Housing crisis: Feds stick by immigration plan, rethink international student flows

2023/08/17 Leave a comment

Possible partial pivot but limited to international students, Minister Miller linking this to fraud concerns, not permanent residents and temporary workers.

Kind of an interesting contradiction in the article between “pace of population growth, facilitated by immigration, is making the housing crisis worse” and “Most experts agree that the root causes of this housing shortage are unrelated to immigration.”

The alarm bells are becoming bull horns: Canada’s housing supply isn’t keeping up with the rapid rate of population growth.

Academics, commercial banks and policy thinkers have all been warning the federal government that the pace of population growth, facilitated by immigration, is making the housing crisis worse.

“The primary cause for (the) housing affordability challenge in Canada is our inability to build more housing that is in line with the increase in population,” said Murtaza Haider, a professor of data science and real estate management at Toronto Metropolitan University.

A TD report released in late July also warned that “continuing with a high-growth immigration strategy could widen the housing shortfall by about a half-million units within just two years.”

But the Liberals are doubling down on their commitment to bring more people into the country, arguing that Canada needs high immigration to support the economy and build the homes it desperately needs.

“Looking at the (immigration) levels that we have recently approved as a cabinet (and) as a government, we can’t afford currently to reduce those numbers,” Immigration Minister Marc Miller said in an interview with The Canadian Press.

That’s because Canada’s aging population risks straining public finances, he said, as health-care needs rise and the tax base shrinks.

A report by Statistics Canada published in April 2022 finds the country’s working population has never been older, with more than one in five people close to retirement.

At the same time, Canada’s fertility rate hit a record low of 1.4 children per woman in 2020.

The TD report, co-authored by the commercial bank’s chief economist Beata Caranci, notes that economists are the ones who have been warning of the economic consequences of Canada’s aging population.

“A ramp-up in skilled-based immigration offered a solution. Government policies have delivered, but now the question is whether the sudden swing in population has gone too far, too fast,” the report said.

The federal government’s latest immigration levels plan, released last fall, would see Canada welcome 500,000 immigrants annually by 2025.

In contrast, the immigration target for 2015 was under 300,000.

Although the half-million figure has caught considerable attention, it’s not just higher immigration targets that are driving the surge in population.

Canada is also experiencing a boom in the number of temporary residents who are coming to the country, which includes international students and temporary foreign workers.

In 2022, Canada’s population grew by more than one million people, a number that included 607,782 non-permanent residents and 437,180 immigrants.

Miller said in the interview that the federal government is open to reconsidering international student enrolments, particularly amid fraud concerns.

Earlier this year, hundreds of people were suspected of being caught in a fraud scheme that saw immigration agents issue fake acceptance letters to get students into Canada.

“There is fraud across the system that we are going to have to clamp down on,” Miller said.

The increased scrutiny of Canada’s immigration policies and population growth comes as the country faces a housing affordability crisis caused in large part by a shortage of homes.

Most experts agree that the root causes of this housing shortage are unrelated to immigration. Red tape and anti-development sentiment at the municipal level, for example, can lead to major delays in projects.

Federal tax incentives that helped spur purpose-built rental constructions were rolled back decades ago, leading to a massive shortage in rentals that has slowly built up over time.

Given these existing challenges, experts are concerned strong population growth will add fuel to the fire.

BMO published an analysis in May that estimated that for every one per cent of population growth, housing prices rise by three per cent.

The rebound of the Canadian real estate market this year also shows how immigration is helping to maintain demand for housing, despite decades-high interest rates.

In contrast, the immigration target for 2015 was under 300,000.

Although the half-million figure has caught considerable attention, it’s not just higher immigration targets that are driving the surge in population.

Canada is also experiencing a boom in the number of temporary residents who are coming to the country, which includes international students and temporary foreign workers.

In 2022, Canada’s population grew by more than one million people, a number that included 607,782 non-permanent residents and 437,180 immigrants.

Miller said in the interview that the federal government is open to reconsidering international student enrolments, particularly amid fraud concerns.

Earlier this year, hundreds of people were suspected of being caught in a fraud scheme that saw immigration agents issue fake acceptance letters to get students into Canada.

“There is fraud across the system that we are going to have to clamp down on,” Miller said.

The increased scrutiny of Canada’s immigration policies and population growth comes as the country faces a housing affordability crisis caused in large part by a shortage of homes.

Most experts agree that the root causes of this housing shortage are unrelated to immigration. Red tape and anti-development sentiment at the municipal level, for example, can lead to major delays in projects.

Federal tax incentives that helped spur purpose-built rental constructions were rolled back decades ago, leading to a massive shortage in rentals that has slowly built up over time.

Given these existing challenges, experts are concerned strong population growth will add fuel to the fire.

BMO published an analysis in May that estimated that for every one per cent of population growth, housing prices rise by three per cent.

The rebound of the Canadian real estate market this year also shows how immigration is helping to maintain demand for housing, despite decades-high interest rates.

Source: Housing crisis: Feds stick by immigration plan, rethink international …

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Clark: Go big or go home on housing, Mr. Trudeau

2023/08/16 Leave a comment

As well as “going smaller” on immigration given the increased pressure and demand on housing:

Maybe it was just a coincidence that the new federal Housing Minister, Sean Fraser, told the press he’d be taking the train to an announcement in Burnaby, B.C., on Monday.

