As the housing affordability crisis continues to impact Canadians across the country, a majority of immigrants feels they are being unfairly blamed, as they themselves see the dream of home ownership slip further out of reach.

A poll commissioned exclusively for OMNI by Leger found that nearly seven in 10 new Canadians think politicians are using immigration as a “red herring” to distract from other factors contributing to the lack of affordable housing, such as government policies and economic conditions.

The federal government is planning on bringing the share of temporary residents to 5 per cent of Canada’s total population, down from 6.5 percent.

According to a housing expert, however, “relatively high immigration numbers” don’t necessarily mean newcomers are responsible for high shelter costs.

“One big issue, as we know, is that some areas just have a higher percentage of population of new immigrants than they used to, and as a result they get used as a scapegoat for the housing crisis,” says Prentiss Dantzler, the Director of the Housing Justice Lab at the University of Toronto. “People forget that this housing crisis is not new. We’ve been dealing with this for a long time.”

“There’s a lot of blame to go around, but a lot of time people are focusing on other individuals and not focusing on the housing system itself,” he told OMNI News.

Dantzler points out that a lot of the housing stock is not even being bought up by individuals, but by private equity firms or other companies, and that the number of condos on the market means the system “is not serving a diverse portfolio of families.”

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Artificial intelligence may be all the rage in the business world, but to the feds, AI-enabled algorithms are being cast as the main villain behind skyrocketing housing costs in this country.

Last month, the Department of Justice joined the attorneys general of California, Colorado, Connecticut, Minnesota, North Carolina, Oregon, Tennessee and Washington to sue RealPage, blaming the software company’s property data services for rising rents nationwide.

According to the complaint, the analytic products offered by RealPage have enabled property owners to unlawfully coordinate and collude to artificially raise rents, undermining competition in the rental market to the detriment of consumers seeking apartments. The government argues that these practices are in violation of the century-old Sherman Antitrust Act.

“As Americans struggle to afford housing, RealPage is making it easier for landlords to coordinate to increase rents,” said Assistant Attorney General Jonathan Kanter, a principal player in Washington’s attempted crackdown on tech companies using antitrust laws and the Federal Trade Commission.

The case hinges on marketing materials from the company, as well as interviews with customers who use the platform to screen potential renters, generate pricing recommendations and facilitate the collection of payments. DOJ asserts that by using nonpublic data, property owners that would normally compete are acting like cartels to raise prices on renters, aided by RealPage’s software.

For the first time in weeks, one could recall that Kamala Harris is vice president of the United States, as she seemed well aware of the coming DOJ lawsuit while on the campaign trail. Running against what looks like a shady corporation is good election-year politics.

Ms. Harris unveiled portions of her housing policy proposals, which aim directly at property management software. That is no coincidence. She intended to back a Democratic Senate bill to “prohibit the use of algorithmic systems to artificially inflate the price or reduce the supply” of rental units.

San Francisco will soon also ban “price-suggesting” algorithmic software for property owners, arguing that these platforms have made living too costly for renters seeking a home. For California to pin its high cost of living on landlord software and not its mountain of rules limiting housing development feels like a “pay no attention to that man behind the curtain” moment. 

Are algorithms to blame for higher rents? The evidence is scant.

According to the most recent data from the National Association of Realtors, U.S. median rent in July declined year over year for the last 12 months, trailing downward since the 9.1% inflation peak in June 2022. This is likely because of inflation cooling and the resumption of housing construction as the pandemic recedes.

Since then, rents have declined in most Southern and Western metro areas, such as Phoenix, Austin, Texas, and Nashville, Tennessee, and buoyed by the growing supply and faster construction of rental properties. Overall, the number of privately owned housing units under construction is hovering at levels not seen since the 1970s, which has helped to reduce rental costs in most parts of the country.

While it is fitting to argue that rental costs are higher for American households, it’s a world of difference to believe that algorithms are the main culprit and that breaking them up would have an impact.

