Homes have become so expensive because there aren’t enough to meet demand. Last week, a Toronto condo developer made headlines with a plan to buy hundreds of homes and then rent them back out to Canadians. So, it makes sense that institutional investors would want a piece of the action. Indeed, the policy problem of unaffordability is one of the biggest of our time.
But putting the blame for this problem on investors, while tempting, lets the truly guilty parties get away with policy malpractice of epic proportions. Canadians should want to get the villains of this story right, and our politicians should start finding ways to be housing heroes. Canadian populists are not the first ones to try to pin the blame for this problem on corporate interests. BlackRock executives did not create the public policy mess that has made housing across North America as inaccessible as it is.
Conservative Leader Erin O’Toole tweeted out his displeasure at «billionaire investors» competing with first-time homebuyers. On an emotional level, this approach resonates with regular Canadians trying to buy. Canadians who feel priced out of home ownership have every reason to be upset but going after investors misses the forest through the trees. Politicians owe it to the next generation of homebuyers to identify the problem for what it really is.
There is one simple reason homes are getting so expensive. Canada is 1.8 million homes behind the G7 average and the problem is only getting worse as we welcome new Canadians and more young people get ready to move out of their parents’ homes. We should just build more homes as quickly as possible and as supply catches up with demand, prices will drop. As prices drop, investors will turn to more valuable assets and regular homebuyers will have reasonable access to the market.
This brings us to the true villains of Canada’s housing story, the municipal politicians who stand in the way of new housing. Tune in to any virtual community consultation for a new development and witness local councillors opposing even modest densification. NIMBYism can certainly be a problem, particularly when so-called progressives reject affordable housing, but the NIMBYs would not be so powerful without the local politicians who indulge them. Municipal leaders across Canada are getting re-elected over and over by indulging local hand-wringing, stoking the flames of discontent, quashing new development and then taking a victory lap.
Bashing investors does nothing to confront the gatekeepers who oppose development. Fortunately, thought leaders have already equipped us with ideas for how to combat the real housing villains. Politicians who want to help people and benefit at the ballot box should start by getting the problem right.
Source: Ginny Roth | NP