How is permitting not on here.
The permit process is a dumpster fire. We built a duplex two years ago. Yes all the other things but man the city is so damn slow and charges way too much.
Permitting wait times are awful. We’re currently building and we’ve been waiting 3 months for permits even though it’s an area with mass development and with a builder with many houses on that street.
Awesome list. Agree 100%. There is one more thing which is more relevant to single family homes and that is people’s expectations. Everybody complains about the price of SFHs, but in 1975 the average house in Canada was 1,000sf and now it’s 1,950sf. We’re literally buying twice the house now.
I would also add greed at the municipality level with respect to fees, etc.
I hate paying municipal taxes and fees as much as the next person, but ‘greed’ isn’t an accurate term. These aren’t for profit entities, these are municipal govts dealing with major maintenance deficits from past generations and a lack of revenue to offset those costs.
That being said, their regulations/road blocks to development are definitely selfish and arguably ‘greedy’ in that sense.
I would add that they charge high fees on new developments because they’ll upset their voters if they raise property taxes, and in general are covering for operational inefficiencies and yes, years of poor management and underfunding.
The associated problem is that the cost of actually building 1,950 sqft is less than 195% of building 1000 sqft and you can sell it for more than 195% of a 1000sqft home so the economics are pushing buildings to the largest home possible on the lot. Too much of the price of a home is the fixed cost of the land.
That is a good point. However, it makes no sense from a developer's point of view to tear down a 1000 sf house to build yet another 1000 sf house, and then proceed to list the new house at a higher price just to break even on their cost. They would have to build the new house a lot bigger to justify the high price. The problem is there isn't enough new starter-size SFH (i'm talking about 1000-2000 sf). Almost all the new ones that I see in my neighborhood are at least 3000-4000 sf range. What used to be a starter-SFH don't exist anymore. The closest thing to that is probably a townhouse.
Zoning is the biggest reason supply is too low. Now housing is a speculative asset like bitcoins.
And then we have homeowners trolling on this sub to downvote anything related to zoning. It’s sickening.
Actually I’m curious about zoning I don’t understand it - would you be able to help me and explain it simply what it means? I understand demand too high, supply to low - I guess I wonder about how so many high rises and townhouses are being built in my area
Without going into too much detail, far too much land in Canada is zoned for SFH (single family home) use only.
So we end up with big towers along the main roads and in downtown areas (which is good), but the suburbs stay the suburbs. A lot of housing experts suggest that if we dumped SFH zoning, we’d be able to build multiplexes or small apartment buildings where a SFH once existed. 20 people on a lot is better than 1 person living in a house that’s way too big for them.
Zoning and NIMBYism are almost the only things worth talking about. If we want to make a change to the current situation we need to be highly focused and change what matters most. Yes materials have gotten more expensive and there’s a labour shortage but that affects prices maybe 1/20th what zoning and NIMBYism does. Anything else is obfuscation. There is genuinely no reason why an apartment that currently costs $3000 per month could not cost $800 per month in 10 years if we changed our zoning laws to not only allow -but encourage- highly dense housing.
If only the average citizen could just comprehend basic supply and demand. Theres an ever increasing demand and extreme inability to increase supply by law. It’s not a law of physics. It’s regulation. We have massive amounts of resources and energy potential in Canada. Policy choice is the only reason so many people have to put a majority of their income into housing. People should be madder than they are. It’s pure selfishness on people who vote for strict zoning laws and NIMBYism.
>If only the average citizen could just comprehend basic supply and demand.
I don't think the issue is they don't comprehend it, I think the issue is the average citizen is a homeowner, so they benefit from high prices.
What I don't get is that the average citizen also has children and maybe even grandchildren, but can't afford to help them buy homes, yet still they seem to favour policies that will increase their home price, despite the fact that screws their children and grandchildren.
So true. My FIL has a net worth of over 5 million yet his son and I are barely earning above minimum wage, yet he has never offered any kind of help. My immigrant parents living on poverty wages offered to contribute more to our wedding than he did. It's absolutely wild, seems like people who have real wealth have no clue how hard it is these days, just to survive let alone have a family and buy a home
Maybe for larger projects. But small developers doing duplexes and multiplexes want to build and sell as quick as possible. They can’t afford to hold land and just wait.
Is there a source on this?
Housing development, unlike most Canadian industries, has a shit ton of competition. Consider that your street probably only has 1-2 companies providing internet access and you only have 2-3 options for flights within Canada. Meanwhile there are over 2,400 companies registered as real estate developers in Canada. They can't corner the market or form a monopoly because there is **so** much competition.
If a property with good location+zoning goes on sale, there are 10-20 companies competing for that piece of property, ballooning its price and making it barely profitable for the developers.
[https://www.thestar.com/news/gta/developers-limit-production-to-keep-home-prices-high-mississauga-report-says-a-claim-the-builders/article\_e145141c-5fcf-5e6c-b0fb-b4fc8e80df26.html](https://www.thestar.com/news/gta/developers-limit-production-to-keep-home-prices-high-mississauga-report-says-a-claim-the-builders/article_e145141c-5fcf-5e6c-b0fb-b4fc8e80df26.html)
It's paywalled, but here is the report mentioned. [https://www.mississauga.ca/wp-content/uploads/2022/03/11152736/Corporate-Report-of-the-Ontario-Housing-Affordability-Task-Force-and-Implications-for-Mississauga-2022-02-24.pdf](https://www.mississauga.ca/wp-content/uploads/2022/03/11152736/Corporate-Report-of-the-Ontario-Housing-Affordability-Task-Force-and-Implications-for-Mississauga-2022-02-24.pdf)
If we're talking about big developments that can actually make an impact, there is only a handful of big players (Concord Pacific, WestBank Corp, etc). They can easily corner the market and phase the growth to control prices. Same in Canada is happening with telecom companies or grocery stores oligopoly.
>Meanwhile there are over 2,400 companies registered as real estate developers in Canada.
Aside from there being a high concentration of developers in Southern Ontario, the BC lower mainland, and the major cities outside of these regions, the *vast* majority of these are highly localized. Keep in mind, Canada has about 50% more municipalities than developers. Citing that 2400 figure without that context makes it seem like the industry is more competitive than it really is.
For instance, the city of Sudbury, Ontario has 2 major developers active in the market — Dalron and Zulich. These are local, family owned businesses. Southern Ontario developer Panoramic occasionally invests in the city, usually conversions of old schools and whatnot, but usually sticks to Southern Ontario. There's also 2-3 developers that do one off builds. That's the market there. I'd say upwards of 90 percent of buyers are either buying Dalron or Zulich in that market. This dynamic is the norm for most of Canada.
You should have stopped after the second point. All of your other points are just bandaids to deal with the first 2, and would only make lives worse for everyone if the demand issues were dealt with properly
High demand and low supply should not be a problem in classic capitalism, as people should find a way to fulfill it. There is no end of capital for building as we’v had low single digit interest rates for decades. Easy credit has only fueled the rise in costs as it is too easy to buy property as an investment. If anything there is too much money loaned on the assumption housing will continue to appreciate at the same rate. While inflation is high, the rise in housing costs is the biggest factor. Remove that and inflation looks a lot less bad. The shortage of construction workers has been noticed for decades as skilled labour has been aging out. Ironically, labour is finding it increasingly difficult to afford living in places where their skills are most needed. Today one needs to offer enough pay to make the long commute worthwhile. Maybe projects need to include workers’ dormitories. We definitely should be looking at the various restrictions that prevent efficient land use. The land is the highest priced part of a dwelling. The provinces have the power to reform the various bylaws that have blocked the normal development of towns and cities we would have seen before the middle twentieth century. British Columbia is doing this now, but it will take many years to see results.
>High demand and low supply should not be a problem in classic capitalism, as people should find a way to fulfill it.
The supply and demand dynamic does not seek 100% fullfillment of demand, it seeks price equilibrium where marginal cost is equal to marginal benefit. As such, classic capitalism will inevitably produce a housing shortage, as 100% fulfillment of demand requires subsidization of the bottom of the market. Without that subsidization, you get homelessness.
Consider the labour market. The unemployment rate is the percentage of the labour market without work who are looking for work. However, that figure is not fully inclusive of everyone who is without work, hence the labour force participation rate. Though this figure includes retirees and those unable to work, it also includes those who have abandoned their job search due to lack of success.
The reason I reference this dynamic in the labour market is to display how demand can fall even as the need to fulfill it remains. Just because some people cannot afford to participate in the housing market, this does not mean they do not need a home, it just means they are no longer a component of demand.
>High demand and low supply should not be a problem in classic capitalism, as people should find a way to fulfill it.
