Canada’s Housing Crisis: Who’s Running the Show – and for Whom?
Vancouver, Toronto and Hamilton are the three least affordable cities in North America.
The most basic concept in economics is “supply and demand.” Even someone who has never cracked open a textbook on economics is likely familiar with the term. Our political and financial leaders are presumably experts. And yet, when it comes to what’s happening in the Canadian housing market, the concept that a rising demand could be driving up the price of supply seems as elusive as a Sasquatch to our leaders and power-brokers, from the prime minister on down.
It’s no secret that the cost of housing in Canada has soared. According to an Oxford Economics study from May 2021, Vancouver, Toronto and Hamilton are the three least affordable cities in North America. Five Canadian cities are in the top ten of that category, according to the report. The report says that homes in Canada are 34 percent more expensive than the median-income household can afford. The high cost of housing has essentially shut many Canadians, especially first-time buyers and most newcomers, right out of the home ownership market.
If a rising demand is causing this sharp increase in the cost of housing, what is behind it? The relentless increase in the number of people needing housing, perhaps? Canada’s already very high levels of immigration, a quarter million or more annually since 1990 (competing only with Australia for top place per capita in the industrialized world), was recently nearly doubled by the Trudeau government to close to half a million annually.
In his 2010 book Millionaire Migrants, UBC geography professor emeritus David Ley found a positive correlation coefficient of 0.94 between Vancouver and Toronto house prices and net international migration, a correlation he described as “unusually decisive.”
This finding is consistent with the correlation between strong immigration and high housing prices in other global cities. Housing prices vary according to where immigrants live. And in Canada most choose to live in big cities like Toronto and Vancouver.
The net growth rate of about 1% annually of these two cities is driven almost entirely by foreign-born newcomers. This does not include the approximately one million international students and temporary visa workers who are in Canada at any one time. As Sherlock Holmes might tell Watson, the answer to the problem of Canada’s sky-high housing costs is elementary.
There is also the issue of high-flying foreign investors. Wealthy foreigners seeking to park their money in a safe place are also having a significant impact on the cost of housing in Canada. As are some wealthy immigrants. Daniel Hiebert found that wealthy immigrants transferring large financial resources into Canada were dramatically affecting the prices of high-end properties, but also raising the costs of low-end housing.
In Millionaire Migrants, David Ley looked at the impact of very wealthy immigrants on the cost of housing during the 25-year period spanning 1977 to 2002. Some 400,000 people arrived under the Business Immigrant Programme (BIP) between 1980 and 2008. The purpose of the BIP theoretically was to create jobs for Canadians. However, many business immigrants wanted Canadian citizenship for other reasons. Chinese business immigrants, for example, considered it an “insurance policy” against mainland China’s interference in Taiwan and Hong Kong. Overall, the BIP program did not deliver on job creation. In fact, the BIP was a disaster for working class homebuyers.
Which raises the question: If the cost of housing (supply) that is putting so many Canadians out of the ownership market is a problem, why is reducing demand (driven by extremely high immigration) not suggested as a solution? Especially at a time when the real incomes of Canadians are stagnating, and will continue to do so for the rest of their working lives, according to the head of the Business Council of BC, David Williams. He refers to Canada’s economic strategy of using “record immigration levels to turbo-charge population growth and housing demands in major cities” as a “shaky pillar.”
Josh Gordon, assistant professor at Simon Fraser University’s School of Public Policy, delves into the reasons why policymakers and financiers are so focused on supply and totally overlook adjusting the demand in dealing with the housing crisis. He notes the failure of the federal and provincial governments to collect rigorous data. Indeed, why would governments collect data that would clearly show something they are determined not to see?
In doing his own analysis, Gordon writes, he had to piece together data he had gathered, some of it from government sources. When the BC government finally collected rigorous data, following protests in Vancouver in 2015, it found that “foreign citizen buying” was about 13% in Vancouver, much higher than the 3-5% estimated by the real estate industry, and was subsequently pressured into imposing a foreign buyer tax, enacted in 2016.
Gordon decries the lack of debate in the Canadian media, which essentially toes the industry line that only more supply can solve the problem and ignores what reducing demand (immigration) might accomplish. The rebuttals to demand-side arguments, he says, are arguments by assertion and repetition. And, of course, accusations of xenophobia.
The development industry stokes fears that an absence of immigration would result in a declining population and an aging workforce. But a smaller population would make life more affordable, more livable and less hectic and would have enormous benefits for the environment. Furthermore, immigration does not even have a significant impact on Canada’s age structure, as shown in a landmark study by the C.D. Howe Institute, among others.
