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Analyzing Canada’s Housing Crisis; Exploring Supply-Side and Demand-Side Solutions

(Global News) 

The Canadian Housing Crisis

Canada is currently facing a frenzy of a storm in its housing market. Exorbitant housing costs are illustrated through higher mortgages and rents. Staggeringly flat income levels have increasingly made home ownership for future generations more difficult. Frighteningly, polling data from the Royal Bank of Canada has indicated that 36% of non-homeowners under the age of 40 have given up on ever owning a home. As a result of this sentiment, the youngest members of our generation (millenials and Gen Z) are increasingly looking towards voting conservative, which is significant as youth voters tend to vote for Liberal or NDP. 

The housing crisis has effected certain demographics to such a degree that searching for alternative political options seems to be the only option left for affected voters. Moreover, it showcases the lack of movement on the issue that all levels of government have failed to undertake for years. As the crisis unveils itself, governments are finally stepping in to pass policies that’ll have at least a dent of an effect on the housing crisis this country faces. 

The housing crisis has even shifted the public’s views on immigration, with 63% of Canadians saying that the current levels of immigration are adding strain to the housing market. Canada, a country known for welcoming immigrants and showing pride in fostering a multicultural society, has begun to shift its opinions on immigration as a result of economic hardship. 

Regarding specific policies addressing the issue of housing, governments at both the federal and provincial levels have taken significant steps over the past year. This includes policies that impact the supply of housing by promoting the number of total housing construction starts, implementing favourable financial conditions, and promoting multi-unit as well as density to maximize the number of homes built in a given area. On the other side of the equation lies the demand-side solution, which includes disincetivizing migration patterns by altering migration programs that seem to attract a large influx of foreigners, such as student visas and the Temporary Foreign Worker Program.

Demand-Side Policies

There is significant discontent among Canadians, especially among online forums, rural Canadians, and 1st generation immigrant Canadians, regarding current migration levels. Utilizing my own personal surface-level experiences, Canadians from many different backgrounds are showcasing their discontent with migration, using it as a scapegoat for the problems the country is facing. One needs to only look at online forums such as r/CanadaHousing2, r/Conestoga, and even r/Canada to see the types of negative and discriminatory opinions people are expressing. Although not representative of Canada, these online groups have the potential to be the root of a broader online internet subculture. Resulting in opinions once found on the fringes of the internet becoming mainstream media. 

Overall discontent, be it online or among the general public, has resulted in the federal government taking action against the student visa program. New rules to increase the financial requirements for international students to prove their financial capability have been introduced to curb fraud and provide an easy getaway to entering the country. The federal government is also looking to limit the number of hours (from 40 to 20 hours) international students can work in order to foster a culture of learning rather than using issued student visas as a method to gain permanent residence. 

At the root of the problem are educational institutions, particularly colleges, that are accepting international students at a very high rate. Critics argue that the explosion of international students in these colleges is resulting in subpar education being delivered to them and a lack of housing support being offered to them. On the other hand, colleges in certain provincial jurisdictions argue that international student fees remain one of the primary methods of keeping their institutions financially afloat after years of government funding freezes and cuts. 

As a response, the federal government is potentially looking to cap the number of student visas issued if provinces don’t step up to address the lack of support international students or educational institutions require to be able to provide quality education and affordability to live. 

“Enough is enough. If provinces and territories cannot do this, we will do it for them and they will not like the bluntness of the instruments that we use.” (Minister Marc Miller, Global News). Miller adds, "There are, in provinces, the diploma equivalent of puppy mills that are just churning out diplomas, and this is not a legitimate student experience."

What this indicates is a clear recognition by the federal government that migration in certain areas is not up to par with the Canadian standard, let alone fueling the housing crisis. Housing Minister Sean Fraser has also indicated “potential changes… to both the international student visa and temporary foreign worker programs” (Global News). 