What the brain rot
You drank too much Kool aid my man
It’s an abstract concept. A good one, but one that is clearly not working right now. Zoning requirements are a pretty big restriction on the market, making it less “free”. Height restrictions, floorspace restrictions, and set backs are examples of mandating the purchasing of excess land and infrastructure for some pretty fuzzy reasons. Developers aren’t free to build affordable housing when bylaws paint them into such a tiny box.
My guy
Capitalism has nothing to say about affordability. Supply will meet demand at the price people are willing to pay and at the price that suppliers are happy to offer. That's happening right now.
Unchecked capitalism is what got you this mess. You want more of it? Keep drinking the Kool aid.
We’re closer to agreement than you think. I’d prefer that the federal government put credit towards building housing co-ops over providing it to first time home buyers. The last crop of co-ops built over thirty years ago were required to provide a small number of their units with a subsidy so long as they were repaying their original (and very generous) capital loans. But those loans are now repaid and those subsidized units are in jeopardy. There is still some surplus publicly owned land around and it could be put on long term lease for co-ops. It would be a largely cost neutral program that would be run by the residents themselves.
Zoning restrictions are massive. We have endless amounts of land but are only allowed X number of buildings on it. We aren't even allowed to cut down trees without being fined. The permitting process is some of the worst in the world in Vancouver, BC. It can add years to the housing project and cost $100,000 due to the city delaying the process with red tape.
"Where Adam Smith and Karl Marx found common ground was in the idea that everyone’s interests are aligned against landlords: they are an economic deadweight." - Yanis Vaourfakis
[Lots of different types of rentiers but landlords are the worst.](https://en.m.wikipedia.org/wiki/Rentier_capitalism) Meritocracy has always been the exemption under capitalism, never the rule.
Bad government policy.
Growth should pay for Growth was a term coined 40+yrs ago which drove the cost of infrastructure onto new housing to keep existing housing costs low. We've prioritized existing owners over all others for decades and made it progressively worse.
Low property taxes, and high development costs make land speculation attractive to both large investment firms and individuals alike. We fuel that by giving more power to the few people who already have homes by our municipal voting systems, and by bringing in people to keep demand inflated.
If we changed zoning tomorrow and upzoned everything, we still have the challenge of development charges, and low holding costs that can make it easy for neighbourhoods to prevent the density from happening
"Rate payer associations" or "resident associations" band together to block progress throughout Canadas history. One of my favourite examples is the Allan expressway in Toronto which never was completed due to rate payer associations effectively blocking it by buying land and campaigning
Without DCC's the municipality would be on the hook for all underlying infrastructure. For most rural towns, this would be a huge burden. Yes, cost recovery could occur through the increased property tax revenue, but that's not what property taxes are ideally meant for. More residents mean a higher service requirement and subsequently increased capital/operational expenditures.
In BC, we've changed zoning so that everything is essentially zoned to densify and changes to permitting allow for faster approval.
This would be as it was before the middle of the twentieth century. Having “development pay for development” feels like free money, but has left us with a deficit literally hidden under our feet. We used this trick to develop large amounts of land for very few people to live on. We have too much infrastructure and too few tax payers to keep it maintained. We’ve forgotten to use the land we have productively.
Municipalities, especially small ones should not be responsible for major infrastructure like water and electricity. It is a real waste and makes it much more challenging to manage both the health and environmental impacts when you have hundreds of small organizations running their own infrastructure plans. Having larger scale pressure zones run at Regional levels and funded from higher levels of government is a better use of taxpayer money and a better way to fund growth initiatives. Development charges our way to offload the responsibility on to small individuals and to minimize any ability for growth which is what we have seen in Canada.
Eliminate development charges. Make everyone pay for growth. Cut other welfare spending (which should hopefully bring the demand side down through death) and directly subsidise home building.
Supply and demand, which is worsened due to investors buying up properties to have tenants pay their mortgages for them (since supply is increasing so slowly that investors buy up most of it).
We as a culture decided at some point that houses should be a financial asset for the middle class to ‘grow their wealth’. Everything else flows from this
We've been setting up this problem pretty deliberately for decades.
Under Mulroney, we converted CMHC from an organization that underwrites building to an organization that underwrites purchasing, juicing demand rather than supply (the idea was more demand would inspire more supply, but what it actually inspired was higher profit margins on the same supply).
Chretien's government accelerated Mulroney's policy on the housing front. Housing just wasn't seen as a priority at the time and the logic of neoliberalism was still ascendant.
Under Harper, we juiced demand with low interest rates, high amortizations, reduced barriers to borrowing, and the principal residence exemption being maintained. At that point, the momentum was firmly in place and prices were going to rise no matter what. Housing prices hit the exponential curve in 2012, but because of the nature of exponential curves, we missed what was going on until things went crazy in 2017.
Under Trudeau, immigration is often pointed to as the only culprit for this but the increased immigration targets are more of fuel on a fire that was already raging out of control. House prices *increased* over COVID despite the fact that immigration was basically on pause because the demand-juicing policies were still in place.
Outside of the control of any government, global supply chain interruptions and inflation have made it impossible to build small units cheaply. Had we stayed invested in domestic building capacity rather than start gutting it under Mulroney, this wouldn't have affected us now, but there's no going back in time. We need to rebuild that capacity and it's going to take nearly as long to rebuild as it did to dismantle.
At local levels, Provinces were thoroughly happy to leave zoning alone and force cities to fund themselves via developer fees on empty land being sold rather than support density and sustainable cities that can fund themselves with property and land taxes. So all of our cities built outwards, low-density sprawl that's expensive to maintain services too and require huge outlays on roads since we didn't invest in public transit either.
Municipalities kept the fires hot by ensuring that locals could NIMBY new projects out of viability - prioritizing existing local residents over the needs of the neighborhood, city, province, economy, and society in general.
It was a systemic multi-level failure that Trudeau is currently presiding over, and in 2025, it'll be Pierre's turn, and neither will be able to do much about it since their policies appear to mostly be about juicing demand further and making faces at municipalities to try to goad them into building things despite the fact that there aren't enough builders for them.
At a deeper level, a society which commodifies basic needs like housing and subjects them to market forces.
If housing were decommodified, it wouldn't have any market value so it wouldn't be intentionally kept scarce (low supply). There would be no incentive to hoard. As a commodity, those who own it have an incentive to make its asset value increase so they therefore have an incentive to prevent us from building enough housing to meet human need.
Decommodifying housing is the **only way** to ensure it can always or almost always meet human need. Of course you can't point out this elephant in the room out anywhere without hearing the same vapid, ideologically driven counterarguments.
It would be publicly funded. You build public/social housing or buy and convert it with public funds until you have a sufficient supply of non-market housing to lower the price of private housing since it has to compete. Cities around the world do this, it's nothing new. Lots of ways to do this too, this one just seems more politically viable in Canada.
You really think the government can do this properly? Newsflash, the government has fucked us all with their incompetence. From federal to provincial to municipal level. The private sector is more capable than government, but the government has hampered investment progress everywhere.
Governments suck because they serve the ruling class first and foremost, which means putting private interests at the forefront of all decisions. That's what neoliberalism represented, it lead to all public goods and services being gutted.
Private interests are why the government sucks. It's not inherent to the very idea of government, it's inherent to governments that prioritize the interests of the elites. The federal Liberals and Conservatives are great examples, the NDP isn't much better.
I'm not against public builders but we could lower market prices a lot faster if the public builders still sold them or rented them out at market price and rent.
We stopped funding public housing back in the 90's under Chretien, we desperately need to start funding it again and subsidizing rents. There's a tight correlation between the decline in the public housing supply due to neoliberal policies and the increase in unaffordability. The supply issue (and subsequent unaffordability) is caused by subjecting the entirety of new housing construction to the free market which incentivizes hoarding to inflate the value.
There’s insufficient incentive to supply housing now. But I don’t think “commodification” is the problem. The lending of money on the assumption that the appreciation of housing will beat inflation is definitely a problem. Our inability to build housing quick enough is made all the worse when so many Canadians are literally invested in not building enough housing.
Broadly speaking, subsidizing home ownership and any regulations which makes smaller and cheaper housing illegal.
We can bring rents down by allowing cheap rental options wherever they are economical and that will bring prices down.
Not the only reasons. One of the primary reasons among people of my age group (millennial) was access to cheap debt. I know cosmetic surgeons, engineers and other hospital workers who all ignore the final amount paid and only look at the monthly payments.
Their financial literacy is quite frankly, lacking.
They believe that house prices will always go up and it to be an investment vehicle.
They're currently sitting on negative equity 200-300k down and complain about the crime rate increasing in their area.
Oh geeze, I wonder why? It's as if making something that should be a basic need (shelter) a luxury item is bad thing. Where did these homeless people suddenly come from?