Supply and demand remains as simple and effective a concept as ever. We need to build more housing units and meet demand.

A report this year by the Joint Center for Housing Studies at Harvard found that exclusionary zoning policies and slow construction have contributed significantly to the estimated 1 million new dwellings we need to reverse the housing shortage. It’s an outcome we could have easily predicted.

When the price of building and housing materials soared during the pandemic and the subsequent inflation, building became slower and more costly. When restrictive city zoning laws didn’t allow developers to build dense housing units or mixed-use properties, developers put their money elsewhere. When environmental reviews and red tape doomed residential projects, builders stopped building.

Many state and local governments have now adopted innovative policies to speed up the construction of more homes and alleviate high rental prices, slashing regulations and fast-tracking building permits. These concrete actions address the problem, and it almost always happens at the state or local level.

On the other hand, federal prosecutors and presidential candidates would like to use the courts and the law to chase after software tools and blame landlords when they know full well it won’t lower your rent or make more homes appear.

Instead of using our justice system to go after yet another tech firm, our officials would do well to reduce consumer costs by allowing what we know works to lower housing costs: Build, baby, build.

Originally published here

With rising housing costs in Canada, it is easy to place the blame on immigration. Little housing supply means there are fewer places for people to live, and curbing immigration numbers seems to be a popular solution to this problem among politicians. However, blaming immigrants for a problem brought on by the politicians themselves is not the solution to the country’s growing housing concerns, and may prove to hurt the economy overall.

The Royal Bank of Canada has stated that “Immigration in Canada has accounted for all the growth in the labour force for well over a decade, but it’s still not enough to significantly offset the impact of an aging demographic or substantially reduce the structural shortages in the jobs market.” In other words, Canada needs immigrants to keep its economy afloat.

If the government was actually interested in finding out the causes of the housing crisis, it would do well to notice that the reasons are coming from within. Every level of government has consistently failed to address the housing shortfall by making it more and more difficult not only for Canadians to buy houses, but for new housing to be built at all.

At the municipal level, zoning rules and regulations often keep abandoned commercial offices — now sitting empty due to work-from-home policies — from being converted to residential space. This has been the case in Toronto, where applying to rezone a space takes a minimum of nine months once the paperwork has been submitted, as was pointed out by Consumer Choice Center manager David Clement in 2020.

According to Clement, applicants hoping to re-zone their properties must provide evidence such as “an archeological assessment, a services and facility study, an environmental impact study, an energy strategy, a heritage impact statement, a natural heritage impact study, their planning rationale, their public consultation report and a transportation impact study — on top of their own formal plans.” Who is going to find a process like that worth going through?

Toronto has since moved in the right direction by eliminating exclusionary zoning rules, which previously limited how many and what kind of homes can be built on a lot. This is significant because a large part of the housing shortage is a result of overly onerous rules that do not bring about more housing for Canadians. One can only hope that other cities follow suit, since cities like Hamilton, Vancouver and Ottawa continue to top the charts on housing unaffordability.

Federally, the government keeps providing solutions meant to distract Canadians from the mess it has made by not pressuring provinces to find ways to make building housing easier. Immigration Minister Marc Miller announceda two-year cap on international student admissions in January. He also announced he is restricting postgraduate work permits, which allow international students to gain Canadian work experience after completing their education, from those who attend private colleges that follow public college curriculums. These students are young, motivated and ready to help build Canada’s economy. And yet, they are being framed as one of the reasons for the housing crisis.

The federal government’s latest attempt at fixing its mess is the housing plan it released in April. The plan includes re-introducing a standardized housing design catalogue similar to the one Canada used in the 1940s, and investing in standardizing building processes to make construction more efficient.

However, builders don’t need to look to the past and take advice from politicians and slow-moving bureaucracy; they simply need the ability to do their jobs with fewer barriers such as zoning laws and unnecessary red tape. If housing is needed immediately, there is no time for the federal government to hold consultations about regulatory barriers and the National Building Code, as the new housing plan states — houses must be built now.

