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Housing experts have presented Trudeau’s ministers with a plan to tackle affordability, but will the government listen?

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Housing experts and affordability advocates presented a plan to Prime Minister Justin Trudeau’s cabinet during its summer retreat this week that outlined how the federal government can take decisive action to address Canada’s worsening affordability crisis.

Western University professor and economist Mike Moffatt and Tim Richter, president & CEO of the Canadian Alliance to End Homelessness, were the most high-profile experts asked to present a housing plan to the cabinet in Charlottetown.

Moffatt, earlier this week in an exclusive for The Hub that laid out his message to cabinet, wrote that a “wartime effort” from the federal government will be required to tackle the affordability crisis, and that it must begin without further delay.

“We should view this strategy as an investment, not a cost, as the economic opportunities are enormous,” wrote Moffatt. “The key to this industrial strategy working is speed. The federal government must avoid setting up new approvals processes and micromanaging the system.”

Following the conclusion of the retreat, Richter, in an interview with The Hub, says he is bullish on the prospects of a federal government plan to address the sharply declining affordability of owning or renting homes across Canada. 

“I think the fact we were there is a pretty good indication that they’re receptive to our ideas,” says Richter.

It was reported following the cabinet retreat’s conclusion that the federal government still lacks a national housing strategy despite Richter and Moffatt’s presentation, leading to more criticism that the government is not serious about taking on the affordability crisis. However, Richter says it is unfair to have expected such a plan to be crafted in less than three days.

“Frankly, politicians at all levels have really been struggling to figure out what to do about the housing crisis,” says Richter. “This is a trillion-dollar problem, with a ton of complexity and they’re not going to whip together a plan in 72 hours. That said, I don’t think they have a lot of time and are going to have to put some new policy forward in the next month or two.” 

While Richter could not fully divulge his conversations with cabinet, he says he is hopeful that the government will try to get more involved in alleviating the crisis. 

“I can’t talk about the cabinet conversations directly, but I get the sense they are really seeing housing as a crisis they need to respond to quickly and with more ambition than they’ve shown to date,” says Richter. 

Experts, analysts, and others routinely appear before televised parliamentary committees to testify on issues ranging from foreign electoral interference to social media regulation, but bringing in outside experts to a cabinet retreat to provide input into the housing issue specifically reinforces how salient it has become for this government.

Polling has suggested that affordability is top of mind for many Canadian voters, and other polls conducted in recent weeks have that displayed Trudeau’s Liberals are trailing behind the Conservatives by a wide margin. 

Whether the government follows through on the discussed proposals is another matter. The cabinet retreat itself is private and subject to cabinet confidence which create a different dynamic than when experts testify before parliamentary committees. The biggest, according to J.J. McCullough, a Vancouver-based columnist and professional YouTuber, is that cabinet isn’t televised so there isn’t the same incentive for politicians to be performative.

“When you don’t have the cameras on you, you’re not scoring any sort of partisan points,” says McCullough. “No member of the public is able to engage with the performance one way or another, so I think it’s a reason to be positive about it.” 

Many televised parliamentary committee sessions have devolved into abrasive back-and-forths between witnesses and the MPs, including McCullough’s testimony last year that was critical of the government’s push to regulate social media platforms like YouTube. 

However, McCullough remains skeptical that the federal government will alter its approach to receiving testimony, even without any cameras. 

“Are the politicians engaged in a good faith effort to serve a broad range of opinions that may exist on any issue, or are they carefully curating favourable experts who tell them what they want to hear?” asks McCullough. “And, when they go ahead and do what they were going to do anyway, they can say in a disingenuous way, ‘Oh, well, we surveyed the relevant experts and they all agree with us that this was a good thing to do.’”  

Trudeau came under fire prior to the cabinet retreat after he stated that housing is not a primary federal responsibility and put the onus on the provinces instead. The federal government’s current efforts to alleviate the crisis, such as special, tax-free savings accounts for young people to put away money for a downpayment, have been called insufficient to meet the challenge.  

Richter expects housing to play a major role in the federal government’s annual fall economic statement and says he will be “badgering” them if Ottawa does not stay in touch about a housing strategy.