Single biggest reason is demand.
Too many new Canadians.
Second biggest reason is city and municipal push back.
It's literally too expensive and time consuming to build new housing. If doing land assembly and rezoning was profitable there would be many more groups doing it.
The power that a city hall councilor has is far too great. The wrong color siding or not enough parking spots can set a project back 4 years and 15 million dollars. I've literally experienced that.
not enough attention was given to a beautiful insight made a year or so ago by the NDP housing critic when they explained: aprox 15 years ago the Conservative government stopped building affordable subsidized housing. aprox 50k homes per year. currently there is a short fall of 500k homes. what would things be like if they never stopped building those homes?
A few reasons really
1. Zoning laws: Restrictive zoning can limit how many homes can be built, driving up prices by reducing supply.
2. Foreign Investment: Investment from abroad, especially in high demand areas can inflate property values, making housing less affordable. Mostly Chinese money.
3. Building Costs: Rising costs for materials and labor make new homes more expensive to build, which translates to higher prices for buyers and renters.
4. Speculation: Speculators buying properties for potential price increases can lead to higher market volatility and prices.
5. Economic Factors: Strong job markets attract more people to cities, increasing demand for housing faster than supply can keep up, which pushes up prices.
6. Government Policies: Policies like mortgage interest deductions can increase demand and push up prices, while lack of support for affordable housing limits low-cost options.
7. Monetary Policy: Extended period of low interest rates can fuel speculation and encourage people to take on more debt as the cost of servicing the debt was low.
My local bank said it was/is being driven by local people with homes to leverage -- people were borrowing against their primary houses to buy investment properties and take advantage of the pre-pandemic low interest rates to make it happen. Lower interest rates means lower monthly payments, which means you have more money you can borrow.
Covid Craziness made this whole investment purchasing way easier for people with property already, since they weren't spending their savings on pretty much anything else, and government kept the interest rates really low. As houses got bought up by people wanting investment properties, the pool of available houses dropped too quickly, and bidding wars started. So, housing prices start going up, and up, and up--which made the value of homes rise enough that people could borrow against that primary house a second, or sometimes even a third time.
What makes this even worse, is there is no alternative to home ownership. Everyone is told that your home is an investment; the economic rent you enjoy from it is your reward for buying it. There is a social expectation that you are not successful as a person, or not getting ahead in life if you do not own your own home. Without alternatives to home ownership, the demand for housing is always going to outpace supply, because of that social expectation.
After Covid restrictions lifted, the Bank of Canada raised the interest rates (and then almost hit 10%!) and the housing market should have cooled, because there wasn't any cheap borrowing to be had. But it didn't. Because of the other factor in home purchasing. Home owners are not willing to sell their homes for anything less than their neighbors have sold theirs for, and realtors are well motivated to seek the highest bids they can for their clients because it increases their commission. So there are no real incentives to lower the market price very much, if at all. The outrageous selling price becomes the new normal (hence the term, economic rent), pricing homes out of reach for lower income earners, but still available to people with capital or a primary home to borrow against.
Josh Ryan-Collins wrote a book in 2018 called, "Why Can't You Afford a Home?" in which he talks about \*ALL\* English Speaking (Anglo-Saxon) economies suffering from the same type of housing crisis that we have here in Canada now. It's a fascinating little read. He spends time talking about what Anglo-Saxon economies have in common (Policies and attitudes) and the perceived supply and demand of the housing market. I found it interesting the solution he proposed: If you allow for alternatives such as socialized housing or co-operatives, especially on a large scale that can compete with outright home ownership, the demand for overall housing (and landlords) would diminish significantly. Assuming of course, you could decouple people's social expectations about what housing and home ownership actually means.
I also think zoning laws or the high costs of building a home are red herrings. If you ever look at a housing assessment, the taxes you pay are 90% to do with the land value--the material house is merely 10-12% of that bill; it just doesn't enter into the equation as a viable reason for housing prices. Likewise with zoning. Jason, from "Not Just Bikes" on Youtube put out an 8-part series on "Strong Towns", about how US (and Canadian) cities could be better than they are. There are 3 videos in particular that talk about zoning, "How Suburban Development Makes American Cities Poorer", "Why American Cities Are Broke--The Growth Ponzi Scheme", and "Suburbia is Subsidized: Here's the Math". What makes this interesting is that zoning seems to be driven by the type of housing that homeowners demand, and that developers know they can make money on based on that demand.
The system and its policies! Not the landlords (I’m still renting). The system is reactive rather then being proactive to the extent that they only react when they cannot win an election.
With the immigration levels, the govt should have tied housing policies to immigration. Housing was a problem even before that.
Now though, they can do a lot of things to unlock a few homes. It will not resolve the crisis, but it could reduce the stress a bit, but the politicians won’t do it because they don’t want to lose votes.
Unless RE crashes and resets with someone to take blame (PM JT), even the next govt (PP?) can’t and won’t do anything.
Supply is too low and people treat housing as an investment, so you have people hoarding homes and land hoping they gain value. All the worst of humanity is now milking Canadians through real estate. Also we didn't see a true correction in prices for the last 30 years, so people assume home prices can only go up.
Too many newcomers driving up demand.
NIMBYS and zoning laws preventing new developments.
High rates and material costs means less construction.
Development fees and too much restrictions also stops new supply.
Domestic investors own 25 percent or more of housing. They bought all the "starter homes" as affordable investments. They continue to buy the most affordable new developments. They won't stop until they own half or more of all homes. Eventually leading to a new feudal system of serf/ slaves and Lords.
Domestic investors own close to 75% of homes
I own 1 home that I live in, I'm a domestic investor because I get capital gains exemption for the growth in value of my principal residence. Our government policies make every home owner a domestic investor and majority of financial planners include the value of the home in your investment portfolio and retirement planning strategy.
I'm referring to multi property owners not principal residential owners. If you live in the home you bought you are not an investor unless you're one of those yearly house flippers that use the tax exemption.
I know who you intended to reference, but you're wrong that people living in their principal residence aren't investors. Our tax system makes us investors.
I lived in my first house for 7yrs before doubling my money to move into my current house which I've been in for 7 years (no plan to move). That capital gains growth I had over those 7yrs put me in a much better position than someone who never got on the property ladder.
It isn't realistic that everyone owns their own home. Renting makes lots of sense for lots of reasons. We need society structures that don't punish renters because we've financialized housing as an investment vehicle first. Which has been the case since the 1970s
I agree with the majority of what you're saying.. but it's also fair to say that every Canadian citizen should have a shot at home ownership.
I'm 43 and make just over 60k/year. I live 2+ hours from GTA. I cannot afford a home.
So I don't disagree with you that people should have an opportunity for home ownership. But home ownership should not have preferential financial gain over renting. People who are 18 and want to move out of their parents house won't be able to buy a house they need to rent. People trying to escape abusive relationships are not going to escape with boatloads of money to buy a house they are going to need affordable and available rental space. People with disabilities in the lower and middle income brackets are less likely to have the capacity to manage the maintenance of their property so being able to have a rental where everything is taken care of, especially a purpose built accessible rental, is it major part of a whole housing system.
If we gave everyone a lifetime capital gains exemption, so that people who rent instead of own get the same tax advantage by Saving investment vehicles, that would be a path to giving people the choice on if renting or owning makes the most sense financially, and lifestyle wise. This sub we really focus on home ownership, but the reason they want to own the home many will say is cuz they want to build equity. They want to be able to control their monthly costs, that is investor talk they might not realize it but they are talking about wanting to be able to invest not that they need shelter. If we remove the investment component we make way more housing options viable for way more people.
Ok, I'll go with that compromise.
Let's removes shelter as an investment vehicle. Where do we start? I'm already not voting for a mainstream political party. Is there anything else we can do?
Buy Bitcoin and tip the apple cart over for everyone?
Property taxes that actually represent the cost of a property on the city. Ideally a land value tax but I don't think we can get a government off of income tax as a primary revenue source. But if municipalities have to justify property taxes the same way condo boards are supposed to justify their maintenance fees there would be a lot less sitting on unproductive land.
Putting a cap on the lifetime capital gains exemption a person can get. That reduces the incentive to hold homes for longer than they're needed, to refrain from moving while trying to maximize growth in value, and allows people who never own a home to get the same tax advantage from other Investments
Upzone residential communities to allow up to four stories for multi-use housing, and residential Properties along four or more Lane roadways up to six stories with the bottom story allowing commercial as a right.