But Conservative Leader Pierre Poilievre had been talking about building housing next to train stations in a social-media video he posted Saturday that garnered over two million views and won plaudits from housing experts.

That made Mr. Fraser’s arrival on the SkyTrain to talk about housing seem a little late. That’s a recurring problem for the Liberals.

The biggest, loudest, most obvious political issue in Canada is the high cost of housing. Yet Prime Minister Justin Trudeau’s Liberals have been slow to see it build. And they still haven’t matched the public’s angst with governing ambition.

That’s baffling, if only because of the politics. Mr. Poilievre has been banging the housing issue like a drum for a year and half, striking a chord with couples who can’t afford a house and folks facing skyrocketing rents. NDP Leader Jagmeet Singh is now making it his theme in tour stops, too. And housing is a top-of-mind concern for many in cities and suburbs – and that’s core Liberal electoral geography.

Mr. Trudeau likes big policy initiatives in areas like child care or clean energy, yet he has sounded pretty ambivalent about housing lately. A few weeks ago, he backed into a vague answer about Ottawa’s plans with an assertion that much of the problem is in provincial jurisdiction, not federal.

But it should be obvious that Mr. Trudeau has to expand the scale of federal housing policy to another level.

Former Liberal policy adviser Tyler Meredith argues Mr. Trudeau should go big: by bringing the federal government back into funding large-scale development of affordable housing, creating tax incentives for residential building, adjusting infrastructure programs and policies in areas such as immigration and banking. Then, he suggests, the PM should call provincial premiers to a national housing summit.

Mr. Meredith wants to see the Canada Mortgage and Housing Corporation put tens of billions of dollars into developing affordable housing, noting that can be done without a major impact on Ottawa’s budget deficit or net debt, because Ottawa will own the buildings as an asset. It doesn’t have to be a landlord: It might lease those houses to non-profit organizations.

Policy thinkers have already proposed a number of solid, relatively low-cost ways to change the tax system to provide incentives to build – and acting on such things now should be a no-brainer.

One is eliminating the GST on purpose-built rental housing, which should seem like a good idea to Mr. Trudeau because it was in his 2015 Liberal election platform. Another, proposed by economist Mike Moffat and former Stephen Harper adviser Ken Boessenkool, working with the Smart Prosperity Institute, is more generous tax treatment for depreciation of residential buildings. Those two measures would cost the treasury relatively small sums.

Both the Liberals and the Conservatives have proposed using infrastructure spending as a lever to get municipalities to permit more building. Mr. Poilievre has called for Ottawa to withhold funds from cities that don’t approve housing projects quickly, while the Liberals have created a $4-billion “housing accelerator fund” to encourage towns to speed up the process.

And it’s pretty clear money will talk: Municipalities will be reluctant to lower the costs they charge to developers unless someone – Ottawa or the provincial government – replaces the revenue.

Mr. Meredith also thinks the Prime Minister should call premiers to a national housing summit, because a lot of the obstacles are at the provincial or municipal level, from building rules and permits to fees. Provinces are responsible for municipal governance.

Usually, prime ministers are wary of such summits as premiers tend to come to them with demands. But the cynical political calculation could be different for a prime minister launching major federal housing initiatives and inviting premiers to join the mission. It could shift some of the political pressure to act back to the provinces.

At any rate, Mr. Trudeau has reached a point where he has little time to catch up to the urgency many Canadians feel. The alternative is to roll out small initiatives and argue his government has done enough, and that means missing the train on the country’s hottest political issue.

Source: Go big or go home on housing, Mr. Trudeau

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Housing experts, advocates, industry have unified message for government: Get more rentals built

2023/08/16 Leave a comment

Impressive coalition with practical recommendations, even if they sidestep the demand side and the time lags between current immigration levels and housing availability and affordability:

A coalition of housing experts, advocates and industry representatives are calling on the government to overhaul its policies to get more rental units built.

In a new report titled A Multi-Sector Approach to Ending Canada’s Rental Housing Crisis, the report is co-authored by Mike Moffatt, founding director of the PLACE Centre at the Smart Prosperity Institute, , president & CEO of the Canadian Alliance to End Homelessness, and Michael Brooks, head of REALPAC, a group that represents 130 real estate firms.

“A lot of the conversation is ‘Whose responsibility is it to solve this?’ And the answer should be ‘It’s everyone’s,'” Moffatt told CBC News.

The report, being released Tuesday, makes a number of recommendations to address a dearth in rental units in Canada’s largest cities.

According to the Canada Mortgage and Housing Corp. (CMHC), Canada needs to build 5.8 million new homes — including two million rental units — by 2030 in order to tackle housing affordability.

The report notes that Canada’s renting population and the price of rentals have continued to increase in recent years.

One of the report’s key recommendations calls on the federal government to take on a leadership role and co-ordinate with provinces, territories and municipalities to ensure that more rental units are built.

“This is too big for any one government or sector to handle alone and so we’re hoping the federal government will jump into a leadership role and meet us in the square to have this conversation,” Richter said.

Specifically, the report calls on Ottawa to create a national workforce strategy —  in co-operation with other levels of government, trade unions and education institutions — to ensure Canada has enough skilled labour to build the number of units needed to meet the needs of renters.

