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Canadians will stay in overheated housing markets unless the feds make it worthwhile to leave

The federal government should make it easier to move out of overheated markets and into less frothy ones, writes columnist Max Fawcett. Photo by Rajabali Jawadali / Unsplash

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Some topics are just too big to be covered in one column. That’s why over the past two weeks, Max Fawcett tackled the housing crisis and the ways we could address it in a series of them. For more on this series, read the first, second, third and fourth instalments.

In the third quarter of 2021, Canada welcomed 123,000 new immigrants into the country. That was the highest figure for a single quarter since 1946, and it put us on track to increasing the national population by more than 400,000 for the year.

That’s a bigger figure than the United States and the U.K., which is all the more impressive when you consider how much larger their respective populations are. There’s just one problem: it’s going to make Canada’s housing crunch even worse.

The pace of building new housing in the places these new Canadians want to live isn’t even remotely close to keeping up. Over the last three years, for example, there were approximately 33,000 new units added to the market in the Greater Toronto Area — nearly 50 per cent fewer than the region saw back in 2002 when its population was substantially smaller.

And while more supply is obviously needed to correct this imbalance and help address the ever-expanding demand to live in our biggest cities and regions, we also need to do something about the existing mismatch between people and places.

Opinion: Whether it’s west, east, north, or south, our young men and women need to move somewhere other than Toronto, Vancouver, and Montreal, writes columnist @maxfawcett. #HousingCrisis #Canada

In other words: whether it’s west, east, north, or south, our young men and women need to move somewhere other than Toronto, Vancouver, and Montreal. And while the federal government obviously can’t compel them to do that — Section 6 of the Charter of Rights and Freedoms, which guarantees our right to take up residence and pursue a livelihood in any province in the country — it can give them reasons to consider relocating. Think of it as Canada’s housing equalization program.

What would it look like in practice?

For starters, the federal government could make it easier to move out of overheated markets and into less frothy ones. Certain moving expenses are already tax-deductible, but those could be expanded and enhanced to make relocating even less onerous. It could also create tax incentives for large employers that move their head offices to markets like Calgary, Winnipeg, or Regina — places where the commercial vacancy rate is already sky-high.

Their employees might balk at the prospect of having to relocate, but that’s before they realize just how far their stretched GTA housing dollars would go in those cities.

The federal government could also move some of its offices into those less-competitive markets. The decision to put the new Canada Infrastructure Bank’s head office in downtown Toronto was a missed opportunity that could still be rectified. Dozens of other federal agencies and organizations could also be shifted into different parts of the country, which might have the ancillary benefit of expanding the federal government’s reach and influence.

This housing equalization program would also benefit from the COVID-driven shift towards working from home. The jury is still out on whether that shift will be permanent. But if it is, it will create another opportunity to rebalance Canada’s distribution of talent and capital — and spread some of the wealth that’s building up in its biggest cities into other parts of the country.

None of these ideas would be risk-free, and any effort to divert resources away from Canada’s biggest cities would face an immediate backlash from their political leaders. But the federal government’s job is to look out for the best interests of Canada, writ large, and the nearly 40 million people who live here.

Given how overburdened and overpriced our big cities are getting, it might be in everyone’s best interests for the federal government to find ways to take some of the pressure off them.

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