Ironically, although the government keeps using immigrants as a source of the housing crisis, they admit in their latest housing plan that they need to prioritize newcomers who have the skills to build more homes. It is clear that without immigrants, this housing crisis cannot be readily solved.

It is important to recognize that immigrants are worried about the housing crisis, too. In July, one study by Angus Reid found that nearly 40 per cent of immigrants have considered moving as a result of the housing crisis in Canada. This is terrible news for Canada because, with a declining population, the country’s economic hopes are tied to an increase in economic immigration over the next several years. Canadians should band together and stop allowing politicians to scapegoat immigrants for the mistakes the politicians themselves have made in the housing market.

Originally published here

In a shocking U-turn, the City of Toronto has essentially ended exclusionary zoning citywide. Exclusionary zoning are the zoning regulations that limit the amount of homes that can be built on a single lot, excluding all forms of housing other than single family homes. Prior to the 18-7 vote by Toronto city council, upwards of 70 per cent of the city was zoned exclusively for single family homes. Now, duplexes, triplexes and fourplexes are allowed in all residential neighbourhoods.

These exclusionary zoning rules artificially limit the housing stock, which limits supply, and all but ensures that supply will never keep pace with demand. The consequence of exclusionary zoning is quite predictable: when supply can’t keep pace with demand, you have rising home prices and rising rents.

This is a huge step in the right direction to address the housing affordability crisis in Ontario, but this progress shouldn’t end within Toronto’s city limits. As anyone looking to buy or currently renting knows, the housing crisis isn’t limited to Toronto, with prices rising significantly in the Greater Hamilton area. In fact, in 2021 Hamilton was one of the top five least affordable cities in North America. In fact, Hamilton was only more affordable than Toronto and Vancouver, and significantly more expensive than major North American markets like Los Angeles, Las Vegas and Tampa Bay.

We know that ending exclusionary zoning works to calm the tide of rising prices, because we have seen it work in other cities. Minneapolis, which abolished exclusionary zoning before the pandemic is a perfect example. The city now appears to be bucking the trend of rising rental prices. Rents for one- and two-bedroom units are actually lower in 2022 than they were in 2019. Some of that presumably can be chalked up to having made it easier to build for increased density.

But, ending exclusionary zoning isn’t just the right policy for addressing the housing crisis. It is also the right policy for enhancing economic growth and protecting the environment.

Research on zoning rules in the U.S. has shown that, by freezing workers out of high-rent areas like New York and San Jose where their productivity would be higher, local zoning rules lowered U.S. economic growth by 36 per cent between 1964 and 2009. That is a significant lag on the economy, and without a doubt the same trend rings true in Canada’s high demand cities like Toronto, Vancouver, and Hamilton.

For those who care about protecting the environment, changing the way Hamilton zones the city should be a priority. In fact, according to the Intergovernmental Panel on Climate Change (IPCC) more compact cities could reduce urban emissions by upwards of 25 per cent. This should be intuitive for policy-makers. If people can live closer to where they work, the stores they shop at, the restaurants they dine at, or where they seek entertainment, they ultimately drive less. Whether it be by foot, transit or bike, compact cities actually allow for people to reduce their carbon footprint, not increase it.

And it isn’t just emissions that are reduced by zoning reform. The same goes for water usage. According to the peer reviewed journal Landscape and Urban Planning, single family irrigation rates are 48 per cent higher than multi family housing units.

Now, Hamilton has somewhat taken housing affordability seriously since Mayor Horwath took office. In fact, as leader of Ontario’s NDP she campaigned on zoning reform province wide. The city is currently in its “public meetings and stakeholder working groups” phase of its inclusionary zoning initiative, with policy change expected for the end of 2023.

Mayor Horwath, and city council, should be looking at Toronto and aggressively moving that timeline forward, because with every month supply fails to meet demand, home prices and rents increase. Now it is Hamilton’s turn to end exclusionary zoning.

