To call the housing situation in Canada a crisis today is a trope/cliche/piece of useless newspaper clickbait all rolled into one. Today we’re looking at the origins and potential policy solutions to dig ourselves out of this hole.
First - the problem starts with politics. Any Economics student can tell you the Canadian housing market is extremely price inelastic. That just means people keep buying houses regardless of what happens to the price. Obviously everyone needs a place to live but there are more interesting reasons for the housing costs.
Issue #1: Zoning Laws.
Compare these two cities. Amsterdam uses a zoning technique called ‘mixed-use walkable’. The aim is to let the market decide (within some guidelines) what the highest and best use of of land is. Restaurants, stores, schools, transit hubs, houses, and small apartments to exist right next to each other. This is unimaginable in a place such as Houston (or the GTA for new developments) that has strict zoning codes: office zones, housing zones, apartment zones, commercial zones (Malls usually).
Houston style development is significantly less dense, meaning MUCH more land is needed to accommodate the same number of people and the massive infrastructure for cars (you never have enough people all wanting to go to the same place to justify mass transit). In the USA it’s easy to get more sprawling developments approved, meaning their housing supply is greater relative to population though obviously very problematic for the environment.
In Canada, our suburbs and zoning laws looks much the same as in America. However, we have very strict Greenbelt laws that constrain the outward growth of our cities, and thus more limited housing relative to population - and greater demand.
Solution 1: How Do We Fix Density/Zoning?
It’s pretty simple - start getting rid of zoning laws. There is a limit to this, we don’t want nightclubs next to people’s homes. But there are other, subtler, more ways of controlling for what we actually don’t want than saying commercial spaces are FORBIDDEN next-door to residential spaces.
For example, a neighbourhood law saying all loud noises must end by 8:30pm would solve the nightclub issue without punishing the small grocery store or snack bar wanting to serve customers until 2am.
Problem 2: The NIMBYs.
NIMBYs (Not In My Backyard characters) are funny people. They pretend for the sake of propriety that they like density, mixed use walkable development, transit, and social housing but for some special reason their neighbourhood simply can’t accommodate it.
These excuses range anywhere from schools, to some random lie about keeping children safe from… poor people? They go to protests, local development meetings, write letters to the Mayor, the Media, call the development office. All this activity in the name of cancelling development plans that would greatly benefit the many for generations, in the name of temporary comfort to the few.
I won’t go into the socio-demographic nature of these people, but you can enjoy your best guess.
Solution 2: How to Silence the NIMBYs?
You can’t. Everyone has the right to speak their mind and write expressive letters in our democracy. That being said, no one automatically has a democratic right to halt development progress for the sake of their personal convenience. The Public Service could give less weight to the screams of random protesters at development meetings and more to the cost/benefit/impact/feasibility analysis work that costs millions of dollars and all takes place before public consultations.
Just as we all know not to feed the Internet Trolls, NIMBYs feed on attention and the compliance of our governments. Take that away and we can take back our future.
Problem 3: Overcapacity Immigration
Just as we have local and provincial politicians limiting the housing supply, the federal government increases housing demand. Going into 2024, the federal government is targeting the issue of about 500,000 Permanent Residence cards. The majority of these are working age adults in the prime of life who deserve affordable, dignified places to live.
In 2022 Canada only completed about 220,000 units of new housing across all types across the country. Assuming all PRs were issued to couples (which they certainly weren’t) we would still be around 30,000 units in deficit! And that doesn’t even begin to factor in the 35%+ of young people ages 20-35 still living with their parents.
Yes, Canada needs immigration. That immigration however needs to be conducted in a sustainable and ethical manner. Bait and switching highly skilled, hard working people with low wage jobs and unattainable housing is neither.
Solution 3: Teach The Government to Read
The government has all of this information - I know because I got it from StatCan. Canada needs certain types of highly skilled immigrants to carry out specific tasks for which they are trained. One such skillset we need desperately (ironically) are construction trades. The Ministry of Immigration would be prudent to use the very effective point system to ensure that in the short term we prioritize attracting people to help solve the housing crisis by increasing supply and simultaneously freezing demand by limiting population growth (about 95% of last year’s net population growth came from immigration).
As an adamant (some say unhealthy) political observer I can tell you these changes require no new laws, no public consultations, and barely more time to draft and implement than editing a Word Doc and writing some new HTML code.
The fact that this hasn’t happened yet says nothing more than that the governments right hand doesn’t know what its left hand is doing. Every department has more or less the same access to the unclassified information - they simply choose not to read it when setting policy.
Conclusion
Today’s article has been about 3x key sources of our current housing poly-crisis. It’s critical to be informed on these issues so you know how to argue with local NIMBY’s holding up development or ignore the Prime Minister when he says:
“housing isn't a primary federal responsibility. It's not something that we have direct carriage of…”.
We can solve this problem together with the right combination of political will and economic intelligence.
That’s it for this week everyone.
Thank you,
James R. Davies