Douglas Todd: Singapore has impressive housing success. Can we?

Singapore is unique in so many ways and hard to see how its approach could ever be adopted here apart from some of the tax and surcharge approaches:

If you’re Canadian, you might feel envious learning the quest for affordable housing is basically a success for many of the 5.7 million people of Singapore.

That is not a story you hear often, or at all, in Canada, especially not in Greater Toronto, Metro Vancouver or Victoria, three of the world’s more unaffordable cities.

The wealthy city-state of Singapore, in South-East Asia, is like Metro Vancouver and Toronto in many ways: A megapolis that acts as a magnet for foreign people and capital, which has faced daunting housing problems.

Like other fast-growing cities, Singapore is known for its capitalism and cultural diversity, albeit with a stronger emphasis on orderliness, which leads to cleanliness and low crime. Despite free elections, it has had only one party in government since it gained independence from Britain in 1959. Its legendary first prime minister, Lee Kuan Yew, committed to every citizen being able to own a home.

The city-state approaches Canada for its religious and ethnic diversity: 75 per cent of residents are of Chinese descent, 15 per cent are Malay and seven per cent are from the Indian subcontinent. More than one quarter of Singapore’s population is foreign born, which is less than the proportion in Vancouver and Toronto.

Yet, despite broad similarities, the upcoming book Housing Booms in Gateway Cities, from David Ley, a UBC professor emeritus of geography, explores how Singapore, through innovative taxation, has conducted an impressive experiment in housing.

When Demographia analyzed the worst gaps between house prices and income in 92 cities in Australia, Canada, Hong Kong, Ireland, New Zealand, Singapore, Britain and the U.S., it found this year that Vancouver is the third most unaffordable city, while Toronto is 10th. Singapore is in the middle of the 92 cities.

Singapore has accomplished relative affordability with what Ley calls “its own version of municipal socialism” — a term that will either repel or attract Canadians.

“Typically, Singapore gets the prize of being the most business-friendly and economically open society there is. But, when it comes to housing, it battens down the hatches hard,” said Ley, author of Millionaire Migrants, whose new book will detail housing issues in the gateway cities of Vancouver, Singapore, Hong Kong, Sydney and London, England.

“It’s plan from the beginning was that everyone who is a (citizen) would be a homeowner, buying housing from the government, which is the principal landowner, or from a much smaller private sector.”

The megalopolis’s housing model, unlike in Canada, is based on differentiating three levels of citizenship rights. Restrictions on foreign investment are also tight.

“If you are born in Singapore you are called a Singapore ‘resident,’ and you have basically all the rights that are available,” Ley said. “You can also become a permanent resident and get a chunk of the rights, but not all of them. Or you’re a temporary migrant and you have almost no rights.”

As a result, nine out of 10 citizens of Singapore own a dwelling, said Ley, nearly all of which are apartments, ranging from run-of-the-mill to elegant. Most are leased for 99 years from the government. Another 20 per cent of housing is exchanged on the private market.

Here’s how Singapore’s experiment in housing works.

If you are a full citizen of Singapore, you get access to the apartments built and made available by the Housing and Development Board, or HDP, a high-powered government agency.

“And if you’re a permanent resident, but not born in Singapore, you get access to HDP apartments, but with conditions,” Ley said. “If you’re a temporary migrant you get no access at all.”

That means the majority of citizens are allowed to choose from decent or stylish government-built apartments in well-planned communities, which slowly grow in value because prices are controlled by taxation policy. It results in most residents being able to move up the housing ladder.

It also means the minority of temporary residents in Singapore mostly compete for private housing. The business people from China, Indonesia and the West who work in Singapore’s dynamic financial sector, who are called “Talents,” tend to buy nice flats. On the other hand, migrant nannies often make their homes in extra bedrooms, while many foreign construction workers live in dormitories.

While Ley joins many housing specialists around the world in observing most Singaporeans seem happy with the model, it’s not perfection. A non-Singaporean professional who lives there (and doesn’t want to be identified) told me this week that young adults complain they will not start having children until they own a dwelling. And some charge the government isn’t building them fast enough.

The debate has led to former Singapore cabinet minister Josephine Teo, who calls on citizens to produce more babies even if they don’t own, famously blurting: “You need a very small space to have sex.”

Singapore ‘tenacious’ at limiting housing speculation

“Singapore has been really tenacious in terms of controlling foreign investment in its housing market,” Ley said.

While Ley wonders if Singapore inspired B.C. and Ontario’s foreign-buyers taxes, the surcharges in Canada are modest compared to those in Singapore, where foreign nationals are taxed a solid 30 per cent on any purchase whatsoever.

Singapore’s politicians also curb speculation by local investors. A year ago they slapped a 17 per cent tax on citizens who buy a second property and 25 per cent tax on their third property. They do not, on the other hand, tax citizens who are first-time buyers.

And while Canada treats permanent residents the same as citizens when it comes to housing taxes, that’s not the case in Singapore. It has imposed a five per cent tax on permanent residents purchasing a first dwelling and 30 per cent on those snapping up a third.

While Ley generally supports a surcharge on foreign purchases, he was uncertain about Canada copying Singapore’s taxes on permanent residents who invest in primary properties to live in. To some extent, he said, such speculation is already tempered by Canada’s capital gains taxes.

What can Canada learn from Singapore’s remarkable system of relative affordability? “In some ways, sadly, it’s a rather unique place,” Ley says.

But that doesn’t mean some of the city-state’s effective policies couldn’t inspire creative adaptation here.

Source: Douglas Todd: Singapore has impressive housing success. Can we?

How many houses does Canada actually need?

Depressing yet accurate need. Striking disconnect between immigration levels and housing availability and needs. Given housing constraints, becomes even harder to justify current and growing immigration levels and surprising that there is so little thinking and questioning regarding the linkage:

Everyone agrees Canada has a major housing shortage. To make homes more affordable for young people, to house incoming waves of immigrants and to restore sanity to markets like Toronto and Vancouver, the country needs more homes.

But exactly how many homes? That proves to be a trickier question than you may think.

Estimates vary hugely because the size of the country’s housing shortfall can be defined in a multitude of ways.

The simplest method is to look at what level of home construction would be required simply to meet new demand and stabilize the market at today’s lofty levels. Even by that conservative standard, Canada is falling short.

In recent years, it has typically completed about 200,000 new homes a year – standalone homes, condos and other types of dwellings. However, immigration and other factors will create about 240,000 new households a year between now and 2024, according to RBC Economics. This suggests that construction needs to quickly rise to levels roughly 20 per cent higher than in recent years simply to give all those new households a place to live.

Yet it only begins to address Canada’s structural shortfall of housing. “Even if we had 240,000 completions a year for the next few years, we would simply be meeting new demand, not reducing the gap that has already built up,” Robert Hogue, assistant chief economist at Royal Bank of Canada, said in an interview.

If you look at what would be needed not just to keep pace with new demand but to address the accumulated shortfall that has accumulated over many years, the numbers swell to truly frightening proportions.

Restoring Canada’s housing affordability by 2030 to the levels that prevailed around 2003 would require an immediate doubling or more of home construction rates, according to a recent study by Canada Mortgage and Housing Corp. In an ideal world, Canada would be completing an unprecedented 400,000 or more new homes a year, according to CMHC’s numbers.

A bit of historical context about Canadian housing trends may help to put this flurry of estimates into perspective.

Last year, construction soared and 272,000 new homes were started across Canada. Economists and housing analysts applauded this achievement since it was the country’s highest annual number of starts since the heyday of the 1970s.

Unfortunately, the figure was not quite as impressive as it appeared at first glance. Canada’s population is now much larger than it was a half-century ago – more than 38 million people compared with only about 23 million in 1975.

If you adjust last year’s housing starts for the vastly increased size of the Canadian population, the big jump in housing construction last year took Canada to only about 60 per cent of the rate of housing starts per capita that it was achieving in the mid 1970s.

And even that comparison doesn’t capture the extent of the shortfall because the average size of households has been steadily shrinking – the result of people marrying later, having fewer children and living longer.

In the early 1940s, the average Canadian household had 4.3 people, according to RBC Economics. By 1981 that had fallen to just under three people. Today it stands at 2.4 people.

This has resulted in a tremendous upward push in the need for housing. To house the three-person households that were common in the 1970s, you would have required roughly 33 homes for 100 people. In contrast, to accommodate the same 100 people today, in households that average only 2.4 people each, you would need more than 41 homes – a major increase even if Canada’s population hadn’t budged at all.

Most analysts agree the combination of shrinking households and years of sluggish construction has resulted in a serious housing deficit – but putting a hard number on the size of that deficit is difficult.

Last year, Jean-François Perrault, chief economist at Bank of Nova Scotia, wrote a noteexploring a couple of methods for estimating the size of Canada’s housing shortfall. Just to be clear: This is the size of the shortfall that would still exist even if Canada were to suddenly speed up construction to the point it was meeting demand from newly formed households.

His first approach was to look at what it would take to keep the ratio of housing units to population stable since 2016, when home prices began a notable upward surge. This method suggests Canada was about 100,000 dwellings short at the time Mr. Perrault wrote his report in early 2021.

However, it ignores the shortfall that had accumulated before 2016. A more wide-ranging approach is to compare Canada with other advanced economies in the Group of Seven and ask what it would take for Canada to achieve the same number of housing units per 1,000 residents as other G7 countries.

