria's been mentioned quite a bit lately--with strong regulation and lots of government-built and government-owned housing are the ones that don't have ridiculous housing prices.

I think there's a role for taxation--mainly of property that isn't one's principal residence.

This is all true. But I think we should be clear that while Poilievre is right to treat housing as a major issue, and while he could indeed potentially make political hay from it, he wouldn't actually do anything useful about it if given the chance.
I would be willing to bet that everything Pierre Poilievre recommends to actually do about the problem, if he in fact recommends anything rather than just giving the impression that his sheer Conservativeness and freemarketiness would magically solve the problem the moment he was in office, will in fact be strategies that would make the problem worse, while funneling yet more wealth to the rich.

Right on housing, wrong on everything else. Just what we need as PM, more division, increased confrontation and additional alt right manipulating our social media to adversely affect our elections and democracy

Let's not get ahead of ourselves. "Right that housing is an issue" is not the same as "right on housing". I'm sure whatever he wants to DO about housing is absolutely wrongheaded.

As a senior living in small town Alberta, I am not affected by house prices or rent for that matter. If rent goes up, just move back to Manitoba where rent control and the second least expensive electricity in North America make living there affordable. My concern is this house price increase in Canadian communities where the economy iand life style are different. Gentrification of PEI for example. Can an economy based on tourism with seasonal wages rates tied to tourism survive as more Canadians move east and bump up the prices of homes

Housing is a huge issue, especially for people of Max's generation, they have every reason to be incensed, but any attempt to try and link Pierre "Boilievre" with ANYTHING good or useful EVER is just a distraction. The guy's a nightmare.

Their are many possible paths toward housing equity but the one referred to as tackling the "financialization of the housing market" is the most immediate and urgent issue. This is a global pandemic that rivals Covid for the damage it is doing to humanity. Around the world REIT (Real Estate Income Trusts) and the hegemonic Hedge Funds have the mutual goal of gobbling up all the possible residential housing in every corner of the world - saving only refugee camp tents, and nomadic peoples grass huts.... Their strategy is to buy up at above market prices properties that can be "flipped" to generate more income by subsequently raising rents or purchase prices driving the greed focused bubble, boondogle, fraudulent scam to stratospheric heights.

Not only is this scheme universal in its application it is furiously supported by the ancillary remora fish real estate hangers on - the local real estate brokerages, the mortgage lenders, the banks, the investors, the owners who are prepared to cash in, or out, of their suddenly palatially priced properties.

No amount of public funding for affordable housing will remedy this plague. It merely provides more stock for the gobblers to consume as jurisdictions remove themselves from the ownership of "onerous costs of maintaining affordability". Refreshing the cycle of predatory capitalism.

All those who expect to make windfall profits from this bubble are furiously aggrieved by any move to prick it. One wonders why it has taken so long to recognize the scope and reach of this latest investment craze that threatens to implode financial markets globally at a scale that dwarfs the prime lending debacle.
Perhaps we simply could not imagine the chutzpah, the lethal ambition of its perpetrators?

Suddenly the idealists, seeing the catastrophic future are shouting about "Housing" being a universal human right! Surely that must have roused some faint alarm bells in the minds of all those kleptocrats befuddled by visions of laundering their dirty money through real estate? Surely the smug elected officials basking in the firelights of runaway housing costs must have given a passing thought to the end game?

If universes can expand to the breaking point and then collapse into black holes - how much more likely is it that the criminal use of black "surplus" money to pump up the real estate bubble is bound to contract to the dismay and disarray of ordinary schmucks while the kleptocrats slink off into the burning under brush of our conflagrating world.?

The presence of this convenient and opportunistic investment strategy may not be an evil conspiracy, though no sane person can deny its evil. If the globalist community wishes to keep its universe from imploding it must immediately take steps to rein in the out of control real estate fraud. Th accumulation of obscene wealth has fueled this bubble and the accumulators are due for a sharp "correction". We can start by meaningful surplus wealth taxes on the plutocrats, We can follow this with legislation constraining the laundering of hoarded, illicit wealth - as the proceeds of crime. It won't take much effort to uncover the crimes involved - starting with wholesale tax evasion The world needs to break this cycle of criminal wealth accretion. It might even require the world's louts and losers to give up their use of illegal drugs? It might require politicians to give up their addiction to the bribes and freeloading used by the criminals to ensure favourable legislation. It may even require humanity to give up its delusions of limitless wealth - and settle for sustainable survival.

Excellent comment! Wish you could run for mayor of Toronto or help Jennifer Keesmat in her run as she feels almost exactly the same way! The current mayor runs on Ford diesel - and definitely not non-partisan - sitting back waiting for the next photo-op.