Originally published here

Ontario seeks to reform zoning rules that slow construction and increase costs

Last week Doug Ford’s Ontario government introduced legislation that will seek to rapidly increase homebuilding in the province, primarily by peeling back exclusionary zoning. Premier Ford’s bill will allow for up to three units to be built on a single residential lot without any bylaw amendments or municipal permissions. This allows for the building of basement apartments, garden suites, duplexes, and triplexes on a single residential lot. In addition to allowing these units to be built, the legislation also exempts these units from development charges and parkland dedication fees, which significantly increase the cost of building and are ultimately passed on to buyers.  In a city like Toronto, this could be a game-changer for calming the housing crisis.

Upwards of 70 per cent of Toronto is zoned exclusively for single-family homes, a restriction that significantly limits building options, which in turn constrains the housing supply. The impact of these zoning rules can’t be overstated. A family in Toronto needs an annual income of $280,000 to purchase a detached home, $214,000 for an attached home, $167,000 for a townhome and $148,000 for a condo. But the median income for a couple in Toronto is only $97,700.

Why zoning reform is needed is simple: artificial limits on what can be built keep the housing stock low, which in turn prevents supply from keeping pace with demand, thus putting upwards pressure on home prices and rents. Because of these zoning rules, Ontario has a terrible record for building new homes. Among G7 countries, Canada ranks dead last in population-adjusted housing units per 1,000 people with 424. Ontario, which has only 398 units per 1,000 people, is a major cause of the problem.

Increasing the housing stock would put downward pressure on prices and foster economic growth. Research on zoning rules in the U.S. has shown that, by freezing workers out of high-rent areas like New York and San Jose where their productivity would be higher, local zoning rules lowered U.S. economic growth by fully 36 per cent between 1964 and 2009. There is no reason to assume similarly exclusionary zoning laws aren’t having the same negative impact in Ontario and across Canada.

The benefits of zoning reform aren’t just theoretical. Reform has made housing more affordable in both the United States and Japan. Minneapolis, which abolished exclusionary zoning before the pandemic, now appears to be bucking the trend of rising U.S. rental prices. Rents for one- and two-bedroom units are actually lower in 2022 than they were in 2019. Some of that presumably can be chalked up to having made it easier to build for increased density.

Before the pandemic Japan was building nearly a million new homes per year because of its relaxed approach to zoning. This approach is largely why average home prices in Japan have stayed relatively flat for nearly a decade. Enabling supply to keep up with demand is the keystone of Japan’s success in creating a stable housing market, one where home ownership is feasible and rental prices are stable. On the rental side, from 2008-2018 rent for the average two-bedroom apartment in Tokyo hovered around $1,000 (U.S.) per month. A two-bedroom apartment in Toronto is now more than double the price of an equivalent unit in Tokyo.

Now, for some, the thought of smaller Tokyo-style apartments doesn’t seem appealing. But the point here is that with limited government involvement in the building of new homes the market is able to adjust and build in a way that better meets housing demand. And to really demonstrate the power of supply: Japan’s rental prices were stable without the use of rent control, a policy often touted as a means to curb rising rents.

For those who like the suburbs and want them to stay that way, this bill could work to increase density in high-demand areas like Toronto, while easing housing pressure in surrounding areas. Opening up 70 per cent of Toronto to increased density will help curb the trend to suburban sprawl, as people who prefer to live in these high-demand areas will find it easier to do so.

This new bill takes the issue of chronic housing undersupply seriously by saying “Yes, In My Backyard.” Welcome to Team YIMBY, Premier Ford.

Originally published here

In April, the Canadian federal government announced its budget for 2022 with a much-needed focus on building homes over the next decade. Initiatives in the proposal included the launch of a new Housing Accelerator Fund of $4 billion to aid in speeding up housing development, which highlights the obvious demand for homes in this country.