To catch up to the United States – a country experiencing housing shortages of its own – Canada would require another 99,000 units, Mr. Perrault estimated in his note. To catch up to the United Kingdom, 250,000 homes. To catch up to the G7 average, a staggering 1.8 million homes.

People can argue which number is most appropriate, Mr. Perrault said in an interview, but “we know there is currently a huge gap and that gap will rise given population growth and recent construction trends.”

One disturbing aspect of those recent construction trends is the discrepancy between housing starts and housing completions. While housing starts have been lacklustre, housing completions have been even worse.

Between the start of 2016 and the end of 2021, Canada started an average of 221,000 homes a year but completed only about 200,000 homes annually. The discrepancy appears to reflect a variety of factors – labour shortages, rising raw material costs and the long lag time between starting a multiunit project and completing it – but whatever the exact cause of the gap, it does drive a wedge between widely reported numbers on housing starts and the actual amount of housing that is being delivered.

Meanwhile, Ottawa has supersized national immigration targets, raising them from around 260,000 people in 2015 to more than 400,000 today. Thanks largely to immigration, Canada’s population is now growing at more than twice the pace of most developed economies, according to Mr. Hogue at RBC.

Given immigration pressures, demographic trends toward smaller home sizes and Canada’s long history of sluggish construction, how many new homes would it take to make housing affordable again? CMHC economists took a crack at answering that question in an ambitious study over the summer.

They defined housing affordability in two ways. The first was as the level of affordability that prevailed in each province in 2003-04. The second was as the level that would require households to devote no more than 40 per cent of their after-tax income to housing.

If nothing else, these definitions help to put a number on the extent of Canada’s affordability challenge.

In Ontario, achieving affordability would mean the average price of a home would have to fall from $871,000 in 2021 to between $499,000 and $551,000 in 2030, depending on which affordability benchmark you use. In British Columbia, restoring affordability would require average prices to fall from $929,000 in 2021 to between $607,000 and $679,000 in 2030.

In contrast, home prices in other provinces already seem to be affordable or at least close to affordable, especially when judged against the common 40-per-cent-of-disposable-income benchmark.

But even taking those more affordable regions into account, bringing the country as a whole back to affordability is a mammoth challenge because of the huge shortfalls in Ontario and British Columbia.

The CMHC study estimates that Canada must build an additional 2.3 million homes between now and 2030, on top of what it is already building, to meet the 40-per-cent-of-income target. Achieving the more ambitious target of restoring the affordability levels of 2003-04 would demand 3.5 million more homes than the business-as-usual scenario.

The bottom line? Canada needs to at least double its current pace of home building to have a serious impact on affordability, according to Aled ab Iorwerth, deputy chief economist at CMHC.

“We need a lot more supply, we need a sea change,” he said.

Source: How many houses does Canada actually need?

Canada’s Immigration Problem: Not Enough Homes for Newcomers

A classic example of immigration policy failing to account for its impact on other sectors. IRCC’s annual report to Parliament on immigration is largely silent on these. Externalities in economist jargon, intersectionality in social science jargon.

Canada’s bid to attract a record number of immigrants, required to fill job openings and drive economic growth, has run into a bottleneck: There aren’t enough residences to accommodate these newcomers.

Immigration into Canada is on pace to hit a record high in 2022 of 431,000, following the entry of about 405,000 the previous year, and the country is targeting entry of another 900,000 newcomers in 2023 and 2024 combined. Because of immigration, Canada’s population over the past half-decade grew at almost twice the pace of its Group of Seven peers, Statistics Canada said.

The aggressive intake, though, has had repercussions for Canada’s housing market, which among G-7 countries has the lowest number of dwellings per capita, economists at Bank of Nova Scotia calculate.

Population growth, a shortage of housing stock and low interest rates helped push up house prices in Canada’s biggest centers, prompting would-be buyers to look farther afield and drive up prices in smaller, far-flung communities unaccustomed to housing booms. The cost of a single-family detached dwelling has doubled over the past decade, according to data from the Canadian Real Estate Association. Data collected by the Federal Reserve Bank of Dallas indicate Canada had, until recently, recorded some of the fastest growth in house prices among major developed economies.

And the pressure from immigration on housing keeps coming. In the second quarter, Canada recorded the fastest population growth over a three-month period since 1949, when Newfoundland and Labrador joined the country as its 10th province. Immigration accounted for 95% of that growth. Overall, Canada’s population sits at 38.9 million, up from 34.7 million a decade ago, with immigrants representing more than one-fifth of the populace.

“We can’t keep up with the amount of immigration coming to the country,” said Christopher Alexander, president of the Canadian unit of Re/Max Holdings Inc., the global real-estate listing company with 140,000 agents worldwide.

A rush is now under way among Canadian officials to build housing units and ease supply constraints. “There was a lack of forward thinking, lack of planning on the housing side, on what the actual [housing] need was going to be,” said Abe Oudshoorn, a professor at Western University’s nursing school in London, Ontario, and leader of a research group that since 2016 tracked the arrival of 51 immigrant families into Canada and their path to acquiring housing. He said the families his research group tracked remain stuck in housing that is either too costly or too small for their growing families.

Kanishka Noorzai and his wife, his four sons, his parents and his younger sister arrived here in February, from Afghanistan via Albania, and settled in the Waterloo region, an urban center of a half-million people west of Toronto. After a monthslong search that took him to apartments, townhouses and other domiciles, he found a three-bedroom bungalow—at a cost of nearly $3,000 a month for a one-year lease, or “really, really above our budget,” said Mr. Noorzai, 43 years old. He is currently working part time as a security guard but is seeking full-time hours.

“I really was surprised,” he said, “because I did not think it would be that difficult to find a house in Canada. It was a nightmare.” He has heard from friends who fled Afghanistan to the U.S., where they found reasonably priced housing. The bungalow he settled on isn’t ideal, Mr. Noorzai said, “but at least it’s better than a hotel,” where a local immigration agency had put his family up during their housing search.

Real-estate agents, home builders and economists say housing starts—which last year hit their highest level in over four decades—have to accelerate further to deal with immigration-fueled demand, against a backdrop of higher material costs and a labor shortage in the construction industry.

Mike Moffatt, senior policy director at the University of Ottawa’s Smart Prosperity Institute, a think tank, said one reason housing starts lagged is because regional and local officials underestimated population growth and overestimated the amount of housing stock. “Our zoning laws were set for a slow-population-growth country. When our population started growing, our regulatory environment didn’t adapt to that reality,” he added.

The national housing agency, Canada Mortgage and Housing Corp., said the country will require 3.5 million additional homes above current home-building projections by 2030 to restore housing affordability.

“It takes multiple years to increase housing supply to accommodate the sudden increase in immigration,” said Aled ab Iorwerth, CMHC’s deputy chief economist.

Representatives for Canada’s immigration and housing ministers said officials work closely with provincial and municipal governments in setting annual immigration targets, and the government has provided financing to help regions deal with immigrant-fueled housing pressures.

“Newcomers play a crucial role in the future of our communities and our economy, and we do everything we can to set them up for success,” the spokespeople said.

Canada intends to spend 10 billion Canadian dollars, or the equivalent of about $7.3 billion, to help double home construction over the next decade. Some of the money will be used to encourage municipalities to change zoning laws. Ottawa also wants to tie access to funding for municipalities for services such as public transit and wastewater management to a pledge to increase housing supply. The city of Toronto, a magnet for immigrants, recently allowed the building of self-contained, residential dwellings in backyards, or so-called garden suites, to help alleviate the housing crunch.

Hefty Bank of Canada rate increases this year have triggered a sharp decline in real-estate activity and a deceleration in annual house-price growth, though economists say immigration, and a trend toward smaller households as the population ages, will put a floor on the current price drop.

As for Canada’s rental market, it is tightening in major urban centers, reflecting immigration trends and house prices still at elevated levels. The average rent for all property types across Canada in August rose 11.1% from a year ago to nearly C$2,000, or the highest level in three years, according to data from

“Immigration has to be throwing gasoline on the on-fire rental market,” said Scott Ingram, a Toronto-based real-estate agent. Annual rent increases in Toronto and its suburbs and exurbs range from 10% to 26%, said

The Toronto Region Board of Trade calculates that one-third of Canada’s immigrants settle in Toronto, the country’s largest metropolitan area with 6.2 million residents. For every two immigrants who arrive in Toronto, at least one resident leaves because of high housing costs and limited supply, said Craig Ruttan, the board’s policy director.

“We’re sort of in a Catch-22. We need the immigration because of the labor shortages and the need for new workers,” Mr. Ruttan said. “At the same time, we’re hearing and seeing the shortage in housing.”

Benjamin Tal, an economist at CIBC Capital Markets who researches real-estate trends, said he is worried Canada lacks the labor capacity to build the required housing. Canada’s focus has been in attracting educated, high-skilled immigrants, he said. “We need to rethink immigration in the sense we also need a segment of newcomers to be lower skilled—because that’s what the shortage is.”

The most recent Statistics Canada data indicate the construction sector had roughly 82,000 vacancies, for a vacancy rate of 6.5%, or above the national 5.4% average. BuildForce Canada, labor-market data provider, anticipates nearly a quarter of home-building workers will retire by the end of 2031, requiring companies to recruit over 100,000 new workers to fill the gap.