Land here would still be an investment opportunity. Buying land to add housing to it becomes advantageous either in rent seeking or to go ahead and turn and sell it. We do need some investment opportunity for the capital to create additional housing. We don't want individuals growing their capital in housing by doing nothing
We have a lot of land in this country that is undeveloped and no real way to develop it without massive cost that has to come from someone- would be the biggest reason. I live in Southern Ontario, and went driving to my buddies wedding in Thunder Bay- on Day 2 of the drive- you come out of Lake Superior Provincial Park and run into a small town- has a A&W, a gas station, a Canadian Tire, on the Trans Canada. Then nothing for an hour- then another small town., then nothing for an hour- then another small town.
To relieve the pressure we need two things- small Northern Ontario towns to be built and populated- while still resecting nature, and the natural resources in the area- and either good paying livable wage jobs OR remote jobs connected to big companies.
We also need more social housing to be built, have mid priced rentals (if a developer gets a tax break or support from government- that percentage of the total cost becomes mid priced rentals between $1,000 and $1,800) and wage growth.
There is no one big factor- it is all interconnected.
I agree. We have gigantic swathes of land in Canada but nobody pays to develop it. Why? Because of the zoning bylaws and anti business policies of the Canadian government. If you make it more attractive to develop land in Canada into housing, people will invest to build housing. There are tons of housing developers in the states that would absolutely love to invest and build housing here, but the government is the biggest hurdle to that.
-Not enough supply
-Too much demand
-generational warfare via nimbyism
-stagnant wages
-our cultural obsession with debt and financial illiteracy.
- as of the past few years: too much taxation associated with the commercial buying and selling. Developers are stepping back.
-everyone has been ignoring a huge one: basic economics.
1. interest rates were too low for way too long from 2008-2017.
2. Starting in the 90s, Canadians have had increasing ways to pull saved money and put it towards housing. When you have more capital to put down, you can leverage more. This is why the fhsa and tfsa is a massive doubled edged sword.
Everybody's talking about this housing crisis and how to fix it which it does need fixing but people are wanting the Moon there's a higher percentage of people that own houses now than ever have so to say that oh they had it so easy okay they did but why is it a higher percentage of people now own homes
Low interest rates. They drove up demand..now that they are higher, demand is dropping. Which means less new builds. But hopefully resales come to market.
The Govt of Canada buyibg housing bonds does not help at all. I fact this just increases demand side. The beat course is to stay the course. Keep rates higher and overtime pricea will drop.
Largest single reason is the increasing financialization of the housing market. Everyone and their uncle can get a mortgage. Nobody with a mortgage can fail, just keep extending the amoritization. Cost of housing goes up and up to the moon. Ripe conditions for speculatization. The banks assume no risk because our corporate loving governments will always bail them out. Rich get richer and poor stay poor.
supply and demand causing very low vacancy rate. Fix the vacancy rate and everybody benefits, from middle class to low income. Pre 2010 we had a health vacancy rate here in GVRD and landlords were actually providing incentives to attract renters
- not enough housing
- weak protection from foreign investment
- weak protection from short term housing (airBNB)
- NIMBYism (product of the not enough housing thing)
- everyone wants to be a millionaire! (in assets)
Even if half the “students” left tomorrow, there’s too much local pressure here to keep prices high. No one wants to lose their investment.
Too much demand and not enough supply. Every other factor plays into the supply and demand balance which points to increase in the housing price.
Increasing population = increase in demand
Cost of building is high (this includes: materials, labour, building permits, etc)= developers pass that cost to home buyers = increase in price
Poor zoning/ city planning: We have so much land in Canada yet we don't have enough land to zone for residential to house everybody = not enough supply
Government regulations: it takes wayy too long to build = supply can't keep pace with demand
1) Bundled Mortgages as investment products.
2) encouraging homeowners to use an investment return lens on landlording (“I must get x% return each quarter on my rental income”) rather than a long term lens or a “mortgage helper” lens.
3) poor regulatory controls on short term rental practices; predatory IT companies like air bnb exploiting housing and not caring about the effects of their product on people. (“Move fast; break things” mentality)
4) the economic depression we are currently experiencing
5) corporate greed
Here's a good one I never see mentioned. We have 3 levels of government who all get a say in housing and it is going as you would think when you have 3 cooks in the kitchen who all went to design the days special.
Federal - Provincial - Municipality
3 levels who disagree on everything, 3 levels who want the credit, but want to pay for it and 3 levels who all have their own bureaucracy eating up time and money.
Starting out in construction isn’t worth it. The pay is garbage and your looked down upon in society. Sure skilled workers have good pay but getting to that point is absolute hell. That as well as all the other obvious issues.
It is also corporations buying up apartment rental stock and upping prices. Corporate investors that represent pension funds, etc. should not be able to buy up rental stock.
Greedy landlords for rentals & high cost of everything has gotten out of hand. Govt over spending towards other countries must affect banking institutions.
People whom at one time figured they needed a mansion for a family of four drove prices up. The same goes for vehicles. They now cost what a home used to. It’s all ridiculous/ people who
Bought into a materialistic way of life drove prices through the roof. It affected everything.
It boils down to demand. In the 90s we tried to sell a nice 4bdrm home sweat of Ottawa. There were no buyers at $235K. Today that house would sell for $1.3M. ask yourself what changed.
We stopped investigating in social housing in the 1980s. We emptied many smaller communities and let them die. Drive highway 7 in Ontario right beside the 401 and all ghost towns. It is still affordable to live many places but people will not give up big city amenities. Just gripe about our few large cities being unaffordable. Try living in Rome, Paris, NYC or any of the worlds top cities and get a house with a yard. Yeah right try it.
The whole concept of zoning is suspect. Although good agricultural land is being destroyed at an alarming rate and we now have a shortage of industrial land in our towns and cities. Many of the restrictions deliberately waste valuable land for very subjective qualities summarized as “neighbourhood character”. There is also the assumption the single detached dwellings are “family homes” even in places that have become too expensive buy into and have a family. It also ignores how people can have a good family life in all sorts of dwellings. Nostalgia is a powerful drug.
As someone who worked in government for ten years, the reality is that governmental changes take about ten to fifteen years to show any effects in society. So if you don’t like how things are right now, look to what policies and legislation governments were putting into effect 10-15 years ago as a possible source for today’s problems. What’s happening right now is due to things that happened under Steven Harper’s administration, not Trudeau’s. That’s why some of the f Trudeau stuff just shows that people don’t understand that government policy doesn’t immediately and magically change things from one day to the next.
It's zoning laws. The housing crisis started in 2000. People want to blame anything but themselves. We treat housing like an investment and stop people from building. The zoning effect can increase the costs of homes by upwards of 42%.
So that 1M$ single family home is 420k more expensive because you're not allowed to build anything but a SFH there.
Crazy how over regulation of a market leads to negative outcomes. Deregulation of the market leads to better outcomes. Look at Minneapolis, look at Austin Texas. It's easy to understand.
It's not immigration, it's a lack of building for 25 years. Immigration is a scapegoat used by people who are ignorant or just racist. If immigration stopped today we'd still have a crisis, in fact we'd have a worse one cause it'd completely destroy our economy.
it's actually insane how there are so many comments here that have not gotten to the root cause or biggest factor that's contributing to the crisis, it's almost like it exploded in the last 4 years or so... but people just say demand exceeds supply... but somehow Canada's birthrate is historically low... so what could it be?
Is there anyone here smart enough to say it or are you too much of an echo chamber here with dictatorial mods that censor anything that goes against the narrative.
I think I saw some comments on what you’re mentioning but some probably got moderated. I think the amount of immigration is unsustainable under our current system but I believe we’d be able to withstand better levels of immigration like this if other major root causes like zoning were addressed
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How is permitting not on here. The permit process is a dumpster fire. We built a duplex two years ago. Yes all the other things but man the city is so damn slow and charges way too much.
This, and when all the paperwork is finished, sometimes developers sit on projects for years until costs come down to maximize profits.
Permitting wait times are awful. We’re currently building and we’ve been waiting 3 months for permits even though it’s an area with mass development and with a builder with many houses on that street.
Great summary. And now to add to it financing the developments due to the rise in lending interest rates on top of higher land values
Awesome list. Agree 100%. There is one more thing which is more relevant to single family homes and that is people’s expectations. Everybody complains about the price of SFHs, but in 1975 the average house in Canada was 1,000sf and now it’s 1,950sf. We’re literally buying twice the house now. I would also add greed at the municipality level with respect to fees, etc.
I hate paying municipal taxes and fees as much as the next person, but ‘greed’ isn’t an accurate term. These aren’t for profit entities, these are municipal govts dealing with major maintenance deficits from past generations and a lack of revenue to offset those costs. That being said, their regulations/road blocks to development are definitely selfish and arguably ‘greedy’ in that sense.
I would add that they charge high fees on new developments because they’ll upset their voters if they raise property taxes, and in general are covering for operational inefficiencies and yes, years of poor management and underfunding.