It also calls for financial reforms to ensure rental units are viable for builders and developers. Brooks said that costs to the industry have increased to the point where the number of construction projects for rental units is likely to drop significantly in the coming years.

“We’ve got a problem that’s likely to get worse before it gets better without changing some of the elements,” he said.

Some of the financial solutions the report puts forward include creating a tax credit for developers that invest in community rental units and deferring the capital gains tax when a rental housing project is sold and the proceeds are reinvested into the construction of further rental units.

The report also calls for the government to offer fixed-rate financing through CHMC or the Canada Infrastructure Bank on rental builds.

To better help low-income renters, the report suggests a targeted housing tax benefit for families spending more than 30 per cent of their income on rent.

The report also contains recommendations that federal opposition parties would support.

Conservative Leader Pierre Poilievre has suggested in the past that the federal government should tie infrastructure funding to municipalities to local housing permit approvals. Similarly, the report suggests the federal government tie funding to municipal housing targets.

The report also suggests that the government waive the GST on rental housing construction, something that NDP Leader Jagmeet Singh has been calling for.

The author’s said they hope their report sends a signal to all governments of varying political stripes to work together to solve the housing crisis.

“This is about communication and collaboration,” Brooks said. “Get together in a room and talk to each other and make that conversation be based on evidence.”

“I think we were all pleasantly surprised just how much common ground there was,” Richter said of working on the report with his two co-authors.

“There’s plenty of stuff that I’m sure that we don’t agree on, but there was more that we do agree on then we didn’t and I think you see that in the report,” he said.

Source: Housing experts, advocates, industry have unified message for government: Get more rentals built

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Meggs: When it comes to immigration levels, temporary permits are the elephant in the room 

2023/08/15 Leave a comment

Good reminder of the need to manage the number of temporary residents, not just the permanent residents in the annual levels plan.

No sign yet that the government is seized with the pressures on housing, healthcare and infrastructure that result from high levels of permanent and temporary residents or an appreciation of how this issue will harm them politically and how it risks damaging the overall Canadian consensus in favour of immigration.

Anne and I often compare observations but our respective pieces were written separately and complement each other (see Griffith: Canada badly needs an immigration reset):

With pressure mounting to rethink Canada’s immigration policies, it’s no surprise to see a new minister, Marc Miller, take charge of the portfolio. Over recent months, we have seen an increasing number of articles, studies and reports warning that the rapid rise in population is stretching housing and health services and that the current immigration levels might be too high. More voices are calling for a course correction or restoring balance in Canada’s immigration policy.

The federal government may, indeed, want to propose a temporary slowdown of the pace of arrivals in response to these calls for a reset, and the new minister might be more open to this approach. However, any realignment in pace, numbers or skill levels of new arrivals will be much easier said than done. Mr. Miller can certainly level off permanent immigration targets, at least for the short term, but this would make little or no difference to the number of arrivals, since almost all people arriving from other countries now do so on temporary visas and permits.

Permanent immigration planning was relevant years ago when the number of permanent residents each year coincided relatively closely with the number of new arrivals. This was because permanent immigration applications had to be made from outside Canada. It is also important to note that people arriving with permanent status benefit from the same protections and public services as Canadian citizens from the moment they land in the country.

The bulk of people granted permanent resident status these days are already living in Canada with some sort of temporary immigration status, such as a work permit or a student visa. These are not the people driving new demand for housing or health services, because they are already here.

Meanwhile, the number of people arriving as temporary residents isn’t directly managed by the federal government – there are no targets and no ceilings. The former immigration minister Sean Fraserwas very clear that temporary immigration is based on the demand of postsecondary institutions and employers. The number of temporary work permit holders in Canada at the end of 2022 had soared to 798,100. The number of foreign students in Canada has also soared, with more than 807,260 in the country at the end of 2022.

The requirement to apply for permanent residence from outside the country was abolished several years ago. Most people with temporary study or work status (and their spouses and children) nevertheless arrive seduced by the promise of permanent residence. Multiple pathways for just that purpose have been put in place both federally and provincially.

Temporary residents do not have the security, rights or protections associated with permanent residence. They often can’t get a mortgage or a car loan because they’re in the country ostensibly on a temporary basis, even though the positions they hold are often permanent. Many are tied to their employer and therefore to the municipality where they work. The nature of their permit determines which public services are available to them.

Provincial governments will resist cutting back on the number of international students because they would have to find new ways to finance postsecondary institutions. These young people have also become essential to fill low-paid jobs in certain key sectors of the economy.

Employers have been led to believe that temporary immigration is the best and quickest solution for their job vacancies. But this is contrary to international evidence showing that countries with faster-growing populations are not seeing their job vacancy rates decrease: as immigrants spend their incomes, the pressure on demand for workers returns. Naturally, it is cheaper for employers to bring in foreign labour for low-paid, low-skilled jobs than to put in the effort and resources necessary to improve salaries, working conditions and productivity.

No realignment on immigration policy, whether it be slowing the pace of arrivals or getting back to focusing on selecting highly skilled immigrants, will have any effect if it does not include temporary immigration. Restoring balance to the immigration system will not be easy, but Mr. Miller must try.

Anne Michèle Meggs is the former director of planning and accountability at Quebec’s ministry of immigration and the author of L’immigration au Québec: Comment on peut faire mieux.