“With every passing day more and more people are being pushed into homelessness,” says Richter. “As we get near the end of the month and closer to rent being due, I’m kept awake at night worrying about those people and the thousands of people languishing in shelters or on the street. The government needs to feel that same urgency.”

Can the housing crisis be fixed without lowering current property values? Analysts are skeptical

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Newly-appointed Minister of Housing Sean Fraser made a bold pledge in his first weeks on the job when he said that the federal government’s goal was to increase Canada’s housing supply while maintaining the high values of existing properties.

Fraser’s statement has since been the subject of some debate among economists and other policy scholars, mainly because it seems to conflict with conventional thinking about the relationship between supply, demand, and prices. Although it was largely met with skepticism from such experts, there are some notable voices on housing, including Western University business professor and recent Hub contributor Mike Moffat, who have broadly agreed with it. 

The predominant view is reflected in Moshe Lander, a senior lecturer of Economics at Concordia University, who says home values will be maintained as long as demand outpaces any increase in the housing supply. 

“If the increase in demand continues to outstrip any increase in supply, housing prices will continue to rise,” says Lander. “The only way an increase in housing supply will result in a decline in home values is if it increases faster than demand increases, which is unlikely given Canada’s growing population.”

The current price to rent an unfurnished, one-bedroom apartment in Vancouver was more than $2800 per month in January, which was roughly the average monthly rent of a two-bedroom apartment in the city in 2019. The average price of a house across Canada in April was $716,000, up from $472,000 in 2019. 

The federal government has staked out an ambitious goal of admitting half a million new residents per year, a number which vastly outstrips the number of new homes built yearly over the past five years. 

Ron Butler, the founder of Butler Mortgage, says Fraser’s statement is completely unrealistic. 

“That is a venture that would only normally be undertaken by David Copperfield because it has a magical quality to it,” says Butler. “To say that there is an ability to create affordable homes for young Canadians to buy, and that at the same time, there will be no price reduction at all for people who’ve purchased already is obviously magical thinking.” 

Eric Lombardi, the founder of More Neighbours Toronto which advocates for boosting the housing supply, says it is impossible for housing prices to be maintained while space for housing becomes more affordable. 

“What we need to focus on is less about what’s the value of the land, but more so on the cost per square foot of net new housing,” says Lombardi. “If that comes down, the cost per square foot of housing in the built-up market has to come down.

Lombardi says the value of the land itself, rather than the property value, should be the focus of any effort to tackle unaffordable prices. 

“A large reason why we have this housing crisis is that we’re very restricted on how we can use land,” says Lombardi. “A very little bit is allowed to be much more than a small project, and even the laws around multiplexes that were introduced keep most properties infeasible to build multifamily housing.” 

Lander says the solution is not as simple as determining how many new homes are required to lower prices, and that many other factors are involved. 

“Where are those homes? How fast is the net population increasing?  How many people want to own a home versus rent? What type of homes are being built?  How will climate change affect the way we use those homes?” asks Lander. 

At this week’s federal government’s cabinet retreat, housing is slated to be a major topic, with Moffat and other housing experts scheduled to give presentations to Prime Minister Justin Trudeau and his ministers. However, Butler does not believe the federal government is serious about tackling the housing crisis. 

“If you felt it was a crisis, like you felt health care was a crisis, you would call a federal-provincial meeting like you did in the case of health care,” says Butler. “You would bring out to the provinces something along the lines of what you did with the new childcare benefit, where you drastically reduced costs of childcare in Canada…but you haven’t even done that.” 

Furthermore, Butler says there are more cynical reasons why any government may be inclined towards ensuring property prices remain high. 

“There is an incentive at all levels of government, not to knowingly reduce home prices because the most consistent voter in any election…are people over the age of 55 who own homes,” says Butler. “The classic baby boomer is very pleased with the increase in the value of the properties they bought 20 years ago, or 25 years ago, or even 15 years ago.” 

Conservative leader Pierre Poilievre has actively courted younger voters frustrated over unaffordable housing and pledged to attach requirements for boosting the housing supply to federal funding for municipalities. 

While the Liberal government of Justin Trudeau came to power in 2015 in large part due to younger voters, polling has suggested that voters aged 55 and older have migrated away from the Conservatives and towards the Liberals.