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Housing

Could the “missing middle” help solve New Brunswick’s housing shortage?

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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Zoning reform should be an election priority

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

PLAN DE TRUDEAU POUR LE LOGEMENT GRIGNOTER AU LIEU DE MORDRE

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

Will the blind bidding ban work?

“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

Liberal Housing Plan Misses The Mark

Ottawa, ON: Today the Federal government released their budget, which includes a significant portion addressing the housing crisis. Major policy announcements include a ban on blind bidding, a new tax-free First Home Savings Account, a foreign buyer ban, and $4 billion for municipalities who grow quicker than the historical average.

The Consumer Choice Center’s Toronto based North American Affairs Manager David Clement responded stating “Unfortunately, the government’s housing plan is not bold enough to properly tackle the housing crisis and effectively deal with the issue of chronic undersupply.”

“They’ve proposed a ban on blind bidding, which has already been shown to have no impact on prices and does nothing to increase supply. Their foreign buyer ban is yet another policy that is attempting to tinker with demand, without addressing supply. And while some of Ottawa’s response will allow for consumers to save more, like the Tax Free First Home Savings Account, these tax policy changes also do nothing to increase the supply of housing,” said Clement

“The only supply side policy the federal government has announced is their earmark for communities that grow at a quicker pace than the historical average. The government’s own estimate states that this could result in the building of 100,000 new homes by 2025, but the problem is that a province like Ontario needs another 650,000 new homes just to get to the national average, which wouldn’t be much to celebrate considering that Canada ranks dead last in the G7 for housing units per 1000 people,” said Clement.

“Rather than tinkering with demand and an underwhelming earmark program, the federal government should have focused on zoning reform. The federal government could quite easily tie federal funding for affordable housing and public infrastructure to density goals, with zoning reform as the core mechanism to achieve it. This would be broadly similar to the recent child care agreements which involve the transfer of federal dollars in exchange for a set of provincial deliverables,” said Clement.

A day late and a dollar short: Liberal budget fails consumers

Ottawa’s housing plan isn’t bold enough to deal with the issue of chronic undersupply

Chrystia Freeland bought a brand new pair of shoes last week, as is tradition for the finance minister when the government introduces a budget, and Canadians are wondering what sort of tracks Freeland the Liberal-NDP “agreement” will be leaving on their day-to-day lives. The 304-page document has a lot to unpack, and plenty of policy changes that will impact consumers.

On the positive side, the federal government has repealed the excise tax on non-alcoholic beer. Yes, you read that right, there was a sin tax on alcohol-free beer. This is a big win for health-conscious consumers, and those who advocate for the principles of harm reduction. Alcohol-free beer doesn’t carry the same risks as traditional beer, so it was always nonsensical that the government would sin-tax these products.

Unfortunately though, the federal government’s smart approach to harm reduction and risk-based tax policy took a quick U-Turn on the topic of vaping. The federal government will implement a new tax on vaping at $1 per 2mL for vape liquid containers less than 10mL; $5 for containers larger than 10mL; and $1 for every additional 10 mL. This is incredibly problematic from a harm-reduction perspective because vaping products are a useful tool for smokers trying to quit, and 95 per cent less harmful than cigarettes according to Public Health England. Scaling taxes up on vaping liquids makes these reduced-risk products more expensive, and thus less attractive for smokers trying to quit. The harder we make it for smokers to access vape products, the more likely they are to continue smoking, and no one wins in that scenario.

On housing affordability, which is the most pressing issue for millennial Canadians, the Liberals are a day late and a dollar short. Unfortunately for millennials priced out of the housing market, like myself, the government’s housing plan is not bold enough to effectively deal with the issue of chronic undersupply.

They’ve proposed a ban on blind bidding, which has already been shown to have no impact on prices and does nothing to increase supply. Their foreign-buyer ban is yet another policy that is attempting to tinker with demand, without addressing supply. And while some of Ottawa’s response will allow for consumers to save more, like the Tax-Free First Home Savings Account, these tax policy changes also do nothing to increase the supply of housing.

The only supply side policy the federal government has announced is its earmark for communities that grow at a quicker pace than the historical average. The government’s own estimate forecasts that this could result in 100,000 new homes by 2025, but the problem is that Ontario alone needs another 650,000 new homes just to get to the national average, which wouldn’t be much to celebrate considering that Canada ranks dead last in the G7 for housing units per 1,000 people.

And while a rate increase will certainly help dampen unprecedented home price inflation, the real policy solution here is zoning reform. The federal government could have quite easily tied federal funding for affordable housing and public infrastructure to density goals, with zoning reform as the core mechanism to achieve it. This would be broadly similar to the recent childcare agreements which involve the transfer of federal dollars in exchange for a set of provincial deliverables. On housing, it looks like millennial consumers will be left waiting — at least until 2025 when the Liberal-NDP agreement expires — for meaningful policy change.

Originally published here

Liberal & NDP Agreement: How Will This Affect Housing?

Tanya joins David Clement, North American Affairs Manager for the Consumer Choice Centre, and Elliot Hughes, Senior Advisor with Summa Strategies, to examine the new agreement between the Liberals and the NDP and what will become of this new alliance.