Source: When it comes to immigration levels, temporary permits are the elephant in the room

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Long way home: Blamed for affordability crisis, Liberals look to pivot on housing

2023/08/15 Leave a comment

But a real pivot has to include both immigration and housing….

Chris Burke and his fiancée have been less than a year away from buying their first home for the past three years.

Saving for a down payment was the first challenge. Now, rising interest rates have kicked home ownership down the road again, stalling the couple’s plans to get married and have children.

“Any gains we make towards purchasing a house, we’re watching the goalposts move further and further away,” the 31-year-old Ottawa resident said.

Feeling “stuck,” as Burke put it, is a sentiment shared by many young Canadians who are increasingly pessimistic about their home ownership prospects.

For the federal Liberals, the growing discontent with the state of the housing market is becoming a political threat.

“I’m a former Liberal voter,” Burke said. “I certainly wouldn’t be voting for them this time around.”

Experts say the housing crisis poses a great risk to the incumbent government in the next election if it doesn’t take drastic action soon.

“This has become probably the most important both economic and political problem facing the country right now,” said Tyler Meredith, a former head of economic strategy and planning for Finance Minister Chrystia Freeland.

“And especially given the significant emphasis the government has put on immigration and the relationship between immigration and the housing market, there is a need to do more.”

Conservative Leader Pierre Poilievre has taken direct aim at the Liberals for the state of the housing market, highlighting the dramatic increases in home prices, rents and even interest rates.

According to the Canadian Real Estate Association, the national average price of a home sold was $709,000 in June 2023, up from $455,000 in Oct. 2015, when the Liberals first came to power.

And the cost of getting a mortgage has soared, following a series of aggressive interest rate increases by the Bank of Canada in response to rising inflation following the COVID-19 pandemic.

Rent prices have also skyrocketed, with some cities seeing double-digit increases over the last year.

Trudeau has tried to deflect for the housing crisis, recently saying there are limits to what the federal government can do.

“I’ll be blunt as well: housing isn’t a primary federal responsibility,” Trudeau said during a housing announcement in Hamilton on July 31.

“It’s not something we have direct carriage of. But it is something that we can and must help with.”

His remarks were quickly blasted by Poilievre, who reminded people of earlier promises Trudeau had made on housing.

“(Trudeau) held a news conference … to tell you all he’s not responsible for housing. That’s funny, because eight years ago, he promised he was gonna lower housing costs,” Poilievre said in a news conference the next day.

Most experts agree that Ottawa isn’t solely responsible for the problem. But many say the federal government could still be doing more to alleviate the shortage of housing at the root of the affordability crunch.

The Canada Mortgage Housing Corp., the national housing agency, warned last year that the country needs to build 5.8 million homes by 2030 to restore affordability.

If the current pace of building continues, then only 2.3 million homes will have been added to the housing stock by then.

There are several things experts say the federal government could be doing, such as better calibrating its immigration policy with housing and reforming tax laws to incentivize rental developments. It could also push local governments to get housing built faster.

The federal government has been hearing from stakeholders and housing experts on these potential solutions, as rumblings grow about a focus on housing in the coming fall economic statement and next year’s budget.

A senior government official who spoke on the condition of anonymity so they could discuss matters not yet made public, says the Liberals plan to take steps over the next year to get other levels of government, the private sector and the not-for-profit sector to build more homes.

Trudeau’s recent cabinet shuffle might be an early sign that the federal government plans to prioritize housing. The prime minister appointed one of the stronger communicators and a rising star on the Liberal bench, Sean Fraser, to take on housing and infrastructure as one, amalgamated file.

“The prime minister said something to the effect of, ‘I’ve got a big job for you to do,'” Fraser said in an interview.

Fraser said he hopes to help restore a housing market closer to the one he grew up with in small-town Nova Scotia: one where having a job was enough to buy a home.

“It might take a bit of time for us to solve the housing challenges that are before us,” he said. “But man, is it a challenge we’re solving.”

That challenge includes overcoming jurisdictional issues. Many of the policy levers that could help spur more housing development are at the provincial and municipal levels of government.

Urban planning, zoning laws and red tape are the purview of local governments, which have decision-making powers that can help or hinder housing development.

Ben Dachis, associate vice-president of public affairs at the C.D. Howe Institute, says the predicament the Liberals find themselves in speaks to the “insidious nature of consistent federal overreach.”

“The cautionary tale is that the federal government needs to stick with jurisdiction,” Dachis said.

But housing expert Carolyn Whitzman has a different take. The University of Ottawa adjunct professor says the federal government can’t turn its back on Canadians in the middle a crisis.

“The federal government: it’s where the buck stops,” Whitzman said.

“If housing and climate change are the crises that they’re certainly treated (as), the federal government is going to have to put on its big kid pants and actually deal with it.”

Source: Long way home: Blamed for affordability crisis, Liberals look to pivot on housing

Related article: Canada ‘absolutely’ can’t build more houses without more immigrants, minister says

Canada’s housing crisis “absolutely cannot” be solved without the aid of new immigrants who bring their skills here, Immigration Minister Marc Miller told reporters on Friday

“The federal government is making housing more affordable and bringing in the skilled workers required to build more homes,” Miller said in Montreal.

“Without those skilled workers coming from outside Canada, we absolutely cannot build the homes and meet the demand that exists currently today.”