“The competition for workers is going to be incredibly intense,” said Bill Ferreira, BuildForce’s executive director.

Source: Canada’s Immigration Problem: Not Enough Homes for Newcomers

Douglas Todd: B.C.’s housing-addicted economy not sustainable, experts fear

Same could be said for Canada as a whole. Good observations by those quoted in the article (Don Wright, David Williams, Stephen Punwasi):

B.C.’s economy is not as healthy as it might appear, since it relies too much on housing and newcomers to keep it above water, say prominent economists and analysts.

The real estate sector makes up a much larger section of the B.C. economy than in the rest of the country. The B.C. economy is heavily reliant on large-scale flows of people arriving each year from other provinces and countries, say the specialists.

They maintain B.C. has not been effective at developing its resources, businesses and industrial capacity in a way that increases wages and improves productivity. This B.C. phenomenon, going on for two decades, puts demand pressure on housing prices.

Don Wright, former head of B.C.’s civil service, says there is a general feeling among British Columbians that the economy is healthy because unemployment is relatively low and government revenues stable.

But there is a distinct possibility the economy is not sustainable, Wright says.

B.C.’s trade deficit has been growing steadily since 2005. The province, he said, is “spending about $28 billion more per year than we are earning.”

Both Wright and David Williams, senior policy analyst for the Business Council of B.C., say the provincial economy is too dependent on large-scale in-migration to bring in capital, which fuels the housing sector and props up spending on goods and services.

Last year, according to the B.C. government, the province welcomed a record 100,000 new people. About 33,000 came from other provinces, which is the highest amount in three decades. The other 67 per cent arrived from other countries, a lower proportion than normal, and most chose Metro Vancouver.

B.C. has an unusual economy because it hinges so heavily on “outside money;” on new arrivals coming in to “buy real estate and support consumption with income earned elsewhere,” says Wright, an economist who gives presentations on the issue to Ottawa politicians and business organizations.

“In essence we are ‘exporting’ the right to reside in B.C.,” Wright says.

“This has become our largest ‘export industry.’ It accounts for more than twice the annual level of forest industry exports. In the short run, this injection of dollars does create the impression of a healthy economy, but how long can this go on?”

The business council’s Williams generally agrees. A tremendous amount of B.C. money is going into “housing-related consumption,” he says.

But investment dollars are not flowing strongly enough into such things as new machinery and equipment and intellectual property rights, said the business economist. Those sectors can much more add to the “economy’s future productive capacity” and potentially increase stagnant wages.

In-migration should not be seen as a cure-all for the economic woes of Canada or B.C., says Williams.

He questions the way Canada, particularly B.C., depends on “record immigration levels to turbocharge population growth and housing demand.” Canadian economists believe immigration numbers have an overall neutral effect on real wages and gross domestic product per capita.

According to Stephen Punwasi, of Better Dwelling, B.C.’s economy is almost twice as reliant as neighbouring Alberta on real estate, which accounts for 20 per cent of B.C.’s GDP.

That compares to an average of 13.5 per cent across the country, a proportion that is still much higher than in the United States. If B.C.’s construction industry is included, it adds up to almost one third of B.C.’s GDP coming from real-estate related services.

Canada, and especially B.C., are “addicted” to real estate-driven growth, says Punwasi, who maintains it’s an unhealthy dependence that won’t be easy to break.

Wright, who was NDP Premier John Horgan’s deputy minister until stepping down last year, cites the danger of over-relying on new arrivals.

When 100,000 people move into B.C. and buy houses and services “it creates the illusion that the economy is strong. But for me the question is, ‘Is it sustainable?,’” Wright says.

“Let’s say somebody from outside B.C. retires to Comox and buys a place. And they’ve accumulated a lot of net wealth over their life. Whenever they spend money, it’s money that’s not being earned in B.C. In the short term it’s not bad for the economy, because it creates employment when somebody goes out and eats at a restaurant.”

But Wright doesn’t think relying on imported wealth is sustainable — for two reasons.

The first is that “you only get to sell off a piece of real estate to somebody outside the province once,” he said.

“And another reason is it’s not socially sustainable: Young people cannot afford a house anymore.” And too many new real-estate units are not suitable for families.

“A whole generation is going to be frozen out of the housing market, unless they have a well-capitalized, generous bank of mom and dad.”

What might happen to B.C. “when the party stops?” Wright asks, referring to a time when newcomers stop bringing in tens of billions of dollars each year from beyond provincial borders?

B.C., he said, will need to restructure by strengthening sectors such as forestry and mining, manufacturing and high tech — all of which are capable of producing superior middle-class wages.

“We better know,” Wright says, “how to rebuild the standard of living of the next generation.”

Source: Douglas Todd: B.C.’s housing-addicted economy not sustainable, experts fear

The Reckoning: International Student Enrolment

Another possible indicator that housing may prove to be the canary in the coal mine with respect to current high levels of immigration, with Alex Usher’s take on international students:

I am calling it now: Canadian post-secondary institutions are very close to the end of the road on international student number growth.  It’s not because demand is going to dry up or anything like that.  There is still room for hundreds of thousands more international students if we wanted them, and probably demand to match as well.  It is simply that too many institutions have become too greedy, and they are imposing intolerable externalities on their surrounding communities.  A backlash is building.

I want to be clear about what’s not going to drive the backlash.  First, it’s not going to be about foreign students “taking spots from deserving Canadian students”.  This is a talking point in some places, but there are no post-secondary institutes and only a very few faculties nationally where one can genuinely point to domestic student numbers falling for any reasons other than demographics.  The spaces being taken up by international students are all spaces that exist only because international students are there, paying full freight for them.  The counter-factual to spots taken up by international students is – given current government funding practices – no spots at all, not spots taken up by domestic students.

Nor is it going to be from all those recent stories in outlets like The Walrus, the Toronto Starthe Globe and Mail etc.  about the exploitation faced by international students in the local labour market, about the incredible hardship many endure since tuition fees here are sometimes many times their parents annual income back in their home country (which, in these stories, is usually India, most often Punjab).  Clearly, we all decided in that very passive-aggressive Canadian way of ours – which is to say, we never had a discussion and agreed to a thing, we all went around self-interestedly and created a situation, then called it a consensus – that we were OK with creating a new class of immigrants who could evade the whole points-based immigration system simply by coming to Canada, paying some money to support our post-secondary system and gutting it out in low-wage jobs for a few years.   Exploitation?  Maybe.  But many ethnic groups who have immigrated to Canada over the past 150-odd years followed similar, gruelling, dues-paying periods in their history, so not many people are too fussed about it.  

No, the blowback is going to be about housing, and the way that some institutions have been packing in students without regard to local housing supply, which contributes to the steep rise in housing costs not just for international students but for all renters and first-time home buyers.  I discussed this a few weeks ago in the context of some new reports from my colleague Mike Moffatt at the Institute for Smart Prosperity: we are letting in hundreds of thousands of students, and not building any new housing.  Combined with a variety of other factors that are taking low-income housing off the market, it does not take a degree in economics to realize that there will be a shortage of spaces for anyone looking for low-rent housing.  This is, in effect, an externality that institutions are imposing on their neighbours: universities and colleges gain from tuitions, while local tenants are effectively paying a tax through higher housing costs.  

I suppose one could argue that the pros of having a thriving post-secondary institution in the neighbourhood outweighs the cons of these kinds of externalities, and on aggregate that’s true.  But rents aren’t paid on aggregate: they are paid by a very specific sector of the population – one which has a large overlap with the most vulnerable sector.  It is becoming an issue that politicians are hearing on doorsteps when they talk to voters.  In some communities, politicians are starting to relay those concerns to university and college leaders.  

Now, you might ask why opprobrium would rain on universities and colleges when they are far from the only culprits here. Long-term NIMBY-ism run amok leading to a catastrophic failure to build, the financialization of the housing market, the accumulated 30-year impact of the federal government leaving the affordable housing market and provinces failing to pick up the baton: there are indeed all sorts of supply-side issues that we can and should worry about at least as much as educational institutions juicing demand.  

But here’s the difference: none of the other players in this field spend their time shouting at the top of their lungs about how much they benefit the community.  And not just in financial terms; institutions are increasingly using communications tools like the UN Sustainable Development Goals to articulate not just how research and its dissemination helps to improve the world, but also how their local community benefits directly through more concrete actions (purchasing) and co-creation of knowledge.  Colleges have always anchored their value-proposition in terms of their value to local communities, but for many universities this is a more recent shift, one accelerated by COVID but in a larger sense driven by the dawning realization that all the money and research invested in higher education (worldwide, not just in Canada) isn’t exactly leading to the paradise of economic prosperity we all thought it would 30 years ago and that alternative ways of explaining value propositions to voters are needed.

This “good neighbour” policy makes eminent sense; it’s also why the international student/rental housing policy nexus is so deadly. Some institutions – and there’s no way to put this politely – are clearly acting as “bad neighbours”.  And once they get that labelled with that tag, it’s going to be hard to shed.  There are, of course, many institutions who are doing their best to get housing efforts started in their communities – though universities in Nova Scotia seem significantly more seized of this issue than those anywhere else – but new housing takes time to come on-stream.  It can take years, decades even, given the inanities of planning and land-use in this country’s big cities.   But those international students are showing up now, and in growing numbers, year after year.   Institutions that continue to pile pressure on local housing markets by adding more students are playing with fire.