Economists have increasingly pointed out that the federal government’s strategy for its immigration targets is not considerate of the necessary housing and infrastructure required to sustain them at an affordable level. Officials from the Bank of Canada have also expressed that an increase in immigration is adding pressure to Canada’s housing supply, although it is not significantly impacting inflation overall. 

Other countries, such as Australia and the UK, are looking to halve immigration levels and toughen English tests for students as a way to provide the country with “sustainable” levels of migration. The federal government in Australia is deeming its current immigration system "broken" and is looking to shift focus away from temporary residency towards permanent residency and citizenship. 

Although there is no evidence that Canada will follow in Australia's and the UK’s footsteps amid recent policy announcements, the door is left open for immigrant-friendly countries like Canada and Australia to revamp their immigration systems in this time of crisis. 

Supply-Side Policies 

At the heart of the housing crisis, as expressed by most housing experts, is a lack of housing supply meeting ever increasing high demand. This side of the argument is obvious and has been in conversation among political pundits, housing experts, and the election platforms of both Canada’s federal and provincial parties for years, if not decades. Even after years of conversation, the housing supply issue is worse now than it was years ago. Data from the Canada Mortgage and Housing Corporation shows housing starts to be down 22% compared to exactly one year prior, largely due to the high cost of building materials and rising interest rates, making the investment less likely to have buyers. 

But the supply-side issue is currently a work in progress, and steps are being taken by all levels of government to address this issue as well. 

From the federal and provincial governments comes a pause on the application of the general sales tax on new rental housing construction. For housing starts, this means that developers would be more enticed to build rental housing with the sales tax cost waived. 

The federal government has also introduced a Housing Accelerator Fund aimed at providing municipalities with financial packages in exchange for building more homes by following certain conditions, such as high density, transit-oriented development, reducing parking minimums, building multi-unit housing, and fast tracking permit processing. Virtually all major cities in Canada are looking to ink deals with the federal government to promote housing development; some cities have already arranged deals, including Calgary, Mississauga, Vaughan, Brampton, Halifax, Hamilton, and the entire province of Quebec. 

The federal government has also brought back war-time pre-approved housing blueprints that’ll streamline housing construction by cutting building time by as much as a year. The federal government hopes to fast-track housing starts, as was the case after World War II, when the federal government helped build over a million homes for returning veterans. 

On the side of the provinces, Ontario has developed a new investment agency dubbed the Ontario Infrastructure Bank that’ll focus $3 billion allocated towards a combination of housing and clean energy. The province is also looking to build 1.5 million homes by 2030, although current projections show the province falling well short of that goal. 

The province of British Columbia has become a recent leader among the provinces in developing housing policy. The BC government is looking to crack down on short-term rentals to increase long-term rental supply (specifically against AirBnBs), revamp municipal zoning laws to promote multi-units and density, set minimum requirements for building heights, and promote housing density around transit areas. 

Will the Housing Crisis be Absolved? 

A fundamental question that governments and citizens are interested in is whether the housing crisis can ever be affordable again in the future. The answer to this question is likely to be muddy rather than definitive. What we can say is that significant steps are being taken to make housing more affordable in the years to come, or at least address some of the challenges the housing market is facing in terms of supply. However, it is equally probable that housing remains a difficult asset to attain among aspiring homeowners due to the nature of the economy in the 21st century. 

No political party in particular will solve the issue, but rather it will take years and years of collaboration among governments, housing experts, public servants, profit and nonprofit developers, and citizens pressing governments to act to get anything done. In short, if the public demands more affordable housing, it will be reflected in nationwide policy. However, the fight for affordable housing stops as soon as the public deems the issue to be non-important. Housing requires long-term care and solutions; it isn’t sufficient to simply forgo the issue in peaks and troughs when it feels convenient for the public. We ought to treat housing with the same seriousness as we do healthcare and education, two fundamental aspects required to live dignified and happy lives. While recent developments in housing policy have improved my view of the direction of housing policy, we are far from restoring affordability until more is done. 

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