Canada led the G7 in percentage population growth over the last five years (the 5.2% population growth is double that of the United States’ 2.6%). Canada added 1.8 million citizens between 2016-2021 and the federal government has plans to welcome 1.3 million immigrants over the next three years. This population growth is being achieved against the backdrop of a chronic housing supply shortage.  It was reported this year by Consumer Choice Centre that among the G7, Canada has the lowest average housing supply per capita with only 424 units per 1,000 people nationally, a ratio that is lower than it was five years ago. Of all the provinces, Ontario leads this disparity with only 398 units per 1,000 people – requiring 650,000 units to be built just to meet the national average.

With the recent increase in interest rates and construction cost inflation, some developers are taking a pause on launching new products, which will only exacerbate the supply imbalance and contribute to upward pressure on prices in the coming years. Whether for rent or for sale, Canada needs to build more houses, and quickly.

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Increasing the housing stock puts downward pressure on prices and fosters economic growth

At both the federal and provincial level, Canadians and their legislators often look down their noses at American policy and politics, and sometimes with good reason: gun control and the abortion debate come to mind. But when it comes to tackling the housing crisis Canadian politicians could learn a thing or two from what is unfolding south of the border.

Earlier this month President Joe Biden announced that the federal government would be seeking to tackle the root cause of the housing crisis, which it believes to be exclusionary zoning — local rules that prohibit multi-family housing from being built and instead favour single-family units. In a White House statement, the administration said “Exclusionary land use and zoning policies constrain land use, artificially inflate prices, perpetuate historical patterns of segregation, keep workers in lower productivity regions, and limit economic growth.”

All of that is true. Increasing the housing stock puts downward pressure on prices and fosters economic growth. Research on zoning rules in the U.S. has shown that, by freezing workers out of high-rent areas like New York and San Jose where their productivity would be higher, local zoning rules lowered U.S. economic growth by fully 36 per cent between 1964 and 2009. There is no reason to assume similarly exclusionary zoning laws aren’t having the same negative impact in Canada. Toronto, for example, has nearly 70 per cent of its land zoned exclusively for single-family homes, making it illegal to build anything with increased density.

Elevating the conversation and targeting zoning reform are things Justin Trudeau and Chrystia Freeland could have done in their last budget. Right now, only two Conservative leadership candidates are talking about zoning on the campaign trail, Scott Aitchison and Pierre Poilievre.

But lessons about zoning reform aren’t just useful at the federal level. The U.S. offers plenty of examples of state and municipal legislators carrying out dramatic zoning reforms. In Oregon, for example, any land previously zoned exclusively for single-family homes can now, as of right, build a duplex on that site or even a four-unit dwelling if it is in a municipality larger than 25,000 people.

The same goes for Minneapolis, which abolished exclusionary zoning before the pandemic. The city now appears to be bucking the trend of rising rental prices. Rents for one- and two-bedroom units are actually lower in 2022 than they were in 2019. Some of that presumably can be chalked up to having made it easier to build for increased density.

Finally, the small town of Auburn, Maine, shows how local councilors can embrace “YIMBYism” (which stands for “Yes, in my backyard,” as opposed than “Not in my backyard”) to increase affordability. Auburn’s Mayor Jason Levesque, originally elected in 2017, ran on a pro-development platform that gave voters in his town of 24,000 three options: drastically raise taxes, cut public services, or bring in new residents. Having chosen growth, Auburn plans to increase its housing stock by upwards of 25 per cent, gutting zoning rules and taking an “all of the above” view on housing types.

That type of bold ambition is exactly what is needed in Canada’s major cities and the communities that surround them if we want to tackle rather than just talk about the affordability crisis. Nationally, average rents rose nine per cent in April compared to a year earlier. In Toronto and Vancouver, arguably the two Canadian cities most in need of increased density, rents rose 23 and 27 per cent, respectively. On the buying side, the national MLS benchmark price for a home was $882,000 in April, a 27 per cent increase year-over-year despite interest rate increases beginning to dampen demand.