The federal government can help solve Canada’s housing crisis. Here’s how

Canada ranks dead last in housing units per 1,000 people in the G7

To say that Ontario, and Canada, are in a housing crisis would be a significant understatement. Headlines for months have shown that home prices are rising at record levels, which is quickly squeezing out a generation of young Canadians trying to buy a home.1

How bad is the situation in Ontario? Really bad. The average sale price for a home in January nearly broke the $1 million mark, at $998,629, which is a 25.6 percent annual increase. In Toronto, the average home price saw a 28 percent year-over-year increase, with the median home selling for a whopping $1.242 million.

And the crunch isn’t just felt in Toronto. Brampton, Mississauga, Hamilton, London, and Ottawa have had their home prices inflate, year-over-year, by 41 percent, 30 percent, 35 percent, 31 percent, and 15 percent respectively. These record-high prices are largely driven by the fact that Ontario has a terrible record for building new homes. Canada ranks dead last in housing units per 1,000 people in the G7 with 424, and Ontario (which has only 398 units per 1,000 people) is a major cause of the problem.

The province needs to build another 650,000 units just to get to the Canadian average, which would still be well below France, which lead the G7 with 540 units per 1,000 people.2

Prime Minister Trudeau campaigned on the issue of solving the housing crisis, but much of the Liberal plan does little to impact the issue of chronic undersupply. The risk of course is the country’s affordability challenges get worse rather than better.

Take the government’s proposed ban on blind bidding for example. First off, this proposal does absolutely nothing to increase supply. And beyond that, it has faced criticism from housing economists. William Strange, a professor of economic analysis at the University of Toronto, explains that a ban on blind bidding wouldn’t reduce pricing to any meaningful degree and that “there’s no economic evidence that it would matter.”3 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 seller’s market and not the cause. And remember the reason why Canada’s real estate market is so tilted in favour of sellers is that virtually every city has an undersupply of housing.

Two additional proposals from the federal government may make it easier for Canadians to save but similarly do nothing to increase the housing stock. The first is Ottawa’s plan to create a new tax-free First Home Savings Account, which combines the tax aspects of a TFSA and an RRSP, allowing Canadians to put upwards of $40,000 into their account, deduct the savings from their income, and withdraw it to purchase a home without any obligation to repay it. The second is to double the First Time Home Buyers Credit from $5,000 to $10,000.

While both policies should help some Canadians save more for a downpayment, they risk being undermined by the ongoing supply issues. At the very best these policies will help those with already significant housing savings get across the finish line.

So what should be done to address Ontario’s chronic housing shortage? A simple yet profound policy change would be to end single-family zoning. This refers to prohibitions on multi-family housing units or rules that set minimum lot size requirements, which ultimately end up limiting the number of housing units available in a city. A ban on single-family zoning would give property owners more freedom to build different types of housing and increase the housing stock.

Upwards of 70 percent of Toronto is zoned exclusively for single-family homes, which significantly limits building options and in turn constrains housing supply. The impact of these zoning rules can’t be overstated. A family in Toronto needs an annual income of $180,000 to purchase the median home and $130,000 to purchase the median condo. The problem? The median income for a couple in Toronto is only $97,640.4

While zoning is ultimately a municipal issue, the federal government can still play a role. At minimum, Ottawa should be using the bully pulpit to talk about how restrictive zoning rules are the root cause of Canada’s housing crisis. More ambitiously, though, the federal government could quite easily tie federal funding for affordable housing and public infrastructure to density goals, with zoning reform as the core mechanism to achieve it. This would be broadly similar to the recent child care agreements which involve the transfer of federal dollars in exchange for a set of provincial deliverables.

The key point here is that the federal government ought reconceptualize its efforts to tackle the housing crisis. Rather than enacting policies that won’t increase the housing stock in any way, Ottawa should shift course and make zoning reform its key housing priority. That is what will ultimately cure Ontario’s housing woes.

Originally published here

Report: Health Canada’s Cannabis Rule Changes Will Hurt Consumers – Building Must Be In Place Before Application

Toronto – On Wednesday, Health Canada announced that it will make significant changes to the process for approving licensed cannabis producers. Specifically, Health Canada will now require all new producer applicants to have a fully built and compliant site at the time of their application. Health Canada has justified the move by citing that a majority of applications in the current process undergo review, but have not yet provided evidence that they have a fully built and compliant production site.

The fear is that red tape and a major initial financial output would be too much for business owners.

David Clement, Toronto based North American Affairs Manager of the Consumer Choice Center (CCC), said “This move is a significant blow for Canada’s cannabis market, especially cannabis consumers nationwide.

“The process to qualify as a licensed producer is already incredibly rigid. These changes will simply make it harder for new producers to enter the market, which ultimately ends up hurting recreational consumers and medical patients. More red tape will translate into higher prices for consumers, and less product availability. Higher prices and poor access will encourage consumers to continue to purchase in the black market, which runs directly against the Federal Government’s stated goal for legalization,” said Clement.

“If Health Canada has an issue with the amount of pre-approved producers who end up grow-ready, then they should simply liberalise the regulations on the production side to make it easier for producers to go from paper review to fully operational. Rather than take this approach, the government has doubled down on bureaucracy and red tape, which harms everyone involved,” said Clement.

Read more here

Ontario reveals housing supply action plan

With a focus on making it easier to build (and afford) a wider variety of housing, the action plan is being called a win for consumer choice. Heather Bone, a Toronto-based Research Fellow for the Consumer Choice Center (CCC) and Economics Ph.D. Student at the University of Toronto, said: “It is good to see the province is doing its part to reduce the red tape that makes it so difficult for developers to build.”

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