So here’s my call: the international student market is not headed for a “bust” of any kind – remember, demand is still strong – but institutions will stop growing if they wish to maintain good community relations.  That’s a big problem, because international student dollars have essentially been the sole source of increased funding in Canadian post-secondary education since about 2015, and I don’t see governments lining up to backfill.  To some extent, institutions can mitigate this by upgrading services and charging higher fees to international students, but increasingly aggressive cost-containment strategies will need to be part of the solution as well.  At some institutions at least, this will come as a shock.

But this is the path we have been on since at least 2008 when provinces stopped increasing funding in real terms, but institutions kept on increasing spending by 2% per year after inflation.  For a long time, we used international students as a get-out-of-jail free card.  No more.  The reckoning is at hand.   

Source: The Reckoning

Todd: Immigrants have long hungered to own property, Other takes by Punwasi, Mason, Ibbitson and Anglin linking housing and immigration

Starting with Todd’s piece, with the money quote being from Dan Hiebert: “First and foremost, immigration policy is, essentially, also a form of housing policy.”

My apologies for the long compilation but wanted to bring the various threads together.

In one sense, housing, like climate change, healthcare, and infrastructure is one of the major externalities that most advocates for increased and high levels of immigration either fail to address or do so inadequately:

In 1891 the government of Canada awarded the first Ukrainian immigrants to Canada, Ivan Pylypiw and Vasyl Eleniak, 160 acres of land to farm.

They were among millions of struggling newcomers from Ukraine, Scotland, Iceland, Russia, France, Italy and elsewhere who responded to young Canada’s offer in the 1800s and early 1900s to homestead so-called free land to log, ranch or cultivate. Many other newcomers snapped up better-quality land for $1 an acre.

Those original quarter-section grids of land are still in existence on land-title and zoning maps from Nova Scotia to Vancouver Island. They serve as a reminder of the way Canada used old-fashioned advertising to get out the word more than 200 million acres of land were available to willing homesteaders.

Those parcels of dirt, some of which had been processed through Indigenous treaties and others not, served as tantalizing beacons to many people who had never been allowed in their homelands — because of poverty or discrimination — to buy property.

That quest for land continues today, serving as one of the key drivers of the world’s property markets.

And Canada’s immigration story dovetails with global history, as outlined in Simon Winchester’s best-selling new book, Land: How the Hunger for Ownership Shaped the Modern World. It details how the lure of obtaining property — in Europe, Africa, North America and the South Pacific — has for millennia shaped societies.

While all kinds of people want to own dwellings and land, studies show immigrants are even more convinced their future lies in property. An Angus Reid Institute poll found 59 per cent of Canadians believe it is “important to own a home to feel like a real Canadian,” but the proportion jumps to 75 per cent for recent immigrants.

Several Canadian academic studies reveal the rapidity with which immigrants invest in the housing market, the majority doing so in Toronto, Montreal and Vancouver. Newcomers also spend considerably more, on average, on housing than Canadian-born.

recent Vivintel consumer survey, for instance, found South Asians in Canada (nine out of 10 of whom are born outside the country) are four times more likely than the average Canadian to buy a home.

“Home ownership is very important to South Asians. There’s prestige with owning land, being a homeowner. A few years after you arrive in Canada, it’s also seen as a key way to grow income,” says Vivintel director Rahul Sethi, 38, who came to Canada with his family.

Numerous studies show buyers from China have been eager to obtain high-end property in Canada. Vivintel has found the country’s 1.8 million ethnic Chinese residents are predisposed to luxury purchases. Two reasons people from China seek property in Canada are they don’t trust their own government and there is no private ownership of land, only leasing, in China.

Despite Canada’s long history as a destination for those who yearn for a better life and more prosperity, real-estate analysts judged it “controversial” only a few years ago to suggest that immigrants put pressure on housing and real-estate prices. But it’s now universally acknowledged, including by the development industry.

Even Prime Minister Justin Trudeau, who has increased immigration levels to a record of more than 400,000 a year, said this month: “One of the challenges we’re facing in Canada is our population, with immigration and other things has been growing over the past years and housing construction hasn’t kept up, which is a real problem.”

Andy Yan, director of Simon Fraser University’s City Program, confirms “the idea of being able to own land” is what has brought immigrants to Canada for a long time.

“There’s freedom and economic and social security in owning. Compared to being a renter, ownership gives you a new sense of privilege.” When democracies began emerging in the 1800s Yan recalls how many countries did not initially allow tenants to vote.

Home ownership, Yan said, appeals to many, both domestic and foreign-born, because it’s a form of wealth that can be passed down through generations, and homes provide collateral to take out more loans to buy more properties.

Canadian real-estate agent Sahil Jaggi, 36, an immigrant from India, recently made the news for leveraging his initially small purchase of a detached home into an empire in which he now holds 17 rental properties. Going against his own self-interest, Jaggi said governments should be placing surcharges on property investors like himself.

Canadian studies by UBC’s Markus Moos, Queen’s Andrejs Skaburskis, SFU’s Josh Gordon and others show immigrants on average move quickly after arriving into home ownership. Some buy Canadian properties at least in part with money brought from their homelands, which the scholars say can create a “decoupling” between local housing prices and average wages.

In ground-breaking studies, UBC geographer Daniel Hiebert found the typical value of a detached Metro Vancouver home owned by a new immigrant is $2.3 million, compared to $1.5 million for that of a Canadian-born person.

Home ownership is “an important milestone for immigrants in the path towards social and economic integration,” Hiebert said in his report, echoing others who maintain a stream of foreign capital into a relatively small number of high-end properties in Metro Vancouver has had a trickle-down effect, raising prices on most of the city’s dwellings.

Forty-one per cent of the population of Metro Vancouver are immigrants. The difference between the property values of long-term immigrants (a category which includes people who came to Canada before 1980) and “Canadian-born” owners is not as extreme as it is between those who arrived since 2009.

Still, Statistics Canada researchers Guy Gellatly and Rene Morissette found that the average price of a detached Metro Vancouver home owned by a long-term immigrant was 17 per cent higher than the average price of a house owned by a native-born resident.

The history of Canada, and the world, leaves no doubt immigration has a major impact on the availability and affordability of property. As Hiebert says in one of his studies: “First and foremost, immigration policy is, essentially, also a form of housing policy.”

Source: Immigrants have long hungered to own property 

Punwasi provocatively writes about a “snow job:”

Times are wild. Canadian home prices are so out of control that prices in Orillia, Ontario (at an average of more than $900,000) are now on par with house prices in Los Angeles. You can buy a single-family home in the entertainment capital of the world, with its legendary sandy beaches and near perfect weather, or spend the same to live in Orillia, which has several Tim Horton’s and that sweet casino. This is a point I made earlier this month in a now viral tweet that was meant to be a lighthearted poke at the housing issue. Millennials and other aspiring homebuyers felt it nailed their growing frustrations about the real estate market.

But some felt the need to explain that prices will continue to rise due to immigration. It’s something we’ve all heard before — millions of immigrants over the next decade will come for more opportunity. Often people will say Canada is getting half a million more per year going forward, as if the Prime Minister can just pop into the immigrant store and pick up a few hundred thousand. The assumption is Canada has been a great place to immigrate to in the past, and it will be going forward. Is that actually true?

Many believe Canada is still a great place to live with lots of opportunity and free health care. But the truth is, Canada’s reputation as a place of opportunity is fading. It’s prohibitively expensive to live here, wages aren’t stellar, and lots of other places have quality health care. Even so, Canadians assume immigrants will come at any cost. Somehow they have endless cash to drive home prices, but also don’t have any option other than Canada. Let’s take a look at this once-in-a-lifetime opportunity immigrants can’t pass up.

Anyone who’s thinking of buying or selling a home, or has read a newspaper, knows Canadian home prices are outrageous. Last week’s interest rate hike doesn’t change the reality that home prices just increased at the fastest rate in four decades, outpacing that of any of our G7 peers. National Bank of Canada estimates the median urban home price was $732,600 in the last quarter of 2021. By their calculations, a minimum household income of $147,000 is needed to carry the mortgage. That’s nearly double the median household income, already a hurdle for professional couples. It’s a near impossible task for young adults or recent immigrants.

The sky-high cost of real estate is just one part of the issue. The cost of living in general is a problem, and it’s not about to recede, as inflation hits a three-decade high. The Institute for Canadian Citizenship (ICC) recently surveyed newcomers on their experience. The immigration advocacy group found that one in five plan to leave within two years. This is primarily due to the cost of living, which 64 per cent felt would be a barrier for future immigrants.

Put bluntly, Canada’s ambitious immigration growth plans are based on a country that no longer exists, a place where you can settle and enjoy social class mobility. Immigrants are finding themselves in a similar situation to Canada’s young adults. Signs of diminishing opportunity and bleak economic growth have begun to appear. At the same time, countries where immigrants traditionally arrive from are starting to catch up and offer greater social mobility.

Pressure makes diamonds, right? Defenders of the status quo argue that a high failure rate is the cost of buying into a hypercompetitive economy. Sure, many immigrants have an entrepreneurial spirit and will take a calculated risk. Does that describe Canada and will it in the future?