Much of Canadian political culture is framed in opposition to what exists in the U.S. but on zoning reform, we should look southward and learn. It’s time to build but exclusionary zoning is in the way.

Originally published here

David Clement is North American affairs manager of the Consumer Choice Center. He’s one of the authors of a policy paper outlining why cities should allow more multi-family housing.

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Canada ranks dead last in housing units per 1,000 people in the G7, and Ontario is the lead cause, David Clement and Yael Ossowski write.

Ontario NDP Leader Andrew Horwath has unveiled the NDP’s platform in the lead up to the next election, with a policy plank putting an end to exclusionary zoning. For many, this is a bold move from the Official Opposition. It also happens to be a policy change that Ontario desperately needs.

Exclusionary zoning are prohibitions on multi-family housing units ultimately limiting the number of housing units available in a city. Simply put, peeling back exclusionary zoning gives property owners more freedom to build different types of housing, increasing the housing stock, something that Ontario needed yesterday.

Nationally, Canada ranks dead last in housing units per 1,000 people in the G7, and Ontario is the lead cause. Ontario only has 398 units per 1,000 people and needs to build another 650,000 units just to get to the national average.

In Hamilton, buyers and renters are feeling the pain caused by the chronic undersupply of housing. Average home prices are now over $1 million, inflating 25 per cent year-over-year. And the pain isn’t just being felt by those looking to buy a home. Undersupply is putting upward pressure on rental prices as well. The average rent for a two-bedroom apartment is $1,841. That rent requires an income of at least $82,000, but the average family in Hamilton has a pre-tax income of only $66,460. As the housing crisis worsens, the average home, both buying and renting, is out of reach for the average family.

Beyond making life more affordable, increasing the housing stock also grows the economy. Research on zoning rules in the U.S., which mirror what we see in Canadian cities, showed that housing constraints lowered U.S. aggregate growth by 36 per cent from 1964 to 2009.

But, some who oppose density will likely rehash the argument that increased density, despite growing the economy, is bad for the environment. Time and time again, NIMBY voices argue against increased density because of the perception that increased density is a net negative for the environment. It’s not true.

In fact, according to the Intergovernmental Panel on Climate Change (IPCC) more compact cities could reduce urban emissions by upwards of 25 per cent. This should be intuitive for policy-makers. If people can live closer to where they work, the stores they shop at, the restaurants they dine at, or where they seek entertainment, they ultimately drive less. Whether it be by foot, transit or bike, compact cities actually allow for people to reduce their carbon footprint, not increase it.

And it isn’t just emissions that are reduced by zoning reform. The same goes for water usage. According to the peer reviewed journal Landscape and Urban Planning, single family irrigation rates are 48 per cent higher than multi family housing units.

While the NDP is making steps in the right direction on zoning reform, they are taking a giant step backwards with their proposal to give municipalities more decision-making power by reforming the Ontario Land Tribunal. Giving more power to local councillors is exactly what got Ontario, and Hamilton, into this mess. Zoning reform is needed, but emboldening local governments with more decision-making power is bad policy, and one that could undermine the value of zoning reform.

Hamilton needs more homes. Ending exclusionary zoning is a great step in the right direction. Whether blue, orange, or red, all political parties, both federally and provincially, need to make zoning reform a priority. 

Originally published here

Pour ceux et celles qui souhaitent un meilleur avenir, être propriétaire d’une maison a toujours été un but principal à atteindre, surtout pour la génération des millénariaux.

Mais quand on regarde les prix des maisons qui gonflent, la concurrence massive dans l’achat des maisons et l’inflation qui gruge de plus en plus notre pouvoir d’achat, ce souhait n’est plus qu’un rêve.

Nous étions très contents de voir que le logement figure au centre du budget du premier ministre libéral Justin Trudeau. Mais au lieu d’avancer de vraies réformes afin de donner à notre génération les meilleurs moyens de devenir propriétaire, nous ne voyons que des actions symboliques. 