Miller was asked by reporters if he was considering slashing Canada’s immigration targets, which are currently at historic highs, in response to a recent Bank of Canada report that new immigrants are adding to housing demand.

The minister said he was not.

“People coming to this country are resourceful. When they bring capital, they are able to acquire houses,” he said.

“If people are asking us to slash, what does that mean? Does that mean slashing the skilled workers that we need to actually build those houses? Slash family reunification, which can be devastating for the mental health and well-being of the families that are already here?”

Canada aims to welcome 451,000 new immigrants in 2024.

By 2025, the number is expected to go up to 500,000 new immigrants in one year.

Miller said around 60 per cent of new immigrants to Canada are economic migrants, many of whom are the kind of skilled workers needed to build more housing. Family reunification visas account for around 20 per cent of those migrating. The rest, he said, are refugees and asylum seekers.

“We have a humanitarian duty towards people that are fleeing war and persecution,” Miller said.

Last week, a spokesperson from Miller’s office told Global News that fulfilling Canada’s labour shortages is one of his key priorities, and a key goal of the government’s immigration targets.

“Strategies like Express Entry, and the historic Immigration Levels Plan, which is largely made up of economic migrants, are a great asset to our nation as they will directly help combat the ongoing labour shortage. This is especially true when it comes to the housing sector,” Bahoz Dara Aziz, press secretary to the immigration minister, told Global News.

“With provinces like Ontario needing 100,000 workers to meet their housing demands, it is clear that immigration will play a strong role in creating more homes for Canadians.”

The federal government increased its immigration targets in November 2022, and Miller has suggested those targets may need to keep rising.

The construction industry is short tens of thousands of workers, and experts say a coming wave of retirements could make the problem worse.

Meanwhile, Canada is millions of homes behind what’s needed to reach housing affordability this decade.

The job vacancy rate in construction is at a record high with around 80,000 vacancies in the industry,  CIBC deputy chief economist Benjamin Tal said in a recent note.

Those vacancies, which push up building costs and impede productivity, come at a time when the residential construction industry is under pressure to meet the demands of a growing population.

Canada Mortgage and Housing Corp. forecasts a need for 3.5 million more homes by 2030 than the country is currently on track to build.

The number of new homes built, however, has been in decline, from just over 271,000 in 2021 to 260,000 in 2022. And in May this year, the annual pace of housing starts dropped 23 per cent month over month, leading the CMHC’s chief economist to predict that just 210,000 to 220,000 new homes will be built by the end of the year.

Last week, the federal government launched a separate stream of entry for newcomers with work experience in skilled trades.

“It’s absolutely critical to address the shortage of skilled trades workers in our country, and part of the solution is helping the construction sector find and maintain the workers it needs,” Miller said in a statement, making his first major announcement as Canada’s new immigration minister.

“This round of category-based selection recognizes these skilled trades workers as essential, and I look forward to welcoming more of these talented individuals to Canada.”

Immigration, Refugees and Citizenship Canada (IRCC) said that by welcoming people in skilled trades such as carpentry, plumbing and welding, Canada can help its construction sector attract skilled workers.

But there remain questions about how the government can ensure those bringing the skill set to work in construction actually end up working in the sector and are able to navigate the certifications processes across the country.

Source: Canada ‘absolutely’ can’t build more houses without more immigrants, minister says

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Sun editorial: High immigration fuels housing shortage

2023/08/14 Leave a comment

As it appears from Minister Miller’s initial public comments that the government has no intention to revise or freeze current and planned levels, they risk being labelled, correctly, as being pro-immigration ideologues and oblivious to reality.
There is enough concern about the impact of permanent and temporary migration across most of the political spectrum that this presents a major political risk to the Liberals in 2025.
The weakness, or course, is that all the provinces want more immigration save for Quebec and are thus equally complicit to the Liberal government: 
Federal Immigration Minister Marc Miller has responded to repeated economic warnings the Trudeau government’s high-intake immigration policies are contributing to Canada’s housing shortage with a turn of phrase that doesn’t address the problem.
He said Friday we need more immigrants to build more housing.

“Without those skilled workers coming from outside Canada, we absolutely cannot build the homes and meet the demand that exists currently today,” Miller said, as reported by Global News.

But if the federal government’s plan to bring in almost 1.5 million immigrants to Canada between now and 2025 is already contributing to the housing shortage and raising the cost of housing, how will bringing in more immigrants solve it?

As TD Bank warned recently: “Continuing with a high-growth immigration strategy could widen the housing shortfall by about a half-million units within just two years. Recent government policies to accelerate construction are unlikely to offer a stop-gap due to the short time period and the natural lags in adjusting supply.”

The National Bank of Canada cautioned: “The federal government’s decision to open the immigration floodgates during the most aggressive monetary tightening cycle in a generation has created a record imbalance between housing and demand … As housing affordability pressures continue to mount across the country, we believe Ottawa should consider revising its immigration targets to allow supply to catch up with demand.”

BMO (Bank of Montreal) reported “heightened immigration flows designed to ease labour supply pressure immediately add to the housing demand they are trying to meet … The infrastructure in place and the industry’s ability to build clearly can’t support unchecked levels of demand, so the affordability conundrum continues.”

It’s true there is a shortage of workers in the construction industry and Miller recently announced a plan to encourage skilled trade workers to immigrate to Canada, but the federal government can’t guarantee how many immigrants will end up in the construction trades.