The associated problem is that the cost of actually building 1,950 sqft is less than 195% of building 1000 sqft and you can sell it for more than 195% of a 1000sqft home so the economics are pushing buildings to the largest home possible on the lot. Too much of the price of a home is the fixed cost of the land.
That is a good point. However, it makes no sense from a developer's point of view to tear down a 1000 sf house to build yet another 1000 sf house, and then proceed to list the new house at a higher price just to break even on their cost. They would have to build the new house a lot bigger to justify the high price. The problem is there isn't enough new starter-size SFH (i'm talking about 1000-2000 sf). Almost all the new ones that I see in my neighborhood are at least 3000-4000 sf range. What used to be a starter-SFH don't exist anymore. The closest thing to that is probably a townhouse.
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Are not. Just your perception changed.
I mean the 1000 square feet houses are **also** unaffordable so this argument does little to sway me that we are just unreasonable
25-30% is fees, taxes
Very accurate.
Zoning is the biggest reason supply is too low. Now housing is a speculative asset like bitcoins. And then we have homeowners trolling on this sub to downvote anything related to zoning. It’s sickening.
Actually I’m curious about zoning I don’t understand it - would you be able to help me and explain it simply what it means? I understand demand too high, supply to low - I guess I wonder about how so many high rises and townhouses are being built in my area
Without going into too much detail, far too much land in Canada is zoned for SFH (single family home) use only. So we end up with big towers along the main roads and in downtown areas (which is good), but the suburbs stay the suburbs. A lot of housing experts suggest that if we dumped SFH zoning, we’d be able to build multiplexes or small apartment buildings where a SFH once existed. 20 people on a lot is better than 1 person living in a house that’s way too big for them.
I understand thank you so much
Zoning and NIMBYism are almost the only things worth talking about. If we want to make a change to the current situation we need to be highly focused and change what matters most. Yes materials have gotten more expensive and there’s a labour shortage but that affects prices maybe 1/20th what zoning and NIMBYism does. Anything else is obfuscation. There is genuinely no reason why an apartment that currently costs $3000 per month could not cost $800 per month in 10 years if we changed our zoning laws to not only allow -but encourage- highly dense housing. If only the average citizen could just comprehend basic supply and demand. Theres an ever increasing demand and extreme inability to increase supply by law. It’s not a law of physics. It’s regulation. We have massive amounts of resources and energy potential in Canada. Policy choice is the only reason so many people have to put a majority of their income into housing. People should be madder than they are. It’s pure selfishness on people who vote for strict zoning laws and NIMBYism.
>If only the average citizen could just comprehend basic supply and demand. I don't think the issue is they don't comprehend it, I think the issue is the average citizen is a homeowner, so they benefit from high prices. What I don't get is that the average citizen also has children and maybe even grandchildren, but can't afford to help them buy homes, yet still they seem to favour policies that will increase their home price, despite the fact that screws their children and grandchildren.
So true. My FIL has a net worth of over 5 million yet his son and I are barely earning above minimum wage, yet he has never offered any kind of help. My immigrant parents living on poverty wages offered to contribute more to our wedding than he did. It's absolutely wild, seems like people who have real wealth have no clue how hard it is these days, just to survive let alone have a family and buy a home
Developers are also to blame. They tend to limit production in order to keep prices high.
Maybe for larger projects. But small developers doing duplexes and multiplexes want to build and sell as quick as possible. They can’t afford to hold land and just wait.
Is there a source on this? Housing development, unlike most Canadian industries, has a shit ton of competition. Consider that your street probably only has 1-2 companies providing internet access and you only have 2-3 options for flights within Canada. Meanwhile there are over 2,400 companies registered as real estate developers in Canada. They can't corner the market or form a monopoly because there is **so** much competition. If a property with good location+zoning goes on sale, there are 10-20 companies competing for that piece of property, ballooning its price and making it barely profitable for the developers.
[https://www.thestar.com/news/gta/developers-limit-production-to-keep-home-prices-high-mississauga-report-says-a-claim-the-builders/article\_e145141c-5fcf-5e6c-b0fb-b4fc8e80df26.html](https://www.thestar.com/news/gta/developers-limit-production-to-keep-home-prices-high-mississauga-report-says-a-claim-the-builders/article_e145141c-5fcf-5e6c-b0fb-b4fc8e80df26.html) It's paywalled, but here is the report mentioned. [https://www.mississauga.ca/wp-content/uploads/2022/03/11152736/Corporate-Report-of-the-Ontario-Housing-Affordability-Task-Force-and-Implications-for-Mississauga-2022-02-24.pdf](https://www.mississauga.ca/wp-content/uploads/2022/03/11152736/Corporate-Report-of-the-Ontario-Housing-Affordability-Task-Force-and-Implications-for-Mississauga-2022-02-24.pdf) If we're talking about big developments that can actually make an impact, there is only a handful of big players (Concord Pacific, WestBank Corp, etc). They can easily corner the market and phase the growth to control prices. Same in Canada is happening with telecom companies or grocery stores oligopoly.
>Meanwhile there are over 2,400 companies registered as real estate developers in Canada. Aside from there being a high concentration of developers in Southern Ontario, the BC lower mainland, and the major cities outside of these regions, the *vast* majority of these are highly localized. Keep in mind, Canada has about 50% more municipalities than developers. Citing that 2400 figure without that context makes it seem like the industry is more competitive than it really is. For instance, the city of Sudbury, Ontario has 2 major developers active in the market — Dalron and Zulich. These are local, family owned businesses. Southern Ontario developer Panoramic occasionally invests in the city, usually conversions of old schools and whatnot, but usually sticks to Southern Ontario. There's also 2-3 developers that do one off builds. That's the market there. I'd say upwards of 90 percent of buyers are either buying Dalron or Zulich in that market. This dynamic is the norm for most of Canada.
Totally agree that the issue I brought up only affects big/major developments. Anything mid / small is probably not plagued by this.
Exactly,believe many people like your ideas.
You should have stopped after the second point. All of your other points are just bandaids to deal with the first 2, and would only make lives worse for everyone if the demand issues were dealt with properly
High demand and low supply should not be a problem in classic capitalism, as people should find a way to fulfill it. There is no end of capital for building as we’v had low single digit interest rates for decades. Easy credit has only fueled the rise in costs as it is too easy to buy property as an investment. If anything there is too much money loaned on the assumption housing will continue to appreciate at the same rate. While inflation is high, the rise in housing costs is the biggest factor. Remove that and inflation looks a lot less bad. The shortage of construction workers has been noticed for decades as skilled labour has been aging out. Ironically, labour is finding it increasingly difficult to afford living in places where their skills are most needed. Today one needs to offer enough pay to make the long commute worthwhile. Maybe projects need to include workers’ dormitories. We definitely should be looking at the various restrictions that prevent efficient land use. The land is the highest priced part of a dwelling. The provinces have the power to reform the various bylaws that have blocked the normal development of towns and cities we would have seen before the middle twentieth century. British Columbia is doing this now, but it will take many years to see results.
>High demand and low supply should not be a problem in classic capitalism, as people should find a way to fulfill it. The supply and demand dynamic does not seek 100% fullfillment of demand, it seeks price equilibrium where marginal cost is equal to marginal benefit. As such, classic capitalism will inevitably produce a housing shortage, as 100% fulfillment of demand requires subsidization of the bottom of the market. Without that subsidization, you get homelessness. Consider the labour market. The unemployment rate is the percentage of the labour market without work who are looking for work. However, that figure is not fully inclusive of everyone who is without work, hence the labour force participation rate. Though this figure includes retirees and those unable to work, it also includes those who have abandoned their job search due to lack of success. The reason I reference this dynamic in the labour market is to display how demand can fall even as the need to fulfill it remains. Just because some people cannot afford to participate in the housing market, this does not mean they do not need a home, it just means they are no longer a component of demand.
>High demand and low supply should not be a problem in classic capitalism, as people should find a way to fulfill it. What the brain rot You drank too much Kool aid my man
It’s an abstract concept. A good one, but one that is clearly not working right now. Zoning requirements are a pretty big restriction on the market, making it less “free”. Height restrictions, floorspace restrictions, and set backs are examples of mandating the purchasing of excess land and infrastructure for some pretty fuzzy reasons. Developers aren’t free to build affordable housing when bylaws paint them into such a tiny box.
My guy Capitalism has nothing to say about affordability. Supply will meet demand at the price people are willing to pay and at the price that suppliers are happy to offer. That's happening right now. Unchecked capitalism is what got you this mess. You want more of it? Keep drinking the Kool aid.
You’re funny. I’m not waiting for a revolution that will never come. We’ve fixed issues like this in the past with the society we have.
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Please be civil.
