The right

The kids on Reddit are so darned cute. For years they have moaned about inflationary house prices and rents. Then they rag on higher interest rates designed to fight that inflation. Now they whimper over reduced affordability as mortgage rates swell. The meme is that the Bank of Canada will soon pivot and hand back 2% home loans. And if not, well, up the Revolution!

Housing is a human right. That’s the clarion call. In reality, it’s not. Accommodation is, but that’s not what the kids mean when they rally under a banner like this. They mean real estate.

There was more bad news for houseless Mills and Zs Friday morning with word the Canadian economy churned out 104,000 jobs last month. Huge. In fact in all of the mighty USA, eleven times our size, new hires in December were a mere 223,000. So this proves (a) interest rate hikes so far have done diddly to halt business expansion, (b) more people working and earning means more spending and inflation and (c) the Bank of Canada cannot take its foot off the gas yet. We haven’t reached the terminal rate.

And look at the stats: of the 104,000 new jobs, over 85,000 were full-time and mostly in the public sector. The overall unemployment rate went down and the participation went up. If you want a job in Canada these days, just show up. Wages are increasing 5.1% annually and hours worked augmenting. The job market is as muscular as this blog’s rippling abs.

Says BMO: “The economy still had some serious zip at the end of last year… At the very least, today’s robust results support the view that the BoC will hike rates again later this month.”

And the econs at TD agree. Read this assessment of the year just ended. We’re awesome.

2022 was a banner year for the Canadian labour market. The economy gained 381 thousand jobs, while the unemployment rate has remained right around the historical low of 4.9% established in the spring. This helped wages rise by over 5% y/y during the back half of the year, incentivizing more people to enter the workforce. Today’s impressive report speaks to this strength. The surge in employment and rise in the labour force make this an incredibly positive print. The fact that most of the gains were full-time positions in the private sector and spanned many industries further supports the robustness of today’s numbers.

So the implications for the central bank are clear. More’s coming. “The continued strength in employment means that the Bank isn’t done yet.”

Put this into the context of yesterday’s news. We told you about the disintegrating sales in major markets and the price declines. Detached housing in places like 416, the LM and Bunnypatch is off 20% or more. Yet with 5% mortgages, this still puts housing out of reach of the Reddit crowd. And recall in a normal market first-time buyers make up about 50% of total sales. Without that fuel, the fire goes out.

The clear implication is that more rate hikes will bring lessened affordability and presage lower prices. TINA. Mr. Market is doing his thing. Be patient.

But, sadly, that’s not happening. And the ‘housing-is-a-human-right’ rabble might exert enough political pressure to render the situation far worse.

For example, if CMHC starts insuring 40-year (or maybe 50-year) mortgages. If the cap for insured loans rises to $1.5 million in urban centres. If the stress test is moderated or punted. If the federal equity-mortgage program is enhanced or expanded. If the crazy FHSA is quickly enacted and embraced by investors flooding taxpayer-subsidized money into real estate. If politicians continue to yield to emotion and create yet more ways to increase housing demand.

It may be coming. And there is already legislative precedent for action. In 2019, Libs and Dippers passed the federal National Housing Strategy Act. It actually recognizes housing as a human right, and commits to reforming laws, policies and programs with that in mind. It enshrines “progressive realization” of the right to housing and commits Canada to achieve it.

Yes, that legislation exists. At the same time it’s worth remembering citizens of Canada do not have the right to own property under the Charter (my amendment to include it went down to defeat in the national Charlottetown Accord referendum).

The combination is dangerous to anyone who, for example, is a multi-door landlord. It legitimizes weird stuff like new taxes on people who don’t sleep in the same bed 180 nights of the year, provincial surtaxes on buyers from others areas, speculation taxes on properties that have been owned for decades and the institutional racism represented by a foreign buyer (China, India) ban.

Suck and blow governance. It’s a mixed-up world. We’re clearly in a vortex of change. The authorities do not know what to do, and will likely do the wrong thing.

Yesterday’s advice is even more salient today.

About the picture: “Lindy appeared one day with 4 kittens under the defunct toilet stored in the storage shed,” writes Leslie. “That certainly explained the box dumped at the edge of our property containing one 2-week old kitten — which died shortly after having offered it milk on a saucer, two days before discovering its mates and mother. We figure Lindy left the fifth behind because it wasn’t all right in the head; it was a bit off. She was only about 6 months old herself: an adolescent saddled with kittens and abandoned in a box, roadside. Lindy was as good a name as any. This is her on one of her frequent breaks from the litter. – Been reading this refreshing commentary/blog for years; I love the humour. Satire and its cousins are becoming rare. The other stuff — like the advice — is good, too!”