Written By Wyatt Claypool, Posted on April 12, 2022
Deputy Prime Minister and Minister of Finance, Chrystia Freeland, speaking yesterday about the Liberals government’s federal budget released late last week focused on plans to try and tackle the issue of unaffordable housing in Canada.
Recently, home prices have risen significantly, but it has been a decades-long issue. Back in the 1960s and 1970s Canadians only spent around 17 percent of their incomes on housing, but now in 2022, the average Canadian household is spending 48.6 percent of their income on housing.
Freeland leading into the Liberals’ new solutions in the budget for the housing crisis said that:
One of the things that I am most concerned about as someone who — it shocks me to say this — is 53 years old, is the intergenerational injustice…We had a better shot at buying a home and starting a family than young people today, and we cannot have a Canada where the rising generation is shut out of the dream of home ownership.
While she is correct about the intergenerational increase in unaffordability within the housing market, Freeland then proceeds to label the symptoms of the housing crisis as the “core problem.”
Freeland pointed to the number of houses being built as the main issue in the housing market, stating, “We cannot have the fastest growing population in the G7 without also having the fastest growing housing stock.”
Yes, the lack of new homes and apartments being built is part of the problem, but this way of framing the issue is like saying the problem with ghettos is the lack of economic activity and not the rampant crime that causes businesses to shut down.
The Liberals are currently planning to spend $10.14 billion on housing over the next 5 years, with $5.8 billion of it going towards the construction of affordable housing and Indigenous housing. Along with the spending the Liberals are creating a new Tax-Free First Home Savings Account (TFFHSA) which can have $8,000 deposited into it per year, to a maximum of $40,000.
The Liberals believe they can double the rate of home development with this plan.
What Freeland and the rest of the Liberal government are missing is what caused developers to not want to increase the housing stock. Their solution to the problem merely builds a smattering of subsidized housing and makes it slightly easier for first-time homebuyers to save a tiny fraction of the average $816,000 price tag for a house in Canada.
The Liberals see the sky-high home prices as a concrete fact, and not the symptom of local policies that make it more expensive and time-consuming to build. By throwing money at the problem the Liberals are just reducing pressure on municipalities and provinces to fix their overly-restrictive zoning laws, environmental regulations, cumbersome review processes, and to scrap rent control laws that remove the incentive to build more rental properties.
There is a reason why Houston, Texas, has experienced massive population growth over the past few decades yet has had housing prices that did not skyrocket the way they did in cities like San Francisco, California, or New York City, New York. Houston, unlike other large cities in the USA, has few zoning laws and environmental regulations so developers can easily increase the stock of new housing to meet consumer demand.
In San Francisco, on the other hand, every new development needs to be approved by the municipal government, environmental evaluations need to be made, and private citizens can force construction to halt for new evaluations at any point in the construction process over hollow concerns over just about anything. San Francisco also has taken huge swaths of land off the market under the misguided idea that “open space” will become extinct if millions of acres are not protected from developers.
In Canadian cities like Toronto, and Vancouver, homes are not pricey because of wealthy foreign buyers, or “excessive profits in the financialization of housing,” which the Liberals promised to target in their 2021 federal election campaign platform. Homes in Canadian cities are getting more expensive because centre-left to left-wing voters who already have homes vote for policies to “protect their communities” or “protect the environment” which blocks out new home buyers, who then believe resulting housing unaffordability is an issue disconnected from the restrictive policies they voted for.
Over the next ten years, we will double the number of homes we build, help people save for their first home, and stop foreign financial speculation in Canadian homes. pic.twitter.com/0EVr2VQKCG
— Chrystia Freeland (@cafreeland) April 9, 2022
If Chrystia Freeland and the Liberals actually wanted to increase the stock of houses on the market and reduce prices they would be putting pressure on, or giving incentives, to provincial and municipal governments to loosen their regulations and restrictions on new developments.
At this point, it is both shocking and predictable that the Liberals would assume that the housing market just needs more money injected into it in order to incentivize the construction of new housing. Throwing money at an issue has rarely ever solved it, especially when the issue is high prices, but the Liberals seem more preoccupied with the short-term political gain associated with bragging about the amount of money they are willing to waste on a fake solution to a real problem.
Wyatt is a student at Mount Royal University, where he is the president of its Campus Conservative club. In his writing, he focuses on covering provincial and federal politics, firearms regulation, and the energy sector. Wyatt has also previously written for The Post Millennial.
A well written report. Thanks for your effort. It raises awareness.
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