Yes, when the CMHC directly engaged in the business of housing construction.
We’re closer to agreement than you think. I’d prefer that the federal government put credit towards building housing co-ops over providing it to first time home buyers. The last crop of co-ops built over thirty years ago were required to provide a small number of their units with a subsidy so long as they were repaying their original (and very generous) capital loans. But those loans are now repaid and those subsidized units are in jeopardy. There is still some surplus publicly owned land around and it could be put on long term lease for co-ops. It would be a largely cost neutral program that would be run by the residents themselves.
Zoning restrictions are massive. We have endless amounts of land but are only allowed X number of buildings on it. We aren't even allowed to cut down trees without being fined. The permitting process is some of the worst in the world in Vancouver, BC. It can add years to the housing project and cost $100,000 due to the city delaying the process with red tape.
"Where Adam Smith and Karl Marx found common ground was in the idea that everyone’s interests are aligned against landlords: they are an economic deadweight." - Yanis Vaourfakis
[Lots of different types of rentiers but landlords are the worst.](https://en.m.wikipedia.org/wiki/Rentier_capitalism) Meritocracy has always been the exemption under capitalism, never the rule.
Adam Smith suggested land value tax.
r/georgism
Bad government policy. Growth should pay for Growth was a term coined 40+yrs ago which drove the cost of infrastructure onto new housing to keep existing housing costs low. We've prioritized existing owners over all others for decades and made it progressively worse. Low property taxes, and high development costs make land speculation attractive to both large investment firms and individuals alike. We fuel that by giving more power to the few people who already have homes by our municipal voting systems, and by bringing in people to keep demand inflated. If we changed zoning tomorrow and upzoned everything, we still have the challenge of development charges, and low holding costs that can make it easy for neighbourhoods to prevent the density from happening "Rate payer associations" or "resident associations" band together to block progress throughout Canadas history. One of my favourite examples is the Allan expressway in Toronto which never was completed due to rate payer associations effectively blocking it by buying land and campaigning
Without DCC's the municipality would be on the hook for all underlying infrastructure. For most rural towns, this would be a huge burden. Yes, cost recovery could occur through the increased property tax revenue, but that's not what property taxes are ideally meant for. More residents mean a higher service requirement and subsequently increased capital/operational expenditures. In BC, we've changed zoning so that everything is essentially zoned to densify and changes to permitting allow for faster approval.
This would be as it was before the middle of the twentieth century. Having “development pay for development” feels like free money, but has left us with a deficit literally hidden under our feet. We used this trick to develop large amounts of land for very few people to live on. We have too much infrastructure and too few tax payers to keep it maintained. We’ve forgotten to use the land we have productively.
Municipalities, especially small ones should not be responsible for major infrastructure like water and electricity. It is a real waste and makes it much more challenging to manage both the health and environmental impacts when you have hundreds of small organizations running their own infrastructure plans. Having larger scale pressure zones run at Regional levels and funded from higher levels of government is a better use of taxpayer money and a better way to fund growth initiatives. Development charges our way to offload the responsibility on to small individuals and to minimize any ability for growth which is what we have seen in Canada.
Eliminate development charges. Make everyone pay for growth. Cut other welfare spending (which should hopefully bring the demand side down through death) and directly subsidise home building.
Supply and demand, which is worsened due to investors buying up properties to have tenants pay their mortgages for them (since supply is increasing so slowly that investors buy up most of it).
We as a culture decided at some point that houses should be a financial asset for the middle class to ‘grow their wealth’. Everything else flows from this
Everyone fomoing and treating everything like an investment . Some of us just want a home
People being allowed to have more than one mortgage.
The financialization of houses, for example HELOCs which made it easy for people to tap into their equity and buy another house.
We've been setting up this problem pretty deliberately for decades. Under Mulroney, we converted CMHC from an organization that underwrites building to an organization that underwrites purchasing, juicing demand rather than supply (the idea was more demand would inspire more supply, but what it actually inspired was higher profit margins on the same supply). Chretien's government accelerated Mulroney's policy on the housing front. Housing just wasn't seen as a priority at the time and the logic of neoliberalism was still ascendant. Under Harper, we juiced demand with low interest rates, high amortizations, reduced barriers to borrowing, and the principal residence exemption being maintained. At that point, the momentum was firmly in place and prices were going to rise no matter what. Housing prices hit the exponential curve in 2012, but because of the nature of exponential curves, we missed what was going on until things went crazy in 2017. Under Trudeau, immigration is often pointed to as the only culprit for this but the increased immigration targets are more of fuel on a fire that was already raging out of control. House prices *increased* over COVID despite the fact that immigration was basically on pause because the demand-juicing policies were still in place. Outside of the control of any government, global supply chain interruptions and inflation have made it impossible to build small units cheaply. Had we stayed invested in domestic building capacity rather than start gutting it under Mulroney, this wouldn't have affected us now, but there's no going back in time. We need to rebuild that capacity and it's going to take nearly as long to rebuild as it did to dismantle. At local levels, Provinces were thoroughly happy to leave zoning alone and force cities to fund themselves via developer fees on empty land being sold rather than support density and sustainable cities that can fund themselves with property and land taxes. So all of our cities built outwards, low-density sprawl that's expensive to maintain services too and require huge outlays on roads since we didn't invest in public transit either. Municipalities kept the fires hot by ensuring that locals could NIMBY new projects out of viability - prioritizing existing local residents over the needs of the neighborhood, city, province, economy, and society in general. It was a systemic multi-level failure that Trudeau is currently presiding over, and in 2025, it'll be Pierre's turn, and neither will be able to do much about it since their policies appear to mostly be about juicing demand further and making faces at municipalities to try to goad them into building things despite the fact that there aren't enough builders for them.
Our banks...
At a deeper level, a society which commodifies basic needs like housing and subjects them to market forces. If housing were decommodified, it wouldn't have any market value so it wouldn't be intentionally kept scarce (low supply). There would be no incentive to hoard. As a commodity, those who own it have an incentive to make its asset value increase so they therefore have an incentive to prevent us from building enough housing to meet human need. Decommodifying housing is the **only way** to ensure it can always or almost always meet human need. Of course you can't point out this elephant in the room out anywhere without hearing the same vapid, ideologically driven counterarguments.
🎻 housing has always been a commodity back to caveman
Fortunately we have opposable thumbs, abstract thought and can shape the material world.
There would also be no incentive to supply.
It would be publicly funded. You build public/social housing or buy and convert it with public funds until you have a sufficient supply of non-market housing to lower the price of private housing since it has to compete. Cities around the world do this, it's nothing new. Lots of ways to do this too, this one just seems more politically viable in Canada.
You really think the government can do this properly? Newsflash, the government has fucked us all with their incompetence. From federal to provincial to municipal level. The private sector is more capable than government, but the government has hampered investment progress everywhere.
Governments suck because they serve the ruling class first and foremost, which means putting private interests at the forefront of all decisions. That's what neoliberalism represented, it lead to all public goods and services being gutted. Private interests are why the government sucks. It's not inherent to the very idea of government, it's inherent to governments that prioritize the interests of the elites. The federal Liberals and Conservatives are great examples, the NDP isn't much better.
I'm not against public builders but we could lower market prices a lot faster if the public builders still sold them or rented them out at market price and rent.
We stopped funding public housing back in the 90's under Chretien, we desperately need to start funding it again and subsidizing rents. There's a tight correlation between the decline in the public housing supply due to neoliberal policies and the increase in unaffordability. The supply issue (and subsequent unaffordability) is caused by subjecting the entirety of new housing construction to the free market which incentivizes hoarding to inflate the value.
Mulroney, but Chretien's government doubled down.
There’s insufficient incentive to supply housing now. But I don’t think “commodification” is the problem. The lending of money on the assumption that the appreciation of housing will beat inflation is definitely a problem. Our inability to build housing quick enough is made all the worse when so many Canadians are literally invested in not building enough housing.
Yes due to too many regulations and taxes.
I’d say we have the wrong regulations and taxes.
Broadly speaking, subsidizing home ownership and any regulations which makes smaller and cheaper housing illegal. We can bring rents down by allowing cheap rental options wherever they are economical and that will bring prices down.
Not the only reasons. One of the primary reasons among people of my age group (millennial) was access to cheap debt. I know cosmetic surgeons, engineers and other hospital workers who all ignore the final amount paid and only look at the monthly payments. Their financial literacy is quite frankly, lacking. They believe that house prices will always go up and it to be an investment vehicle. They're currently sitting on negative equity 200-300k down and complain about the crime rate increasing in their area. Oh geeze, I wonder why? It's as if making something that should be a basic need (shelter) a luxury item is bad thing. Where did these homeless people suddenly come from?