There’s no doubt Canada has historically been a great opportunity for immigrants. It boasts of its gross domestic product (GDP) growth rate, which frequently tops the G7. It sounds impressive if you don’t understand that Canada is the smallest member and that small numbers are easier to grow. Without adjusting for size, it’s unclear if the output of people grew or the number of people did. By measuring GDP per capita, we see this more clearly.

From 2000 to 2007, Canada was booming. The real GDP per capita averaged 1.6 per cent per year — remarkable growth for a relatively mature economy. It narrowly beat the U.S. by 0.1 points, topping the G7 at the time.

This was the Golden Age if you were young or immigrating to Canada. Housing was the most affordable in the past 40 years, and the country had the best economic progress in the G7. Moving here was like getting in on the IPO without having to do the turbulent seed rounds in the ’80s.

It’s not hard to understand why. A smaller share of income on shelter means more money for investment or consumption, and one person’s spending is another person’s income. Shelter is, by definition, a non-productive asset. It doesn’t matter if you spend $100 or $1 million; the home does the same thing for the user after it’s built. Investment and spending, in contrast, is how economies grow and wealth circulates.

The Great Recession is where Canada’s low rate addiction sent it spiralling. Our GDP per capita fell to 0.8 per cent per year between 2008 and 2020, failing to outperform the OECD average. Canada placed in the middle of the G7 for performance. It’s fairly common for people to think Canada managed this period better due to the lack of a housing crash. Most don’t realize real home prices in cities like Toronto had yet to recover from the early ’90s high. Home prices didn’t fall much because they hadn’t recovered from the last crash yet.

The opportunity for young adults and immigrants began to close during this period. Low rates were arguably needed to mitigate the Great Recession’s economic risks. However, Canada became addicted to cheap and superficial growth.

The Bank of Canada (BoC) has worked very hard to reduce interest costs: Traditional logic is that lower interest rates mean smaller payments and more cash flow. There’s only one hitch — that only applies to rational players in a balanced market. In reality, people’s emotions can get the best of them.

The BoC twice demonstrated they misunderstood the relationship between low rates and home prices. The first time was in the 2021 revisions to its primary forecast model. Like a Christopher Columbus of monetary policy, it had apparently discovered that credit influences home prices. They must have missed that whole U.S. housing bubble-thing.

The BoC reinforced the impact of low rates on rising home prices in a December speech. Looking at the past 30 years of home prices and mortgages, they found a trend. Mortgage rates consistently fell, but the cost of housing continued to rise. When “interest rates fall, many households simply adjust by borrowing more,” explained Deputy Gov. Paul Beaudry to a provincial regulator last November.

Best-case scenario, they had no clue what they were doing. This is a point I explained in further detail to Canadian Parliament’s Finance Committee, when invited to explain Canada’s high inflation.

What does monetary policy have to do with immigration? A lot.

If capital has improperly incentivized use, it creates economic inefficiencies. One example is residential investment, the portion of the economy covering home construction, major renovation, and land transfer costs — which reached 9.56 per cent of GDP in Q4, the last financial quarter of 2021. For context, this is almost 50 per cent higher than the U.S. at the peak of its real estate bubble. It’s accepted that the share of the U.S. economy devoted to building more housing during this time was reckless.

Here is a telling statistic: About 1 in 59 working adults in Toronto are realtors. Think of how many public schools you see in a week. Now realize you’re more likely to meet a realtor than a public-school teacher in the city.

Real estate investment has also diverted capital from the country’s real productivity. One area where this is showing up, often associated with the immigrant experience, is self-employment. The segment recently fell to the smallest share of employed people since the 1980s (13.7 per cent, as of March). Why spend capital on a risky business that can create jobs when you can, if you’re lucky, buy a condo?

The shift from fostering productivity to non-productive assets is attracting international attention. The OECD’s forecast for Canada shows GDP growth per capita of 0.7 per cent per year from 2020 to 2030 — significantly below the U.S. rate (42 per cent lower) as well as the OECD average (46 per cent lower). Canada would occupy the spot Greece held after the global financial crisis, which is a fun fact that won’t make the immigration brochure.

The slow growth has already set off alarms in Canada’s business community.

“Past generations of young Canadians entering the workforce could look forward to favourable tailwinds lifting real incomes over their working lives. That’s no longer the case,” said David Williams, who heads the Business Council of British Columbia (BCBC). 

“If the OECD’s long-range projections prove correct, young people entering the workforce today will not feel much of a tailwind at all,” he wrote in an analysis this past February. “Rather, they face a long period of stagnating average real incomes that will last most of their working lives.”

Canada’s openness to immigration is pitched as civic-minded global leadership. When you dig into the data, it looks more like a bait and switch — a cover for inbound colonialism.

Policy-makers are focused on the benefits immigrants provide to older Canadians. They often cite strong housing demand, and tax revenues to help with demographics. These aren’t selling points to come to Canada — they’re the reason Canada needs immigrants.

Canada’s historically endless supply of immigrants might dry up in the not-so-distant future. The country’s largest source of immigrants by far is India, the source of a third of arrivals. A distant second is China, followed by the Philippines and Nigeria. It turns out PwC has forecast those countries will be larger and wealthier economies in less than 30 years. The most sought-after talent wants an economy looking to foster and support them. An economy looking for half their income for taxes and a third for rent isn’t as competitive as you might think.

Yes, 30 years is a long time. Not as long as it might sound, though, and competition for Canada’s immigration pool will emerge quickly. In India, the World Economic Forum forecasts that 80 per cent of households will be middle class by 2030, and drive 70 per cent of the economy. The government is fostering a “founder’s mentality,” which will build the entrepreneurial mindset. As a result, the country will become a “playground for growth and innovation.”

China may have an even faster trajectory, according to The Economist. The country is forecast to pass the World Bank’s threshold for high-income countries by next year. If it does so, that would be declared in the mid-2024 update. That’s right around the corner.

These are just a couple of countries Canada draws immigrants from. It would be silly to think other countries aren’t competing for the same pool of talent. It’s downright naive to think they aren’t scouting Canada’s domestic talent too.

Canada was a great place to immigrate and can be once again with a little more planning. However, the country needs to stop treating immigrants as commodities. At some point in the not-so-distant future immigrants might start to feel like they’re being catfished with an early 2000s picture of Canada.

Instead, the country should focus on an environment where young adults thrive. Foster a healthy business and innovation environment, and Canada won’t need the hard sales pitch. People will flock here.

Ignore the environment and sell an opportunity that no longer exists? Forget about attracting immigrants. By 2030, Canada might be trying to figure out how to just retain its young adults.

Stephen Punwasi is a data analyst and the co-founder of the housing news site Better Dwelling.

Source: The Great Canadian Snow Job: With sky-high real estate and soaring inflation, is Canada selling immigrants on an opportunity that no longer exists?

Gary Mason’s short take on immigration and housing:

There are other issues that aren’t easily fixable. More than 100,000 people poured into B.C. in the last year. You’re never going to build enough housing quickly enough to satiate the soaring demand those kind of immigration levels create.

Supply issues do result in rising prices. Immigration is the lifeblood of this country, but it will continue to come at a cost, surging house prices among them.

Canada’s politicians know that it will take various complex solutions to make real inroads in addressing our housing crisis. But it seems they’re too gutless to go there.

Source: Politicians are selling us a myth on housing: that more supply will be our salvation

Lastly, John Ibbitson’s short take with a bizarre and frankly unworkable suggestion to address the contradiction between increased immigration levels for parents and grandparents and addressing an aging population:

Fifth, immigration levels should be kept high, with an annual intake above 1 per cent of population or higher, and skewed heavily in favour of younger workers. International students, temporary foreign workers – anyone young and willing to fill a vacant job should be offered permanent residence. Family-class immigration should be restricted to bringing in the people needed to keep economic-class immigrants from returning home.

Sixth, because those immigrants need somewhere to live, we need to increase the housing supply. The number of high-rise apartments grew faster than other forms of housing over the past five years. Since the census also slows strong population growth in city centres, this suggests densification efforts are working.

Those efforts should continue, as should efforts to expand the stock of low-rise apartments and of suburban houses, many with granny flats. As our immigration intake increases, we will need more of everything.

Mostly, we should be honest with each other. We’re old and getting older. Let’s admit it and deal with it, now.

Source: The 2021 census tells us Canada’s population isn’t aging – it’s aged. Here are six ways we can adapt

Lastly, a reminder by Howard Anglin, former senior staffer to Jason Kenney at both the federal and provincial levels, of the significant links between housing and immigration:

The important questions of politics rarely change, we just change the way we talk about them.

Consider housing prices: in the 1970s, politicians understood that the problem was, at its most basic level, one of supply and demand. Today, it seems we only ever hear about inadequate supply. Politicians talk about the need for more houses, but they’ve stopped talking about why we need them. What happened to demand?

With starter homes in Vancouver and Toronto selling for 14 times the average income, the concern is especially acute right now, but it’s not new. In 1976, economist Gordon Soules interviewed two young Vancouver politicians for a book on rising house prices. See if you can guess who they are:

Concerned Politician 1: “First, it is essential that we relate both the local and the national housing problems to our immigration laws. Are we in fact merely trying to create new housing, as well as new employment opportunities, just to keep pace with the yearly average of 200,000 immigrants that Canada is admitting every year?”