Given the fact most immigrants end up in cities such as Toronto, Montreal, Vancouver, Edmonton and Calgary, the feds should be consulting with provincial and municipal governments about the number of immigrants they can reasonably absorb.

This as opposed to obsessing about reaching a target of almost 1.5 million immigrants by 2025.

Source: EDITORIAL: High immigration fuels housing shortage

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Record levels of international students straining Canada’s housing supply further

2023/08/12 Leave a comment

Not much new but confirms problems. Bit rich of Universities Canada to state that “Solving the housing crisis will require collaboration among all levels of government…” while ignoring the complicity of universities in increasing demand:

Record numbers of international students coming to Canada is making the already inflated cost of housing worse, said Steve Pomeroy, a policy research consultant and senior research fellow at Carleton University’s centre for urban research.

The biggest strain on Canada’s housing market, he said, isn’t only the rising rate of permanent residents, with more than 400,000 permanent residents in 2022, and the Liberal government determined to hit 500,000 a year in the next couple of years. Those coming here seeking temporary residence, either temporary foreign workers or international students, are fuelling rental price increases.

“Temporary foreign workers and students are going to be renters, as opposed to owners,” he said.

Average rents nationally jumped more than 10 per cent last year and are expected to rise again this year, although rents in hotter markets, such as Toronto and Vancouver, are up significantly more.

Data released earlier this year by Immigration, Refugees and Citizenship Canada (IRCC) show 807,750 international students with valid student visas studying at Canadian post-secondary institutions as of the end of 2022. At 30-per-cent higher than the 617,315 students in 2021, it’s now at the highest level it’s ever been.

With the exception of 2020, where numbers were impacted by the COVID-19 pandemic, Canada’s complement of international students historically saw between six to nine per cent growth annually.

Pomeroy said universities are driving the numbers as a way to generate more revenue, because they can charge international students much higher tuitions.

“In Ontario, university tuition fees are frozen, grants are frozen, but the only variable that universities have to generate new revenues is international students, so they naturally go and chase those,” he said.

More visiting students, he said, create inordinate demand at the very bottom of the rental market, where there’s already a tight market for low-income workers, fixed-income seniors and those who rely on social assistance.

Benjie Rustia, an official with an international immigration and study agency located near the Philippine capital of Manila, said his international-student clients know that coming here means fighting a tight entry-level rental market.

“They are well informed by their relatives or friends in Canada,” he told the National Post.

“Making informed decisions is the basic aspect for the process for international students, and are based on thorough research and understanding.”

Late last month, news of an international student from India found living under an east Toronto bridge brought attention to the problem, and highlighted concerns from advocates that Canada’s affordability crisis is rendering increasing numbers of foreign students homeless.

Most international students coming to Canada flock to Ontario, which in 2022 saw over 411,000 foreign students enrolled in the province’s post-secondary institutions.

British Columbia ranked second with 164,000 students last year, followed by Quebec with 93,000, Alberta with 43,000 and Manitoba with 22,000.

While India’s 319,130 international students rank as Canada’s biggest cohort, followed by China with 100,075, the Philippines is seeing big bumps in the number of their students coming here.

Canada issued 25,295 study permits to Filipino students to study here in 2022, a 76-per-cent increase from the 14,355 visas issued to students from that country in 2021.

As of June 2023, 11,400 permits were issued to students from the Philippines.

Rustia said his clients typically search for schools that offer on-campus residence living or look for schools near where they can stay with friends and relatives already in the area.

News reports on Wednesday described long wait-lists for on-campus housing at Calgary universities, with 740 students waiting for housing at the University of Calgary, and the city’s Mount Royal University establishing a waiting list for their 950 dorm rooms for the first time in the school’s history.

Solving this problem, Pomeroy said, could be done by striking partnerships between schools, governments and developers.

“If the government was smart, it would say ‘OK, we’re causing the problem by giving out these visas to international students, how can we solve this problem,’” he said.

“Let’s work with the universities, let’s work with the private developers for some incentives and stimulus.”

He suggested using existing programs, such as the Canada Mortgage and Housing Corporation’s rental construction financing initiative — which provides low-cost loans to encourage rental apartment projects — to encourage student-centred rental construction to keep the pressure of local residential rental markets.

“You can wait until folks get displaced and they’re in the homeless shelter and we intervene and provide supportive housing and wraparound services to help them get out of shelters at significantly high cost, or we could build 1,000 units of student housing with no cost to government,” Pomeroy said.

A statement to the National Post from Universities Canada, a post-secondary institution lobby group, agreed the federal government should be doing more to address the issue.

“Solving the housing crisis will require collaboration among all levels of government, and universities remain willing partners in these efforts,” wrote interim president Philip Landon.

“Universities Canada urges the federal government to meet its commitments, as set out in the National Housing Strategy, to reduce homelessness, construct new homes and provide Canadians with access to affordable housing that meets their needs.”

Canada’s universities, he wrote, are doing more to approve and build more on-campus housing, as well as provide resources to help students access off-campus living space, as well as developing “innovative housing models” to relieve local rental market pressures.

Emails to Immigration Minister Marc Miller went unacknowledged.

Tom Kmiec, the Conservative party’s immigration and citizenship critic, said that the current government’s housing and immigration policies are leaving newcomers on the streets.