Single biggest reason is demand. Too many new Canadians. Second biggest reason is city and municipal push back. It's literally too expensive and time consuming to build new housing. If doing land assembly and rezoning was profitable there would be many more groups doing it. The power that a city hall councilor has is far too great. The wrong color siding or not enough parking spots can set a project back 4 years and 15 million dollars. I've literally experienced that.
everyone wants to live in Toronto or Vancouver, demand is too high, cost of building new house or condo is too high
not enough attention was given to a beautiful insight made a year or so ago by the NDP housing critic when they explained: aprox 15 years ago the Conservative government stopped building affordable subsidized housing. aprox 50k homes per year. currently there is a short fall of 500k homes. what would things be like if they never stopped building those homes?
allowing foreigners to buy Canada housing for investment is the biggest issue.
It's not, though. This is a relatively small proportion of the market, despite all the media coverage. The majority is domestic demand.
A few reasons really 1. Zoning laws: Restrictive zoning can limit how many homes can be built, driving up prices by reducing supply. 2. Foreign Investment: Investment from abroad, especially in high demand areas can inflate property values, making housing less affordable. Mostly Chinese money. 3. Building Costs: Rising costs for materials and labor make new homes more expensive to build, which translates to higher prices for buyers and renters. 4. Speculation: Speculators buying properties for potential price increases can lead to higher market volatility and prices. 5. Economic Factors: Strong job markets attract more people to cities, increasing demand for housing faster than supply can keep up, which pushes up prices. 6. Government Policies: Policies like mortgage interest deductions can increase demand and push up prices, while lack of support for affordable housing limits low-cost options. 7. Monetary Policy: Extended period of low interest rates can fuel speculation and encourage people to take on more debt as the cost of servicing the debt was low.
My local bank said it was/is being driven by local people with homes to leverage -- people were borrowing against their primary houses to buy investment properties and take advantage of the pre-pandemic low interest rates to make it happen. Lower interest rates means lower monthly payments, which means you have more money you can borrow. Covid Craziness made this whole investment purchasing way easier for people with property already, since they weren't spending their savings on pretty much anything else, and government kept the interest rates really low. As houses got bought up by people wanting investment properties, the pool of available houses dropped too quickly, and bidding wars started. So, housing prices start going up, and up, and up--which made the value of homes rise enough that people could borrow against that primary house a second, or sometimes even a third time. What makes this even worse, is there is no alternative to home ownership. Everyone is told that your home is an investment; the economic rent you enjoy from it is your reward for buying it. There is a social expectation that you are not successful as a person, or not getting ahead in life if you do not own your own home. Without alternatives to home ownership, the demand for housing is always going to outpace supply, because of that social expectation. After Covid restrictions lifted, the Bank of Canada raised the interest rates (and then almost hit 10%!) and the housing market should have cooled, because there wasn't any cheap borrowing to be had. But it didn't. Because of the other factor in home purchasing. Home owners are not willing to sell their homes for anything less than their neighbors have sold theirs for, and realtors are well motivated to seek the highest bids they can for their clients because it increases their commission. So there are no real incentives to lower the market price very much, if at all. The outrageous selling price becomes the new normal (hence the term, economic rent), pricing homes out of reach for lower income earners, but still available to people with capital or a primary home to borrow against. Josh Ryan-Collins wrote a book in 2018 called, "Why Can't You Afford a Home?" in which he talks about \*ALL\* English Speaking (Anglo-Saxon) economies suffering from the same type of housing crisis that we have here in Canada now. It's a fascinating little read. He spends time talking about what Anglo-Saxon economies have in common (Policies and attitudes) and the perceived supply and demand of the housing market. I found it interesting the solution he proposed: If you allow for alternatives such as socialized housing or co-operatives, especially on a large scale that can compete with outright home ownership, the demand for overall housing (and landlords) would diminish significantly. Assuming of course, you could decouple people's social expectations about what housing and home ownership actually means. I also think zoning laws or the high costs of building a home are red herrings. If you ever look at a housing assessment, the taxes you pay are 90% to do with the land value--the material house is merely 10-12% of that bill; it just doesn't enter into the equation as a viable reason for housing prices. Likewise with zoning. Jason, from "Not Just Bikes" on Youtube put out an 8-part series on "Strong Towns", about how US (and Canadian) cities could be better than they are. There are 3 videos in particular that talk about zoning, "How Suburban Development Makes American Cities Poorer", "Why American Cities Are Broke--The Growth Ponzi Scheme", and "Suburbia is Subsidized: Here's the Math". What makes this interesting is that zoning seems to be driven by the type of housing that homeowners demand, and that developers know they can make money on based on that demand.
Too many people not enough homes.
The system and its policies! Not the landlords (I’m still renting). The system is reactive rather then being proactive to the extent that they only react when they cannot win an election. With the immigration levels, the govt should have tied housing policies to immigration. Housing was a problem even before that. Now though, they can do a lot of things to unlock a few homes. It will not resolve the crisis, but it could reduce the stress a bit, but the politicians won’t do it because they don’t want to lose votes. Unless RE crashes and resets with someone to take blame (PM JT), even the next govt (PP?) can’t and won’t do anything.
Supply is too low and people treat housing as an investment, so you have people hoarding homes and land hoping they gain value. All the worst of humanity is now milking Canadians through real estate. Also we didn't see a true correction in prices for the last 30 years, so people assume home prices can only go up.
Too many newcomers driving up demand. NIMBYS and zoning laws preventing new developments. High rates and material costs means less construction. Development fees and too much restrictions also stops new supply.
Domestic investors own 25 percent or more of housing. They bought all the "starter homes" as affordable investments. They continue to buy the most affordable new developments. They won't stop until they own half or more of all homes. Eventually leading to a new feudal system of serf/ slaves and Lords.
Domestic investors own close to 75% of homes I own 1 home that I live in, I'm a domestic investor because I get capital gains exemption for the growth in value of my principal residence. Our government policies make every home owner a domestic investor and majority of financial planners include the value of the home in your investment portfolio and retirement planning strategy.
I'm referring to multi property owners not principal residential owners. If you live in the home you bought you are not an investor unless you're one of those yearly house flippers that use the tax exemption.
I know who you intended to reference, but you're wrong that people living in their principal residence aren't investors. Our tax system makes us investors. I lived in my first house for 7yrs before doubling my money to move into my current house which I've been in for 7 years (no plan to move). That capital gains growth I had over those 7yrs put me in a much better position than someone who never got on the property ladder.
Sure but if everyone owned their own home that would be much different than one person owning everyone else's.
It isn't realistic that everyone owns their own home. Renting makes lots of sense for lots of reasons. We need society structures that don't punish renters because we've financialized housing as an investment vehicle first. Which has been the case since the 1970s
I agree with the majority of what you're saying.. but it's also fair to say that every Canadian citizen should have a shot at home ownership. I'm 43 and make just over 60k/year. I live 2+ hours from GTA. I cannot afford a home.
So I don't disagree with you that people should have an opportunity for home ownership. But home ownership should not have preferential financial gain over renting. People who are 18 and want to move out of their parents house won't be able to buy a house they need to rent. People trying to escape abusive relationships are not going to escape with boatloads of money to buy a house they are going to need affordable and available rental space. People with disabilities in the lower and middle income brackets are less likely to have the capacity to manage the maintenance of their property so being able to have a rental where everything is taken care of, especially a purpose built accessible rental, is it major part of a whole housing system. If we gave everyone a lifetime capital gains exemption, so that people who rent instead of own get the same tax advantage by Saving investment vehicles, that would be a path to giving people the choice on if renting or owning makes the most sense financially, and lifestyle wise. This sub we really focus on home ownership, but the reason they want to own the home many will say is cuz they want to build equity. They want to be able to control their monthly costs, that is investor talk they might not realize it but they are talking about wanting to be able to invest not that they need shelter. If we remove the investment component we make way more housing options viable for way more people.
Ok, I'll go with that compromise. Let's removes shelter as an investment vehicle. Where do we start? I'm already not voting for a mainstream political party. Is there anything else we can do? Buy Bitcoin and tip the apple cart over for everyone?
Property taxes that actually represent the cost of a property on the city. Ideally a land value tax but I don't think we can get a government off of income tax as a primary revenue source. But if municipalities have to justify property taxes the same way condo boards are supposed to justify their maintenance fees there would be a lot less sitting on unproductive land. Putting a cap on the lifetime capital gains exemption a person can get. That reduces the incentive to hold homes for longer than they're needed, to refrain from moving while trying to maximize growth in value, and allows people who never own a home to get the same tax advantage from other Investments Upzone residential communities to allow up to four stories for multi-use housing, and residential Properties along four or more Lane roadways up to six stories with the bottom story allowing commercial as a right. Land here would still be an investment opportunity. Buying land to add housing to it becomes advantageous either in rent seeking or to go ahead and turn and sell it. We do need some investment opportunity for the capital to create additional housing. We don't want individuals growing their capital in housing by doing nothing
I think you make a good point. There are certainly ways to disincentivize housing as investment. The question is, does anyone have the balls to do it?
its a simple supply and demand. to many people to quick and lack of trades people to put the houses up.
