I’ve written my fair share of articles focusing on Canada’s housing crisis. I’ve discussed the roles taxes, development fees, zoning restrictions, and expensive environmental policies have had on construction. And I’ve discussed the pressures ten years of out-of-control immigration placed on availability and affordability. I even took a look at
I think the most overlooked part of your simulation is the municipal panic. I was looking at the public accounts for Toronto recently, and it is wild how much their budget relies on land transfer taxes and development charges (basically the cover charge developers pay to build). If housing prices actually dropped 16% like your model suggests, big city mayors would be banging on the door of the Finance Department in Ottawa demanding a bailout within months. It creates a perverse incentive where the government literally cannot afford to let housing become affordable.
I really appreciated reading this thoughtful post.
I think an additional policy tool is to better regulate foreign ownership, and have additional taxes on homes owned by foreigners. State of Hawaii does this to out of state owners for example, and provinces could do same. So an Alberta buying a holiday property in BC, or an Ontario person buying in PEI, would pay additional out of province tax fees on their property each year. Need a mechanism to reduce demand of non local ownership without actually banning it.
Foreign ownership taxes are at least in principle a great idea. They've actually been imposed in Ontario, BC, and Nova Scotia with mixed results. Although no one has put much effort into addressing the more serious problem of Chinese government-related organized crime buy-ups of residential housing to launder their drug money.
Intra-provincial restrictions might require some fine tuning: just imagine how much pushback you'll get from civil servants with cottages just over the Ottawa River in Gatineau. :)
Even adjusted for inflation, median household incomes in Canada have risen modestly since the 1970s. So I don't see income *depression*. And incomes in the U.S. - where they were victims of off-shoring just as much as we were - have risen even faster. But either way, I think it's unreasonable to expect incomes to triple or quadrupal over such time ranges, which is what would have been necessary to keep up with the costs of housing.
I completely agree with you that 2025 wages don't come close to making homes affordable. It's a disaster that's very upsetting for my kids' generation.
But even if $32/hour jobs were available for anyone willing to work hard, that wouldn't come close to getting workers into $1,000,000 homes - especially when you factor in how much of the $64,000/year they'd be earning would be taken by federal and provincial taxes.
A very interesting discussion. My contribution is that I would include an exemption from the ‘first-time buyer’ provision for those homeowners who are transferred by their employers and must perforce sell up when they move. To demand another 30% down payment, especially if they are having difficulty selling their existing property, would be unduly onerous. A situation even worse if they’ve only recently bought that first home and really have no equity of which to speak. Or have I misunderstood the premise?
I think the most overlooked part of your simulation is the municipal panic. I was looking at the public accounts for Toronto recently, and it is wild how much their budget relies on land transfer taxes and development charges (basically the cover charge developers pay to build). If housing prices actually dropped 16% like your model suggests, big city mayors would be banging on the door of the Finance Department in Ottawa demanding a bailout within months. It creates a perverse incentive where the government literally cannot afford to let housing become affordable.
Absolutely. I've written about just that point: https://www.theaudit.ca/p/solving-the-housing-affordability
I really appreciated reading this thoughtful post.
I think an additional policy tool is to better regulate foreign ownership, and have additional taxes on homes owned by foreigners. State of Hawaii does this to out of state owners for example, and provinces could do same. So an Alberta buying a holiday property in BC, or an Ontario person buying in PEI, would pay additional out of province tax fees on their property each year. Need a mechanism to reduce demand of non local ownership without actually banning it.
Foreign ownership taxes are at least in principle a great idea. They've actually been imposed in Ontario, BC, and Nova Scotia with mixed results. Although no one has put much effort into addressing the more serious problem of Chinese government-related organized crime buy-ups of residential housing to launder their drug money.
Intra-provincial restrictions might require some fine tuning: just imagine how much pushback you'll get from civil servants with cottages just over the Ottawa River in Gatineau. :)
Indeed it's a typical thing to find the problem with the home prices but not the wage stagnation for the last 30 years.
Just go back and do the same from the 70s for 30 years and home prices did grow about the same percentage only incomes was somehow keeping up with it.
So what changed
Globalist economic policies where labor values were depressed directly and indirectly by lower cost mostly tax free imports.
So today you enjoy the cheap products by globalization but you pay for it by having a lower income that can pay for a home.
You cant fix something until you discover what is broken.
In economy everything is about balance
Even adjusted for inflation, median household incomes in Canada have risen modestly since the 1970s. So I don't see income *depression*. And incomes in the U.S. - where they were victims of off-shoring just as much as we were - have risen even faster. But either way, I think it's unreasonable to expect incomes to triple or quadrupal over such time ranges, which is what would have been necessary to keep up with the costs of housing.
To your point, the growth in housing prices has vastly outpaced the CPI, beginning around 2002.
Both metrics indexed to 1990.
Year CPI_Index Housing_Index
1990 100 100
1995 111.7 106.4
2000 121.7 114.8
2005 136.5 174.9
2010 148.6 238.1
2015 161.5 310.9
2020 174.8 398.2
2025 206.5 483.1
Well thank you
This proves my point of wages didn't increase enough
First of all compere from the 70 to 2000 not from 70 to today
AI Overview
+5
If 10 dollars increases by 4 percent every year for 30 years, it will be approximately
32.43 dollars.
My workers at a simple factory job average made abour 10 dollars around 1997 to 2000 and most of them bought a home with their partners.
4 percent is not an unreasonable income increase per year when factoring minimum 3 percent inflation.
At my place it was a standard increase every year.
But of course those jobs are not around to make 32 dollars an hour.
Insted you got the glorious uber driving....hahaha
I completely agree with you that 2025 wages don't come close to making homes affordable. It's a disaster that's very upsetting for my kids' generation.
But even if $32/hour jobs were available for anyone willing to work hard, that wouldn't come close to getting workers into $1,000,000 homes - especially when you factor in how much of the $64,000/year they'd be earning would be taken by federal and provincial taxes.
A very interesting discussion. My contribution is that I would include an exemption from the ‘first-time buyer’ provision for those homeowners who are transferred by their employers and must perforce sell up when they move. To demand another 30% down payment, especially if they are having difficulty selling their existing property, would be unduly onerous. A situation even worse if they’ve only recently bought that first home and really have no equity of which to speak. Or have I misunderstood the premise?
That makes sense. Any policy change like this would almost certainly come with unexpected consequences that need addressing.