Concerned Politician 2: “Foreign investors, many speculatively, are driving up home prices beyond the reach of British Columbians,” and in an “ideal” world “most land would be owned by the government and leased to the people.”

Surprisingly, the first quote was from Mike Harcourt, the future mayor of Vancouver and NDP premier; the second, promoting socialized real estate, was from future Social Credit premier Bill Vander Zalm. Even more surprising, there was consensus across political lines that immigration policy was a factor in rising housing prices. Vancouver’s progressive mayor Art Phillips chimed in, telling Soules: “I maintain that the primary approach to solving the housing problem in the Greater Vancouver area lies in the immediate reduction and future control of immigration.”

Sometime between then and now, we forgot about the demand side of that most basic of economic equations. In the meantime, Vancouver has added 1.5 million new residents, and house prices keep climbing. That doesn’t mean that there aren’t other factors involved.

Construction feeszoning rulessocial housing policiesregulations, and commodity prices have all played a part, as have internal migration and federal monetary policy, but it’s magical thinking to imagine that doubling the city’s population hasn’t been a major factor.

The air of unreality extends to federal politics. At the same time economists are warning us about an over-inflated housing market, and the Governor of the Bank of Canada is worrying openly that “recent rapid increases in home prices are not normal,” the federal government is planning an historically large surge in immigration.

For most of the last decade, the federal government under both Conservatives and Liberals admitted an average of 275,000 new permanent residents to Canada each year, and about twice that number of temporary residents. Now, against consistent public opinion, the Liberals are promising to raise the number to more than 420,000. That is the equivalent of adding a new Halifax every year, or a new Alberta over the next decade.

Except, of course, that with most newcomers gravitating to the largest cities, it really means more demand in the places that already have the most expensive housing markets.

At some point, we forgot about the demand side of that most basic of economic equations.

It doesn’t have to be this way. Immigration levels are not a force of nature beyond our control. Each year, the federal minister of immigration tables a “levels plan” in parliament announcing the total number of permanent residents his ministry will process that year. There is hardly any policy discussion about the optimal level inside government, and even less outside.

Considerations like housing or infrastructure or health care don’t enter into it. In its 41-page immigration levels plan for 2020, the Trudeau government didn’t mention either of these issues. Nor did it note, let alone discuss, the environmental and ecological impact of moving so many people to the one of the most carbon intensive countries in the world — a concern that once led David Suzuki to declare that “Canada is full.”

A new Public Policy Forum report by the economist and former head of the B.C. public service, Don Wright, corrects these blind spots. The report offers several ways the federal government can raise the Canadian middle-class standard of living, including by shifting “from immigration policy that is focused merely on increasing GDP to one focused on increasing GDP per capita” and by reversing the downward pressure on Canadian wages and the rising pressure on housing caused, in part, by current levels.

The report’s discussion begins, as all such discussions invariably do in Canada, with the assurance, in so many words, that the author is not Donald Trump. In a country that took public policy seriously this disclaimer wouldn’t be necessary, but this is Canada where, as Wright accurately observes, “the promoters of large immigration numbers are quick to label as racist, parochial or small-minded any questioning of larger immigration numbers.”

The accusations are nonsensical, of course. Justin Trudeau’s immigration policy in 2016 wasn’t racist because the annual level was lower than it is today, nor is the current level xenophobic because next year it will be even higher. And when Pierre Trudeau cut annual immigration in half between 1967 and 1972 and then by 60 percent between 1974 and 1978, he wasn’t being “parochial or small-minded,” it was just part of the normal fluctuations in immigration levels that used to track economic and political conditions.

Wright believes that “the optimal level of immigration” is not only “a legitimate question of public policy debate,” but it should offer “a much more nuanced set of policy ideas than ‘more people mean a bigger GDP.’”

It should, for example, include discussion of things like “GDP per capita and how income is distributed” — things that matter because they directly affect our quality of life. Things like the cost of housing, which is the single largest expense for Canadian families and determines how long they have to climb the property ladder before they can afford to settle somewhere and help build the neighbourhood relationships that are so important for personal happiness and the communities that are necessary for social solidarity.

It won’t come as a surprise to residents in Vancouver and Toronto, but it is still shocking to read that their cities are, according to a study by Demographia cited by Wright, “more unaffordable than any American city.” Of Canadian cities, Vancouver, Toronto, Montreal, and Ottawa fall into the study’s worst category of “severely unaffordable,” while Calgary is “seriously unaffordable” and the homes of lucky Edmontonians are “only moderately unaffordable.”

According to Wright, “[t]here are multiple reasons why Canada’s housing has become so unaffordable, but it defies credulity to argue that high levels of immigration will not exacerbate the growing unaffordability of housing in Canada.” This is because “[i]mmigration levels of between 400,000 and 425,000 per year (the current target of the federal government) means an additional demand for approximately 170,000 new homes each year.” And, of course, “[c]lose to 75 percent of immigrants settle in these six major cities.” Supply, meet demand.

Nowhere is it written that Canada’s population must increase, year on year, forever.

In response to sluggish real wages and rising housing prices, Wright commits Laurentian blasphemy and wonders “[c]ould it not be better in the near term to lower the level of immigration, while significantly improving support to new immigrants, giving them a better chance to more easily integrate into the economic mainstream?” He doesn’t get into specific numbers, but it is remarkable enough that he even asks the question.

Wright’s proposal is modest, the kind of plan that would have received broad bipartisan support in Canada until quite recently, and still would in most of our peer countries. It wasn’t long ago that respected figures on the left like Bernie Sanders denounced high levels of immigration as serving the interests of big business rather than domestic workers, and in 2017 progressive darling Jacinda Ardern ran on a platform of cutting immigration to New Zealand by up to 40 percent, in part to address housing pressures. (She didn’t keep her promise, but her government is once again talkingabout reforming post-Covid migration policy to relieve the pressure on housing, infrastructure, and the environment.)

An even more ambitious plan, one that would tackle the housing crisis head on, would aim explicitly for population stability.

Nowhere is it written that Canada’s population must increase, year on year, forever. It isn’t ordained in the constitution that Toronto and Vancouver must absorb hundreds of thousands of newcomers every year, or that their downtowns must bristle with cranes and condo towers and their suburbs sprawl a little further each year up the mountainsides, along the lakeshore, and into surrounding farmland and greenbelts. Relentless urban growth is the result of political decisions made each year in Ottawa. It is a choice, but it isn’t the only choice.

In two articles, from 2012 and 2017, Anatole Romaniuk, the former director of the Demographic Division at Statistics Canada, offered his vision of what a stable population would look like and how it would work.

Romaniuk begins by challenging the assumptions of “the populationist agenda which postulates that growing and large populations are the forces that move economies forward and project a nation’s international might.” Chasing “relevance” — one of the undefined goals of the Trudeau government’s Century Initiative — is a mug’s game. We will never come close to matching the populations of China and India and our international reputation has never have been based on our population. Besides, the government’s job is to boost domestic quality of life, not diplomats’ egos or the interests of the bankers and global management consultants advising it.

Like Wright, Romaniuk takes pains to establish that his proposal is not anti-immigration per se and certainly not anti-immigrant. Romaniuk, an immigrant himself, believes that “[a] liberal society by its very nature cannot be a closed society” and “[w]hile immigration is not a solution to all our social and economic problems, it can be a part of it.” He simply wants us to consider, probably for the first time in a generation, what is it we want immigration to do, and then design a policy to achieve it. In other words, he wants us to think of immigration policy as policy, the same way we think about taxes or research funding, rather than as a feel-good commitment without real-world effects.

Romaniuk runs through the data, well-known to most demographers and immigration experts but rarely acknowledged by our politicians and pundits, deflating the commonly assumed benefits of our current high — and the even higher proposed — annual immigration levels.

For example, multiple studies have showed that there is little, if any, link between increasing immigration and per capita GDP growth; that the earning gap between new immigrants and the Canadian-born has persisted or widened since 1980; that the poverty level of new immigrants is more than twice that of the Canadian-born (and has almost certainly gotten worse during the pandemic); and, contrary to the most popular justification — keeping our pension Ponzi scheme afloat — it has only a modest impact on population aging (according to StatCan, even the high assumption on immigration levels would only lower our average age by one year by 2036).

This is the sort of stubborn data that our politicians either ignore or dismiss in favour of inspirational stories of individual success, but which no amount of wishful optimism can refute.

Reviewing Romaniuk’s 2017 article, Dr. Roderic Beaujot of Western University suggests that it would be possible to stabilize our population through a mix of slightly higher birthrates and slightly lower, but still not insubstantial, annual immigration: specifically, “a cohort fertility of about 1.7 and a net annual immigration of about 0.6 per cent [would] produce about zero population growth in the long run.”

Such a policy would only require us to reduce permanent immigration to 225,000 a year — about the number of the late Chrétien years and still much higher than the G7 average — and would draw on recent pro-familypolicy proposals to modestly increase the Canadian birthrate to about where it was in 2010, or where it is now in the United States. It may even be that, by cooling the demand for housing, and thereby removing one of the reasons young Canadians often cite for putting off starting or having families, lowering immigration might itself play a small part in increasing birthrates.

Population stability alone wouldn’t solve the housing crisis. There would still be a need for some of the supply-side solutions that have been proposed, such as zoning for fewer detached houses, more infills, shared living spaces, and clearing away regulatory barriers to allow us to just build more, more, more, anywhere and everywhere.