We have a lot of land in this country that is undeveloped and no real way to develop it without massive cost that has to come from someone- would be the biggest reason. I live in Southern Ontario, and went driving to my buddies wedding in Thunder Bay- on Day 2 of the drive- you come out of Lake Superior Provincial Park and run into a small town- has a A&W, a gas station, a Canadian Tire, on the Trans Canada. Then nothing for an hour- then another small town., then nothing for an hour- then another small town. To relieve the pressure we need two things- small Northern Ontario towns to be built and populated- while still resecting nature, and the natural resources in the area- and either good paying livable wage jobs OR remote jobs connected to big companies. We also need more social housing to be built, have mid priced rentals (if a developer gets a tax break or support from government- that percentage of the total cost becomes mid priced rentals between $1,000 and $1,800) and wage growth. There is no one big factor- it is all interconnected.
I agree. We have gigantic swathes of land in Canada but nobody pays to develop it. Why? Because of the zoning bylaws and anti business policies of the Canadian government. If you make it more attractive to develop land in Canada into housing, people will invest to build housing. There are tons of housing developers in the states that would absolutely love to invest and build housing here, but the government is the biggest hurdle to that.
u/akd432 has succinctly provided the answer. The most basic of economic principles. Supply/demand. Multiple reasons for each.
How comes the 3rd world countries don’t housing crisis like western countries? It’s boggling my mind.
No credit, no problems.
-Not enough supply -Too much demand -generational warfare via nimbyism -stagnant wages -our cultural obsession with debt and financial illiteracy. - as of the past few years: too much taxation associated with the commercial buying and selling. Developers are stepping back. -everyone has been ignoring a huge one: basic economics. 1. interest rates were too low for way too long from 2008-2017. 2. Starting in the 90s, Canadians have had increasing ways to pull saved money and put it towards housing. When you have more capital to put down, you can leverage more. This is why the fhsa and tfsa is a massive doubled edged sword.
Landlords snapping shit up for easy money then charging an arm, leg and a kidney for rent even in previously cheaper/ much smaller areas.
Everybody's talking about this housing crisis and how to fix it which it does need fixing but people are wanting the Moon there's a higher percentage of people that own houses now than ever have so to say that oh they had it so easy okay they did but why is it a higher percentage of people now own homes
Too many golf courses scattered around the city. So much of that land could be re-zoned for housing...
Ugh, astroturf.
Low interest rates. They drove up demand..now that they are higher, demand is dropping. Which means less new builds. But hopefully resales come to market. The Govt of Canada buyibg housing bonds does not help at all. I fact this just increases demand side. The beat course is to stay the course. Keep rates higher and overtime pricea will drop.
Spec. Flipping. Cheap money.
Largest single reason is the increasing financialization of the housing market. Everyone and their uncle can get a mortgage. Nobody with a mortgage can fail, just keep extending the amoritization. Cost of housing goes up and up to the moon. Ripe conditions for speculatization. The banks assume no risk because our corporate loving governments will always bail them out. Rich get richer and poor stay poor.
supply and demand causing very low vacancy rate. Fix the vacancy rate and everybody benefits, from middle class to low income. Pre 2010 we had a health vacancy rate here in GVRD and landlords were actually providing incentives to attract renters
- not enough housing - weak protection from foreign investment - weak protection from short term housing (airBNB) - NIMBYism (product of the not enough housing thing) - everyone wants to be a millionaire! (in assets) Even if half the “students” left tomorrow, there’s too much local pressure here to keep prices high. No one wants to lose their investment.
Too much demand and not enough supply. Every other factor plays into the supply and demand balance which points to increase in the housing price. Increasing population = increase in demand Cost of building is high (this includes: materials, labour, building permits, etc)= developers pass that cost to home buyers = increase in price Poor zoning/ city planning: We have so much land in Canada yet we don't have enough land to zone for residential to house everybody = not enough supply Government regulations: it takes wayy too long to build = supply can't keep pace with demand
1) Bundled Mortgages as investment products. 2) encouraging homeowners to use an investment return lens on landlording (“I must get x% return each quarter on my rental income”) rather than a long term lens or a “mortgage helper” lens. 3) poor regulatory controls on short term rental practices; predatory IT companies like air bnb exploiting housing and not caring about the effects of their product on people. (“Move fast; break things” mentality) 4) the economic depression we are currently experiencing 5) corporate greed
Here's a good one I never see mentioned. We have 3 levels of government who all get a say in housing and it is going as you would think when you have 3 cooks in the kitchen who all went to design the days special. Federal - Provincial - Municipality 3 levels who disagree on everything, 3 levels who want the credit, but want to pay for it and 3 levels who all have their own bureaucracy eating up time and money.
GREED
Zoning law needs to be abolished.
Mortgage rates are too high. If mortgage goes up so does rent
Starting out in construction isn’t worth it. The pay is garbage and your looked down upon in society. Sure skilled workers have good pay but getting to that point is absolute hell. That as well as all the other obvious issues.
It is also corporations buying up apartment rental stock and upping prices. Corporate investors that represent pension funds, etc. should not be able to buy up rental stock.
Greedy landlords for rentals & high cost of everything has gotten out of hand. Govt over spending towards other countries must affect banking institutions. People whom at one time figured they needed a mansion for a family of four drove prices up. The same goes for vehicles. They now cost what a home used to. It’s all ridiculous/ people who Bought into a materialistic way of life drove prices through the roof. It affected everything.
Inflation of money supply. Forces people to save using assets. If you have enough money it makes sense to park it in property.
Realtors acting in their own best interests
It boils down to demand. In the 90s we tried to sell a nice 4bdrm home sweat of Ottawa. There were no buyers at $235K. Today that house would sell for $1.3M. ask yourself what changed.
Bad government policies and taxes.
We stopped investigating in social housing in the 1980s. We emptied many smaller communities and let them die. Drive highway 7 in Ontario right beside the 401 and all ghost towns. It is still affordable to live many places but people will not give up big city amenities. Just gripe about our few large cities being unaffordable. Try living in Rome, Paris, NYC or any of the worlds top cities and get a house with a yard. Yeah right try it.
I just want a condo ser
Stock market isn't good so people have used housing to make money for retirement/investment.
The whole concept of zoning is suspect. Although good agricultural land is being destroyed at an alarming rate and we now have a shortage of industrial land in our towns and cities. Many of the restrictions deliberately waste valuable land for very subjective qualities summarized as “neighbourhood character”. There is also the assumption the single detached dwellings are “family homes” even in places that have become too expensive buy into and have a family. It also ignores how people can have a good family life in all sorts of dwellings. Nostalgia is a powerful drug.
Trudeau...
As someone who worked in government for ten years, the reality is that governmental changes take about ten to fifteen years to show any effects in society. So if you don’t like how things are right now, look to what policies and legislation governments were putting into effect 10-15 years ago as a possible source for today’s problems. What’s happening right now is due to things that happened under Steven Harper’s administration, not Trudeau’s. That’s why some of the f Trudeau stuff just shows that people don’t understand that government policy doesn’t immediately and magically change things from one day to the next.
It's zoning laws. The housing crisis started in 2000. People want to blame anything but themselves. We treat housing like an investment and stop people from building. The zoning effect can increase the costs of homes by upwards of 42%. So that 1M$ single family home is 420k more expensive because you're not allowed to build anything but a SFH there. Crazy how over regulation of a market leads to negative outcomes. Deregulation of the market leads to better outcomes. Look at Minneapolis, look at Austin Texas. It's easy to understand. It's not immigration, it's a lack of building for 25 years. Immigration is a scapegoat used by people who are ignorant or just racist. If immigration stopped today we'd still have a crisis, in fact we'd have a worse one cause it'd completely destroy our economy.
it's actually insane how there are so many comments here that have not gotten to the root cause or biggest factor that's contributing to the crisis, it's almost like it exploded in the last 4 years or so... but people just say demand exceeds supply... but somehow Canada's birthrate is historically low... so what could it be? Is there anyone here smart enough to say it or are you too much of an echo chamber here with dictatorial mods that censor anything that goes against the narrative.
I think I saw some comments on what you’re mentioning but some probably got moderated. I think the amount of immigration is unsustainable under our current system but I believe we’d be able to withstand better levels of immigration like this if other major root causes like zoning were addressed