The development industry says it must build more housing faster because of Canada’s growing population and warns that city properties must be rezoned at higher density and that rents will continue to rise. Its predictions would be thrown into disarray with the ending of mass immigration, and their profits would take a dive. It therefore emphasizes how many people will be arriving on a yearly basis and how large the population will eventually be.
And the development industry can be confident that the growth they anticipate will occur. After all, those half million newcomers who arrive each year will have to live somewhere. The provinces have to deal with the federal growth targets, and they in turn impose growth targets on cities and municipalities. Cities and municipalities must then draw up growth plans based on the targets imposed by the province.
The New Official Plan of the City of Ottawa, for example, anticipates a 40% increase in population over the next 25 years. Between 2021 and 2046, it expects its population to grow from about one million people to just over 1.4 million. Will that make life better for the citizens of Ottawa in terms of greenspace, infrastructure, and timely access to social services? Given that growth so far has only increased the stress on almost any parameter one can think of, it’s hard to imagine how any rational person could expect things to get better with even more growth.
And what happens if an ornery municipality objects to this imposition of growth? Just ask Oak Bay, British Columbia. In March, its municipal council rejected a proposal for a 14-unit building. In response, the province is preparing to step in to take away some of the powers municipal governments have to approve housing construction. BC’s Housing Minister and Attorney General David Eby said the government is thinking of introducing legislation and regulator changes in the fall that would take the final decision-making authority for housing permit approvals away from local governments. The chief executive of the development company that proposed the 14-unit building said it’s not really about that particular project, but about municipalities in general “getting housing approved and on the table for people to buy and get the housing crisis under control.”
A Victoria-based developer says: “Canada is the fastest-growing country in the G7, with plans to welcome 1.3 million new Canadians in the next three years, and that was before the emergency of assisting refugees fleeing the war in Ukraine. We have a responsibility to provide housing and many CRD municipalities are shirking that responsibility, while continuing to add fees and costs.”
Helping refugees is a good thing, but bringing in over four hundred thousand people annually has absolutely nothing to do with helping refugees. It has to do with making profits – for some anyway. Not for those working Canadians with stagnating wages and no hope of being able to ever own a house.
There are truly heartbreaking stories about the ever-rising unaffordability of accommodation in Canada. Take the case of Conan O’Dell and Sandra McMullen of Saanich, BC, for example. They have two young children. Their landlord decided to move into their unit and served them a notice to end tenancy last September. But rental rates have soared and they are unable to find anything they can afford. “We are going to be homeless,” says McMullen. “As people who’ve worked and paid taxes our whole lives, I never thought we’d be in that position.” She said her family would soon be living in a van.
Of course, there is some political posturing about housing. But it essentially amounts to running hard just to not quite remain in place.
The government, apparently unaware of any irony, says it doesn’t have enough skilled workers to build housing at the rate needed, seeming not to realize that if it lowered immigration levels, it would also reduce the desperate need for workers. Not to mention allow people like the O’Dells to have a place to live.
But maybe the O’Dells, like that veteran who, at a town hall meeting in Edmonton in 2018, asked Prime Minister Trudeau for more resources for veterans, are “asking for more than we are able to give right now.” Of course, how much a government can give depends on how much it is spending elsewhere. What if the government were to take to heart the admonition of 1 Timothy 5:8, “But if anyone does not provide for his own, and especially for those of his household, he has denied the faith and is worse than an unbeliever.”
There is not much evidence that Trudeau makes the interests of Canadians a priority. He does not even think that Canada is a sovereign country, calling it the “first postnational state” with no “core identity” or “mainstream.”
He is an acolyte of the globalist World Economic Forum and his objectives align with those of the WEF’s founding chairman Klaus Schwab. His immigration policies appear to have been taken right from the playbook of the globalist business group Century Initiative, which advocates for a Canadian population of 100 million by 2100. (Who is going to profit from all that growth, one wonders.) Meanwhile corporations are buying up the housing stock that Canadians can’t afford. As Josh Gordon points out, policymakers have turned Canadian real estate, especially in the large cities, into a highly attractive global asset class.
Which explains that strange blindness on the part of Canada’s power-brokers regarding the underlying reason for Canada’s housing cost. They are working for the greater good. It’s just not for the greater good of ordinary working Canadians. It’s for the greater good of the globalist elite to which they all belong. Canada’s big cities are their commodities, and people like the O’Dells are just collateral damage.
Madeline Weld, Ph.D.
President, Population Institute Canada
Tel: (613) 833-3668
The high cost of housing has essentially shut many Canadians, especially first-time buyers and most newcomers,out of the home ownership market.