As we move towards the midpoint of the federal election, affordable housing has become the number one issue on the minds of many Canadians. Under pressure, the Liberals, Conservatives and the NDP seek to either ban foreign buyers or tax them heavily, tackle illegal money and increase the supply of housing.
These are measures the public has demanded, however, policymakers could counter them by stimulating the market as they did with the quantitative easing program. Tighten the market here, release the market here. They have become very good at it over the years.
We need to look at how the data on foreign buyers is captured. The government classifies a foreign buyer as someone who does not hold Canadian citizenship. What needs to be captured is the amount of money earned abroad entering the real estate market. Because when local median incomes are so far removed from house prices, as is the case in Toronto and Vancouver, it is proof that there is outside money in the market. This is why this data metric was created.
During the pandemic, the Bank of Canada implemented its quantitative easing (QE) program to stimulate the housing market. They increased the money supply by about 19 percent and house prices in Canada soared 23 percent. Basically, he manipulated the real estate market.
There was no question of quantitative easing, but Bank of Canada Governor Tiff Macklem was the one who initially encouraged speculation in July 2020 when the quantitative easing program was implemented. The result has been an increase in the prices of real estate and housing.
The only way to achieve housing affordability is to dramatically lower house prices. There is no other way. Affordable housing is when housing is more or less tied to local income, and it is not. Real estate prices really need to come down. Is anyone interested in paying a mortgage at the age of 80?
When the election ends, don’t expect house prices to become affordable, because they won’t. The three major federal parties will try to make it look like they are doing something, but they will not do it when elected. The only way things change is when citizens force governments to honor their promises.
The only reason the BC NDP kept most of its real estate promises was civic activism and media pressure. The only reason the federal Liberals are now changing their housing program is because they have noticed an increase in support from the Conservatives and the NDP for their housing programs.
So prepare activists. Because once the elections are over, we will have to be ready to hold the new government to account. Otherwise, we’ll be talking about high house prices forever.