“More homes were being built in 1972 when Canada’s population was half of what it is today,” he said in a statement.

“The Liberal government has failed to deliver on their housing promises and failed to come anywhere close to building the number of houses we need, leaving Canada short millions of homes and Canadians struggling to afford a place to live.”

Source: Record levels of international students straining Canada’s housing supply further

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David Rosenberg: Why immigration could be good for housing affordability in the long run

2023/08/11 Leave a comment

Not to be facetious, but in the long run we are dead! Time lags matter and it is clear that current immigration policies, with some specific exceptions, are not helping address Canada’s chronic productivity gap:

We have been vocal critics of Ottawa’s aggressive immigration policy from the perspective of creating further strains on a national housing market that is already stretched to the limit from an affordability standpoint due to a lack of supply. Creating a nation of renters because of a persistent multi-year housing bubble exacerbated by the immigration-fuelled boom in demand for residential real estate, is surely going to exert negative and unstable effects on the economic fabric and society as a whole.

It would be nice if the federal government began to focus its attention toward putting more emphasis on importing construction workers and skilled tradespeople, that much is for sure. After all, real residential investment is at -18.7 per cent year over year, and negative for seven quarters in a row — and all the while, Canada’s population and housing needs have been rising inexorably.

The Canada Mortgage and Housing Corp. (CMHC) estimates that Canada needs an additional 3.5 million units by 2030 to restore affordability — so the federal government would be well advised to ask immigrant applicants whether they know how to work with hammers and nails. The country also has a deficiency of health-care workers that should be more adequately addressed in this aggressive immigration policy, but we shall save that file for another day.

Before going down the rabbit hole of lamenting the excess demand effects on housing from the record levels of immigration that have boosted population growth to two per cent at an annual rate, far above historical norms and, outside of Iceland, at the very high end of the range in the industrialized world, the beneficial impact on Canada’s growth potential from the supply side must be addressed.

And that is because one way to deal with the housing affordability crisis in Canada is to find ways to boost national income — income being the denominator in the classic homeowner affordability ratio. From that perspective, this immigration policy could very well end up carrying with it more benefits than costs, and counterintuitively prove to be a development that could redress the inherent imbalances in the national housing market.

Immigration does add to home price inflation on the demand side by elevating housing prices over the near-term. But on the supply side, it is disinflationary by filling in labour shortages and increasing productivity — which then helps provide a positive underpinning for real incomes. And it is the prospect that real income growth rises on a secular basis that is at the root of a positive “take” one can adopt on this aspect of immigration.

While difficult to quantify the net effect of the supply and demand contributions of immigration, the comprehensive models we designed show that supply effects outweigh demand — so if you take a holistic, or what is called a “general equilibrium,” view of this demographic shock, increasing immigration can indeed be disinflationary. Again, this is positive for real incomes — and this could be a real key towards helping resolve the affordability challenge.

Our models show that when net international immigration flows are accounted for, the downward inflation impact is highly statistically significant. That is very encouraging — and why the Bank of Canada has taken a very even-handed approach to this issue, with Governor Tiff Macklem commenting on the supply-side benefits of an ambitious immigration stance.

What is fascinating is that immigration, if done right, can also be a factor that reverses the structural decay in Canadian labour productivity — which has been negative year over year for the past nine quarters. High-skilled immigrants from the “economic category” of Canada’s immigration program are a solution to this problem. In fact, what seems to go under-reported is that immigration in Canada is now focused on this “economic category” — in other words, more than half of recent immigrants are “elected based upon their potential economic contribution to meet labour market needs.”

A public policy focus to improve productivity and thus decrease inflation and bolster real incomes should involve a concentration in immigration on sectors like health care and construction — to help fill in labour shortages.

Bottom line: Ensuring that we have a sensible immigration policy in Canada means using it as a tool to redress, not compound, the housing affordability crisis and a distorting real estate price bubble that just keeps getting bigger.

But the good news in all this is that immigrants in Canada do get integrated into the labour market rather quickly.

The employment rate among landed immigrants and non-permanent residents (64.6 per cent — it was 61.6 per cent in Dec 2022) has been higher than those born in Canada (62.4 per cent) every month since May 2021. The gap is now at a historic high of 2.2 percentage points.

The change in the employment rate has also been much faster for immigrants and non-permanent residents than for those born in Canada, meaning they contribute toward a backdrop of rising incomes in nominal terms.

Statistics Canada has found in its own research that the “median wage of economic immigrant principal applicants surpasses that of the Canadian population one year after admission.” Immigrants pull their economic weight, in other words, and the historical record shows a trend toward labour market involvement and to improved productivity. In fact, research published by Statistics Canada found a positive relationship between the immigrant share in the business sector and growth in labour productivity, with productivity expanding by 1.9 per cent for every 10-percentage-point increase in the share of immigrants at a firm.

While we and others have been focused on the very short-term effects of the immediate demand rush the immigration policy is having on housing, perhaps we all need to take a longer-term view of the supply-side income benefits and how that can help ease the affordability problem plaguing the younger cohorts of society.

That said, it is clear that in the here and now, ensuring that the immigrants flowing into the “economic category” have experience in the building trade sector would also go a long way towards providing relief for a housing market that is clearly short of the supply needed to realign home prices to more normal levels relative to incomes.