Mettre fin à l’investissement étranger, taxer les logements vacants et accorder encore plus de crédits d’impôt à ceux qui achètent leur première maison pourrait faire plaisir à plusieurs, mais ne permet pas de livrer ce que tous les économistes sérieux nous recommandent : construire plus de maisons.

Il y a assez d’argent dans le système (encore plus avec l’inflation), mais il n’y a pas assez de construction de nouvelles maisons et de condos. L’offre est limitée, la demande est en croissance.

Or, le problème au Canada n’est pas la demande pour les propriétés résidentielles. C’est l’offre. Il n’y en a pas assez pour notre population grandissante.

Au mois de février, le prix moyen d’une maison au Québec a augmenté à 474 941 $, une hausse de 18,3 % comparée à 2021. Le prix moyen des maisons vendues à Montréal est 18 % plus élevé et 12 % à Québec.

À Montréal, le prix moyen d’un appartement quatre et demie est de 1982 $, ce qui nécessite un salaire annuel de 89 000 $, tandis que le salaire moyen (avant impôt) ne représente que 56 220 $. 

Comme plusieurs autres l’ont reconnu, Montréal fait bonne figure, mais nous avons encore du travail à faire.

Au niveau fédéral, Ottawa aide les gens à épargner, mais ses politiques ne sont pas axées sur l’augmentation de l’offre de logements. Le gouvernement fédéral cherche à créer un nouveau compte d’épargne libre d’impôt pour l’achat d’une première maison, qui combine les aspects fiscaux d’un CELI et d’un REER, permettant aux Canadiens de mettre plus de 40 000 $ dans leur compte, de déduire l’épargne de leur revenu et de la retirer pour acheter une maison sans aucune obligation de remboursement.

Ils prévoient également doubler le crédit pour l’achat d’une première maison, qui passera de 5000 à 10 000 $. Bien que ces deux politiques améliorent l’épargne des acheteurs, si elles ne s’attaquent pas au problème de l’insuffisance chronique de l’offre, elles ne feront rien pour rendre les logements plus abordables. Au mieux, ces politiques aideront ceux qui cherchent activement à franchir la ligne d’arrivée, mais laisseront le marché immobilier inchangé.

D’autres politiques mises de l’avant par Ottawa, comme l’interdiction des offres à l’aveugle, ne font rien pour augmenter l’offre. William Strange, professeur d’analyse économique à l’Université de Toronto, explique qu’une interdiction des offres à l’aveugle ne réduirait pas les prix de manière significative et « qu’il n’y a aucune preuve économique que cela est important ». Les guerres d’offres sont un symptôme d’un marché de vendeurs extrême, et non la cause.

Le zonage d’exclusion est une politique qui vise à limiter le nombre de logements pouvant être construits sur une même propriété. Ces règles interdisent souvent les logements multifamiliaux ou fixent des exigences en matière de taille minimale des terrains. Ces restrictions finissent par limiter le nombre de logements disponibles dans une ville. 

Une interdiction de ce zonage donnerait aux propriétaires plus de liberté pour construire différents types de logements et augmenterait le parc immobilier. En mettant fin au zonage d’exclusion, les grands centres urbains comme Montréal pourraient immédiatement permettre la construction d’un plus grand nombre de duplex et de petits appartements. 

C’est exactement ce qui se fait à l’étranger pour lutter contre la hausse des prix. 

Par exemple, l’Oregon a récemment adopté une loi qui abolit le zonage unifamilial pour toutes les communautés de plus de 10 000 habitants. Les propriétaires pourront ainsi construire différents types de logements, s’ils le souhaitent, ce qui augmentera considérablement l’offre de logements.