But a future of denser, taller, more crowded, and smaller living units isn’t everyone’s idea of an affordable housing solution. So, as we work on the perennial problem of supply, perhaps we can remember a time, not long ago, when politicians talked seriously about the demand side of the equation as well.


25-year-old internal memo to Canada Revenue Agency predicted foreign money distorting housing market

Pretty outrageous, both the initial non-release and the five-year ATIP battle. Kudos to Ian Young of the SCMP for persisting. David Anderson and Jane Stewart were ministers at the time:

An internal Canada Revenue Agency audit concluded 25 years ago that wealthy new immigrants were buying up most of the priciest houses taken from a sample in and around Vancouver while declaring poverty on their tax returns. But the report was not made public until a five-year access-to-information battle concluded recently.

Housing and immigration academics say the study could have warned the public about the scale of foreign money being parked in Metro Vancouver’s residential real estate – decades before the provincial government began taking meaningful action to slow this trend.

During the federal election campaign, all three major parties have proposed various policies to curb international demand for real estate, which has contributed to rising unaffordability in a number of urban centres.

The Liberals and Conservatives are promising to ban foreign home buyers for at least two years. The New Democrats have pledged to tax those who aren’t Canadian citizens or permanent residents with a 20-per-cent levy – the same penalty imposed in British Columbia’s biggest cities for the past three years.

But critics say the parties need to follow B.C.’s lead to capture even more information about property owners so that they can be taxed more equitably and governments can tamp down international real estate speculation.

The CRA’s analysis from October, 1996, was shared with The Globe and Mail this week after its release to Ian Young, the South China Morning Post’s Vancouver correspondent who first requested the information in 2016 after being leaked portions of the internal memo explaining its findings.

The audit focused on 328 higher-end sales in the suburbs Burnaby and Coquitlam, but the study also analyzed a random sample of 6,060 sales from Vancouver and neighbouring Richmond and discovered “similar demographic results.”

Of the 46 houses bought in Burnaby, staff found 72 per cent were purchased by new arrivals to Vancouver who reported an average total family income of just $16,000. In contrast, the CRA’s chart from the audit showed four buyers who were long-term residents reported average family incomes that were tens of thousands of dollars higher.

This income gap between new immigrants and neighbours who had lived there longer was also observed in Coquitlam, according to the CRA’s chart released in the package of documents.

“It should be noted that an obvious large discrepancy exists between the average total family incomes for long-term Canadian residents and newer Canadian residents,” the author of the memo wrote to his CRA boss. “Furthermore, based on lifestyle and average age of these taxpayers, it is likely that many of these new Canadians still have active business activities, but are not reporting all their sources of income.”

Vancouver lawyer Richard Kurland, who has been helping international clients immigrate to B.C. for 25 years, said the analysis proves the CRA failed to catch those hiding their global income while competing for homes on Canada’s West Coast.

“They knew it was happening and did nothing, so the bleeding continued, taxes were not paid, property was subject to speculation and the end result [is] people in Vancouver are paying many more times than they have to for residential property because the CRA did nothing when it was warned by its own employees about what was going on,” he said.

David Ley, a geography professor at the University of B.C. who studies housing bubbles, said the 1996 report could have spurred politicians to address the anomaly of “apparently poor people buying very rich properties” decades earlier. He said the CRA had long maintained that they it would take too many resources to crack down on home buyers hiding wealth abroad, in large part because other countries they lived in were unlikely to release the pertinent tax information.

“It’s very difficult to pursue foreign sources of income – so they didn’t,” Dr. Ley said.

The CRA told The Globe this week that the study intentionally focused on cases where the buyer may have been underreporting their income and, thus, “was not intended to, and should not be, extrapolated to the whole population.”

But large parts of the internal communications around the release of this document were redacted because the agency said federal access-to-information law allows consultations or deliberations between government employees, a minister of the Crown or their staff to remain confidential.

The federal agency said it takes cheating its system seriously and has stepped up audits in the hot housing markets of Toronto and Vancouver in recent years. Still, the CRA said its five-year battle with Mr. Young over the release of this document is “clearly not normal, nor is it acceptable; we are continuing to take steps to improve [our] performance.”

Andy Yan, a housing analyst and director of Simon Fraser University’s city program, said the federal government has a lot of tools – such as home loan data and analysis of social demographic changes in neighbourhoods – through which it can confirm or refute how widespread these investment patterns have been. But, ultimately, he said, the CRA has not effectively enforced the country’s tax rules, helping create an unfair system where foreign capital is stored in residential real estate.

“There shouldn’t be any free parking,” said Mr. Yan.

In 2015, a Globe and Mail investigation into public data – including land titles, tax reporting and court records – revealed a similar pattern to the 1996 CRA study that suggested the typical wealthy foreign family buying Vancouver real estate pays little or no income or capital gains tax. These family homes were priced out of reach for many locals whose taxes pay for public services.

The Globe discovered that one in three multimillion-dollar homes bought in Vancouver areas popular with foreign buyers was registered to a homemaker, student or corporation – one indicator of how the identity of the person who actually paid can be hidden.

When a spouse or child sells a property that is registered in their name, the real investor can avoid capital-gains taxes – because the relative in Canada can claim it was their primary residence, therefore not an investment.

This and other Globe investigations helped increase public pressure on the provincial Liberal government to enact Canada’s first tax on foreign homebuyers. After the New Democrats were elected in 2017, in part on their pledge to further crack down on expanding real estate speculation, B.C. implemented a host of new taxes and demand-side tools.

Mr. Kurland said more provinces need to follow B.C.’s lead in requiring that homebuyers declare their country of residence for tax purposes as well as create a registry for beneficial owners – which will come into full force at the end of this year to make it tougher for people to hide real estate investments behind corporations, trusts or partnerships.

He said the CRA’s current “whack-a-mole” approach to catching scofflaws in the housing market relies on auditors digging for specific information in individual cases, but it will soon be able to use algorithms to scour all its tax information and these twin data sets to better catch those hiding wealth in B.C.

“It’s equivalent of an abacus versus a spreadsheet,” said Mr. Kurland, who added that he saw a “massive selling spree” among foreign owners in B.C. before each of those two policies became law.

Rohana Rezel, a software engineer who advocates for more affordable housing by using software and data to uncover speculators in Metro Vancouver’s market, said the most effective federal policy on this issue would be to blanket the whole country with a speculation tax on all homes.

Then, owners could offset this two-per-cent penalty against what they pay to the CRA each year, said Mr. Rezel.

“If you’re paying income taxes of a certain amount it doesn’t apply to you,” said Mr. Rezel, who immigrated to Canada from Sri Lanka in 2008.


Douglas Todd: ‘Get real’ estate! Five reasons to doubt Trudeau’s housing promises

Of note. Leave it to the housing experts for a comparative assessment of party housing promises and their electoral positioning:

Justin Trudeau has abruptly switched into the role of housing-affordability radical.

But it remains to be seen how many Canadians will buy the Liberals’ brazen new wave of promises — including a ban on foreign purchases, a tax on property flipping and restrictions on exploitive real-estate agents — since there is much cause for skepticism.

Weighing the party’s credibility is crucial since polls are suddenly showing housing affordability (not COVID) is one of the electorates’ top concerns. That’s like the B.C. election in 2017, which saw provincial Liberal leader Christy Clark, who relied heavily on developer donations, turfed in favour of the NDP.

All federal parties’ housing platforms require scrutiny, but here are five reasons voters are justified in feeling suspicious about the prime minister’s sudden conversion to housing activist, a persona he adopted last week to profess: “You shouldn’t lose a bidding war on your home to speculators. It’s time for things to change.”

1. Trudeau has done remarkably little to address an expanding housing crisis

Housing prices across the country have jumped more than 50 per cent cent on average under Trudeau’s watch.

This glaring reality was captured in a recent devastating sound bite, when a heckler at a Trudeau rally in Ontario bellowed: “You had six years to do something. You’ve done nothing. These houses are worth $1.5 million. Are you going to help us pay $1.5 million? Are you, buddy?”

While in power, Liberal promises to address soaring prices have added up to zero. Take, for instance, the commitment Trudeau made in B.C. during the 2019 campaign, to bring in a one-per-cent tax on purchases by “non-resident, non-Canadians.” Nothing happened.

Similar vacuous pledges came to mind last week when the Trudeau stole the Conservatives’ idea to place a two-year ban on all foreign property purchases. Only two months earlier, the Liberals had voted against a Conservative opposition-day motion to do just that.

Many Liberals, federal and provincial, have long claimed it’s xenophobic to restrict foreign buyers in Canada. They’re only now toning down their race-baiting.

The Liberals have long failed to address foreign capital flooding into real estate — as revealed, yet again, this week. A South China Morning Post article by Ian Young showed Ottawa spent five years covering up an old Canada Revenue report detailing how “rich migrants made more than 90 per cent of luxury purchases” in Burnaby and Coquitlam “while declaring refugee-level incomes.”

It also became even harder in the past few days to accept Trudeau’s authenticity on taxing house flipping when it was uncovered the Liberals’ star candidate in Vancouver-Granville had flipped 21 properties. Liberals’ coziness with real-estate insiders runs deep (as it does for many politicians).