David Rosenberg is founder and president of independent research firm Rosenberg Research & Associates Inc. To receive more of David Rosenberg’s insights and analysis, you can sign up for a complimentary, one-month trial on the Rosenberg Research website. Atakan Bakiskan is a junior economist at Rosenberg Research.

Source: David Rosenberg: Why immigration could be good for housing affordability in the long run

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Veal: Amid Canada’s housing crisis, immigration needs to be slower, more focused 

2023/08/10 Leave a comment

Yet more questioning:

High expected immigration is the main reason that Canada’s total output will likely increase by 1.5 per cent annually in 2023 and 2024, according to the headline numbers from the International Monetary Fund World Economic Outlook. That would be the highest in the Group of Seven.

But that document also includes the predicted changes in output per person. That is a better measure of the change in the average standard of living, as it adjusts for Canada’s high population growth. The 2023 and 2024 predictions for the country are –0.6 and 0.1, a cumulative decrease over the two years. That’s the worst performance in the G7.

Part of this has to do with the lack of investment to complement the inflow of people. The most obvious symptom is Canada’s housing crisis.

The writer, Max Frisch, famously commented on European guest worker immigration: “We wanted workers, but people came.” People need homes, and Canada doesn’t have enough of them – even for its resident population. The high prices from the resultant high demand weigh heavily on the economy. While we wait for housing progress, this country needs slower and more focused immigration.

Immigration in general can be good for the economy. The fact that per capita GDP is expected to decline amid heavy immigration doesn’t mean that those already in Canada will on average be worse off; a good part of the reduction in that metric is due to low-income migrants bringing down the average.

Many of us already here will likely be made better off through the contributions of the newcomers. This is particularly clear in the caring and agricultural sectors. And in the long-term, while it is less clear at higher levels, immigration may bring important macroeconomic advantages. Immigrants can bring new ideas and entrepreneurship.

Moreover, Desjardins economist Randall Bartlett finds that these very high rates of immigration are the only way to prevent large increases in the proportion of the population that is 65 and over. Permanent immigrant families will also help share the national debt, especially as they experience increases in productivity and income.

But, as experts such as Mr. Bartlett have pointed out, high immigration is only sustainable if something can be done about housing, and this is not easy.

In the short term, the housing crisis cannot be solved – it can only be mitigated. Building new housing takes time. In the meantime, reducing immigration temporarily to prepandemic levels would help. Those levels would still provide ample room for home construction workers if necessary, as well as other high-skilled workers in strategic areas.

In principle, the current permanent immigration target could still be met with the reductions coming from the temporary side. For example, the student visa program could be limited with allocations used to incentivize educational institutions and their municipalities to do more on housing.

In the medium term, a solution requires more than doubling the inflow of housing units – Herculean even without the headwind of higher interest rates. It is no coincidence that federal cabinet minister Sean Fraser was recently shuffled from the immigration portfolio to housing.

But it is a three-levels-of-government problem, and municipalities do not face the same urgency from the aging population. In communities where most voters own rather than rent housing, the net political pressures may be against permitting increases in housing supply that might dampen housing prices.

Broader resistance to increased immigration will almost surely come. The brunt of unaffordable rents is borne by those with lower incomes. These are largely the same individuals who may be losing out on the higher wages, the greater flexibility in work arrangements, and the benefits of productivity-increasing capital and training that employers might turn to were there not the alternative options of hiring recent immigrants or accessing the Temporary Foreign Worker program.

But none of this is the fault of those who move here, and nothing changes the ultimate economic benefits of immigration. Canada must cherish immigrants, helping them settle as much as possible – but we need some breathing space to be able to do so properly.

Michael Veall is a professor of economics at McMaster University.

Source: Amid Canada’s housing crisis, immigration needs to be slower, more focused

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‘Need too great’: Canada could raise immigration targets despite housing crunch

2023/08/05 Leave a comment

Change in Minister doesn’t mean a change in policy or understanding as government continues to ignore the linkage between housing, healthcare and infrastructure with immigration. Disappointing, as a change in minister provided an opportunity to signal recognition of this linkage and the negative impacts:

Prime Minister Justin Trudeau’s government won’t lower its immigration targets despite growing criticism that drastic population growth worsens existing housing shortages.

In one of his first interviews a week into his new cabinet role, Immigration Minister Marc Miller said the government will have to either keep — or raise — its annual targets for permanent residents of about half a million. That’s because of the diminishing number of working-age people relative to the number of retirees and the risk it poses to public service funding, he said.
“I don’t see a world in which we lower it, the need is too great,” said Miller, who’s expected to announce new targets on Nov. 1. “Whether we revise them upwards or not is something that I have to look at. But certainly I don’t think we’re in any position of wanting to lower them by any stretch of the imagination.”Globally, advanced economies are confronting similar challenges from decreasing birthrates and aging workforces, and many are competing for skilled workers. But while immigration for some countries is a divisive issue that can polarize voters and even topple a government, Canada has comfortably relied on public support to open its doors more widely for working-age newcomers.Miller’s comments suggest the government is still counting on that backing to grow its population rapidly to stave off long-term economic decline. Trudeau’s government has consistently raised its target for permanent residents. Last year, foreign students, temporary workers and refugees made up another group that’s even larger, bringing total arrivals to a record one million.

Source: ‘Need too great’: Canada could raise immigration targets despite housing crunch

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