La Nouvelle-Zélande a entamé le processus de restructuration de ses lois de zonage dans le but d’augmenter considérablement l’offre et d’exercer une pression à la baisse sur les prix. Le Brookings Institute, situé à Washington, a décrit l’approche de la Nouvelle-Zélande en matière de logement comme un modèle idéal à suivre pour les autres pays.

Il reste beaucoup à faire si nous souhaitons devenir un tel exemple à travers le monde. 

Les législateurs canadiens doivent suivre l’exemple de ceux de l’étranger, et même à Montréal, et faire de la réforme du zonage une priorité essentielle pour s’attaquer à la crise du logement. 

Si notre génération souhaite le même niveau de richesse que celle de nos parents, nous aurions besoin de vraies réformes au lieu des mesurettes qui ne s’attaquent qu’aux symptômes.

Originally published here

“The issue of chronic undersupply is having a devastating impact for both prospective buyers, and those who are renting in major Canadian cities.”

One of the core components of Ottawa’s 2022 budget was a focus on housing. While it’s appreciated that the government is now taking a serious look at housing affordability, much of its plan will do very little to dampen the chaos, like its ban on blind bidding, primarily because it fails to properly address the issue of chronic under-supply.

The supply of homes in Canada, per capita, is the worst in the G7, and it has actually gotten worse over the past eight years. In 2016, Canada had 427 housing units per 1000 people. In 2020, that number actually decreased to 426 units per 1000 people, and in 2022 it fell to 424 units per 1000 people. France by comparison leads the G7 at 540 units per 1,000.

The issue of chronic under-supply is having a devastating impact for both prospective buyers, and those who are renting in major Canadian cities.

In Toronto, for example, the average home price is now more than $1.3 million dollars. A family needs an annual income of $180,000 to purchase the median Toronto home, and $130,000 to purchase the median condo, all while the median income for a couple in Torontois only $97,640. As the crisis worsens, buying an average home is becoming virtually unattainable for the average family.

Unfortunately, the issue of chronic under-supply is also being passed onto renters as well. The average rent for a two-bedroom apartment in Toronto is $2,715, which, based on the CMHC’s affordability metric, requires an annual income of $118,000.

So, housing prices are inflating at rapid levels, while wage growth is lagging far behind, and the response from Ottawa could largely be described as “tinkering with demand.”

Take the federal government’s ban on blind bidding, which is the process where prospective buyers submit their bids on a house without knowing the amount of the other bids. The thought process here is that blind bidding is causing bidding wars that are artificially inflating prices upwards. But is that true?

Not according to housing economists. William Strange, a professor of economic analysis at the University of Toronto, explains a ban on blind bidding wouldn’t reduce pricing. 

“Not to a meaningful degree. There’s no economic evidence that it would matter.” 

Economic analysis comparing bidding models, such as blind bidding versus open auctions, finds different types of auction do not produce dramatically different sales prices.

In addition to Professor Strange, Professor William Wheaton, at the Massachusetts Institute of Technology’s Center for Real Estate, called the ban on blind bidding “dubious” because bidding wars are a symptom of an extreme sellers’ market, and not the cause. And the reason why Canada’s real estate market is such a sellers market is because virtually every city has an under-supply of housing.

Beyond the policy being ineffective, it completely ignores the issue of under-supply and raises questions about competition between auction types. So long as there is nothing mandating all home purchases be done in a blind auction, the market should remain open to competing auction types. Sellers may choose to sell their home in a blind auction, but if buyers demand otherwise, we could see some shift and competition between the two auction types. That would be a preferred outcome, in comparison to picking one auction type over the other, because it ultimately leaves that decision between buyers and sellers.

And while some might read competition between auction types of free market zeal, we are seeing changes from the industry itself. For example, the Canadian Real Estate Association already announced it’s piloting a real time tracking system for bids, streamlining the buying process and increasing transparency for consumers.

So will a blind bidding ban do anything to alleviate the housing crisis? No, not really. At best, it tinkers at the margins of demand, while leaving the housing shortage problem unaddressed.

Originally published here