2. The Liberals have purposely increased ‘demand’ for housing

It was more than odd when Trudeau came to Vancouver in August and said “you’ll forgive me if I don’t think about monetary policy … You’ll understand that I think about families.”

It’s impossible to believe the prime minister doesn’t comprehend that monetary policy — in the form of extremely low interest rates and his government’s rapid printing of money in response to the pandemic — have helped jack up prices.

While the Liberals are joining the Conservatives and NDP in making big pledges to increase the construction of housing, many analysts are shocked that some promises Trudeau is making will further inflate prices.

Trudeau’s talk about tax-free housing accounts for first-time buyers, along with other credits, will super-charge demand even more, particularly among young people who can’t afford to stretch further. The size of new mortgages in Canada are soaring far into the danger zone.

It looks, however, like many millennials aren’t buying the new Liberal rhetoric; Leger polling has found the party has been losing support among young adults.

3. Ottawa has done little to combat money laundering via real estate

Prominent housing analyst Stephen Punwasi says former Vancouver Sun reporter Sam Cooper’s book, Wilful Blindness: How A Network of Narcos, Tycoons and CCP Agents Infiltrated The West, is “the most important book on Canadian real estate you’ll read this year.”

Wilful Blindness describes how transnational multi-millionaires and criminals, rooted in China, Mexico and elsewhere, have exploited the country’s real estate, which is “Canada’s soft spot for economic infiltration.” Cooper’s book describes many egregious examples of how “dirty” offshore money has been transformed into “clean” money through Canadian housing, especially via property flipping.

What have the Liberals done to crack down on money laundering in urban real estate? Though the Liberals said they would gradually direct $69 million into strengthening RCMP investigation of money laundering, B.C. Attorney General David Eby and others have urged Ottawa to go much further — and institute U.S.-style racketeering laws, which are credited with dismantling Mafia families.

4. The Liberals keep hiking immigration levels

Economists — from banks, universities and developers’ organizations — have in recent years acknowledged one of the biggest factors affecting Canadian housing and prices is population growth through immigration.

Despite, or because of, this, Trudeau has steadily increased Canada’s immigration target since being elected in 2015, hiking it from 250,000 to 400,000 a year, with B.C. an especially popular destination.

UBC geographer Dan Hiebert has found the typical value of a detached Metro Vancouver home owned by a new immigrant in 2017 was $2.3 million, $800,000 higher than a dwelling owned by a Canadian-born person.

An SFU study found “hidden foreign ownership,” particularly through satellite families in which breadwinners make their money offshore, is a significant reason prices have no connection to local wages. It all adds up to help cut into the hopes of both domestic Canadians and newcomers with modest resources.

Source: Steve Saretsky, Vancouver housing analyst

5. It’s worse than ironic Trudeau now says, ‘The deck is stacked against you’

In light of the prime minister showing almost no interest in protecting the young from soaring prices, it was more than perplexing to last week see him act like a white knight taking on an out-of-control real-estate system.

Who knows if the identity switch will get votes? But Trudeau’s latest self-image echoes that of the Liberals’ talkative housing secretary, Adam Vaughan, who in April let slip that Canada is “a very safe market for foreign investment, but not a great market for Canadians looking for choices around housing.”

While Vaughan revealed the Liberals’ strategy has been to support “a very good system of foreign investment creating a lot of new housing in Canada as we add immigrants and grow the population,” he cautioned it would be terrible to bring in any policy that could cause  homeowners to see “10 per cent of the equity in their home suddenly disappear overnight.”

There it is. Two months ago the Liberals were firmly on the side of homeowners wanting to profit. Last week Trudeau suddenly became a champion of those frozen out of ownership.

You’re forgiven for thinking you are witnessing pure electoral posturing.

Source: Douglas Todd: ‘Get real’ estate! Five reasons to doubt Trudeau’s housing promises

Scarborough researchers found the link between multi-generational households and COVID-19. What it could change about housing in years to come

Good and relevant study even if not particularly surprising:

A new study by three Scarborough researchers shows that the places that have been hardest hit by COVID-19 are also the places where multiple working adults or families are all sharing a household. 

The study by the Neighbourhood Change Research Partnership and the University of Toronto found that the maps that showed which areas in the GTA have high rates of COVID-19, shared a lot of overlap with areas that had the most households of what they call “mutually dependent adults.” One of those areas being Scarborough, where all three researchers reside. 

The findings confirm some assumptions people have made about why COVID-19 has spread the way it has, disproved some others, and reinforced why information like this is crucial to an effective pandemic response. 

But looking to the future it also shows that as more people live in bigger households like this, it’s time we get ahead of this issue, and build homes that can keep the people living inside healthy.

What does mutually dependent mean?

Using special-ordered Statistics Canada data from 2006 and 2016, the team parsed data on “mutually dependent adults” — combinations of households that could be a group of roommates, a grandparent living with a single mom, a family who rents out a room in their house — pretty much any situation where multiple working-age adults are living together under one roof, rather than independently, or as just a traditional couple. 

Between 2006 and 2016 as housing costs skyrocketed, the amount of working-age residents living together and depending on one another also grew by about 13 per cent across the country.

The most being in the notoriously expensive Toronto and Vancouver, where in 2016 mutually dependent adults were 27 and 25 per cent of the population, respectively. 

Multiple-family households and COVID-19

When broken down by neighbourhoods in Toronto, overall, the 10 with the highest rate of COVID-19 cases had just over twice as many mutually dependent adults at 37 per cent of the population. These were mostly found in Scarborough, northwest Toronto and some areas of York and North York. 

Meanwhile neighbourhoods that had more independent households also had fewer COVID-19 cases. 

The same held true in the GTA, with areas like Brampton. which has 37.2 per cent of adults in these kinds of households, and the highest average household size in the GTA — 3.5 people compared to Canada’s overall average 2.4. At the end of last year, Brampton also had 68 per cent of Peel Region’s COVID-19 cases.

John Stapleton, social policy expert and one of the study’s authors, said pooling resources in this way is both a solution to the high cost of living in Toronto, and to improve quality of living. It’s a way for people to potentially get more space — a house with a yard, for example, rather than living independently in smaller homes. But it created a higher risk for a virus like COVID-19. 

“What it was doing was creating an accelerant for a pandemic of this particular sort,” Stapleton said. 

Through the pandemic, Stapleton noted the assumptions that were made about why racialized people have seen disproportionate rates of COVID-19 — gathering for holidays like Diwali, language barriers. “It has very little to do with it,” he said. 

“Having so many people in a household and a number of adults working … and most likely working right in key sectors that you can’t do the work from home … that means that those households will be more vulnerable to COVID spread,” said David Hulchanski, a housing and community development professor at U of T.

“It’s demonstrating in yet another way what is wrong with having such a huge gap in income and wealth, which then affects all aspects of our life,” Hulchanski said. 

Seeing the overlap in the maps reaffirms that it is wise to focus treatment and resources in these highly-affected areas.

“In other words, it’s telling you, yes, you should have the vaccines (for) Scarborough. You should be doing this stuff by postal code,” Stapleton said.

Still with the vaccine rollout, Ontario only allotted 25 per cent of supply to hot spot areas despite its science table recommending 50 per cent, and only recently announced plans to up it to half as distribution has expanded. 

Epidemiologist Colin Furness said that the province’s reluctance to collect demographic data and have it influence the response from the start of the pandemic, has been a huge downfall. 

“The tail has really had to pull the dog along here and it really should not be that way,” he said.

Building a healthier future

While the high cost of housing is a factor at play here, Stapleton also notes that for some families, it’s more traditional and a choice to live together, rather than just affordability and circumstance.

And with this data in mind, and the cultural choice factor, both Furness and Stapleton see a takeaway being to make these kinds of multi-family households more livable and safe. 

Furness said: “How do we make ourselves resistant to communicable disease in a home? No one talks about that. So, I think we might have some opportunities in terms of how we think about designing safe residences, given what we now understand both what living patterns are, and what the risks are associated with that.”

Furness said building codes, ventilation requirements, the ability for more separation in the household are all things that could be incorporated into creating living spaces that can keep people safe. And also considering sustainability, rather than plowing into farmland in Ontario to create more and bigger houses. 

It’s a complex problem he said and it’s up to leaders to move the dial in this direction. Furness says he is “not optimistic.”

“What we learn from history is that we do not learn from history.”


Douglas Todd: Hidden foreign ownership helps explain Metro Vancouver’s ‘decoupling’ of house prices, incomes

Of note:

The lack of connection between soaring housing prices and tepid local wages in Metro Vancouver is caused in large part by hidden foreign ownership, says a peer-reviewed study from Simon Fraser University that is being welcomed by the B.C. minister responsible for housing.

Based on data Statistics Canada has been collecting only recently, SFU public policy specialist Joshua Gordon’s paper shows the “decoupling” of housing prices from incomes in Metro Vancouver has been caused by “significant sums of foreign capital that have been excluded from official statistics.”

Gordon’s research set out to solve a puzzle in Greater Vancouver and, to a lesser extent, Toronto. How can tens of thousands of owners who tell Revenue Canada they are low income (earning less than $44,000 a year) consistently afford homes valued in the $2- to $10-million range?

Source: Douglas Todd: Hidden foreign ownership helps explain Metro Vancouver’s ‘decoupling’ of house prices, incomes