Pointless

Chrystia’s big budget in three weeks will be all about housing. The Libs are scared, of course. For one simple reason – real estate – support among their key demographic has fizzled. The kids are pissed. They’d vote in a Corgi.

Housing guy poor Sean Fraser said days ago that ‘tens of billions’ more will be thrown at this issue in the budget. Speculation suggests big money to stimulate construction, more government land made available for starts, more cut-rate financing for builders and tax incentives for existing multi-unit building owners to sell for affordable units (not aimed at middle class owners).

There’s also the chance (slight) of new rules just for young buyers. Like longer mortgage amortizations and lower CMHC thresholds. But, of course, that would increase demand which flies in the face of the we-don’t-have-enough-houses meme politicians have embraced. It is, in fact, their only overarching plan to deal with this housing ‘crisis.’

Here are some facts. Housing starts have been poor because of high costs and low demand. Construction financing loans are expensive, as are materials and labour. There is no way that freshly-built homes are going to cost less than existing units. So if real estate on the resale market is unaffordable, so will be the new ones. No solution there.

Second, even if millions of new houses somehow overwhelm demand and sink prices (a very dubious outcome), we are years away from that happening. CMHC says we need more than five million new units, but by 2030 – six years from now – only 1.7 million will have been built. Ontario premier Doug Ford said this week his crew is allocating $1.8 billion for infrastructure for new homes to start coming onstream in 2031.

Toronto has an unfunded and aggressive plan to create 65,000 new units – none of them aimed at middle-class buyers – by 2030. This week the city is reviewing the 300 parking lots it owns to see which can be developed into multi-unit residences. If lucky, some families might be moving in within a decade.

Bank economists have estimated that at current rates of construction those four or five million homes which politicians have promised will be here in about fifteen years. Meanwhile measures to make financing easier to get, or provide subsidies to new buyers will augment demand, and may increase prices – as coming mortgage rate reductions are also expected to do.

So what’s the solution?

Posters here have vilified small-time landlords and seek to throw them out of the market, which would reduce available rental stock. Others blame immigrants or international students for pressuring rents. The kids, of course, blame previous generations for screwing them over. And ‘the government’ is everybody’s whipping boy – which brings us back to the April 16 budget and more kneejerk attempts by the Liberals in Ottawa to deal with towering expectations.

Of course, the Poilievre Conservative plan is the same as the Liberal one – putting all faith in increasing housing stock, and trying to bully cities and towns into building faster. It’s exactly what Fraser’s been up to, and so far he’s thrown $4 billion at it and trashed local zoning in a bevy of municipalities. Now Ontario’s Ford is pushing back, saying allowing multiplex units anywhere, without local control, ain’t gonna happen on his watch.

In short, nothing changes. All the outrage, name-calling and angst thrown around on this blog (and everywhere) is pointless. Nobody yet has come up with a way to make big-city real estate affordable or to corral rents. No political party in Canada has the stones to advocate that housing be taxed like every other investment asset removing its profit incentive, that ridiculous taxpayer-subsidized 20x leverage be eliminated or that whatever gifts buyers/owners receive should be equally extended to renters. Until that happens, the status quo remains. The wealth divide grows. Two classes of citizens. Generational warfare.

Give the fact there is no political option, no solution forthcoming, no leaders of courage and no barrage of new (but costly) houses on the horizon for six years, it’s time to stop yelling. There’s just no point.

Seriously need a house?

Buy what you can afford. Where you can afford it. And don’t wait too long.

About the picture: “I have read your blog daily since the beginning (and the book that kicked it off),” writes Mark, in Hamilton. “Thanks so much for keeping it going and occasionally pressure-washing the comments section. I still learn a lot. I am responding to your call for more dogs. These are our current beasts. Casey is twelve. Still a great companion to us and a terror to the neighborhood rodents. She is out showing our younger dog how it’s done thrice daily still. And snores away at our feet in between. Beatrice is two, and expends about five times the energy with half the results. And lays in wait between bouts. Dogs really help us with living well. Forced exercise in nature (or consequences) and freely given love. Here they are at walk time. Thanks for all that you do to educate the masses.”

To be in touch or send a picture of your beast, email to ‘[email protected]’.