With mortgage interest rates climbing, many Canadians are struggling to pay their debts or save enough to get into the housing market. Everyone has an opinion about how to solve the housing affordability crisis, here are some of them.
Municipal elections have just concluded across Canada, and the hottest topic on the campaign trail was housing affordability.
Kennedy Stewart is the new mayor in Vancouver, the country’s most expensive housing market. He campaigned on the promise that “housing affordability will be my number one priority.” He says his plan is “to prioritize non-profit housing solutions that are affordable to people with low-to-medium incomes, while at the same time encouraging the for-profit housing industry to provide homes within reach of first-time, local homebuyers.”
Stewart promises to speed up the permitting process by increasing city staff and reducing red tape “with special emphasis on reducing wait times for small- and medium-sized developers and homeowners.” He also promises to allow more opportunities for homeowners to build triplexes and fourplexes on standard lots “and remove barriers to converting large homes into multi-family residences.”
Other measures that Stewart plans to introduce are tripling the empty homes tax and protecting between one-third and one-half of all new homes from foreign speculation.
All that densification in existing neighbourhoods may be a challenge in Vancouver. It certainly would be in Toronto, where a recent survey by the Toronto Real Estate Board and the Building Industry and Land Development Association found that residents are not shy about admitting they are NIMBYs, “not in my back yard” opponents to development.
The survey said that 87 per cent of respondents agree that it’s important to build new homes in the Greater Toronto Area as a means toward addressing the issue of housing affordability, and almost 90 per cent agree that zoning bylaws should be reviewed, and changes considered to allow for middle-density housing types.
But 37 per cent of respondents oppose the building of a new townhouse development within a half kilometer of their home, 44 per cent oppose the building of a stacked townhouse development with a half kilometer, and 52 per cent oppose the building of a mid-rise condo apartment within half a kilometer of their home. Almost 60 per cent oppose the building of a high-rise condo building within that half kilometer.
Toronto re-elected John Tory for a second term as mayor. His housing plan is to build 40,000 affordable rental units over 12 years. The Open Door program uses city-owned land and provides property tax deferrals, development charge waivers and fast-tracked approvals to build affordable housing.
Recently three housing industry groups got together to urge the Ontario government to outline five ways the new provincial government can become “the millennial’s best friend” by making housing more attainable.
The Ontario Real Estate Association, the Ontario Home Builders Association and the Federation of Rental-housing Providers of Ontario suggest speeding up the planning approvals process, which they say can take up to 10 years in some parts of the province.
The groups would also like to see more homes built around and above transit stations, and more tax relief for first-time buyers.
They are also calling for the Ontario Municipal Board, which was scrapped by the previous provincial government, to be reinstated. Although critics claimed the board generally sided with developers, the housing groups say it would “take the NIMBY out of housing decisions” and provide “more evidence-based planning decisions, which will create more housing supply and choice.”
The groups also would like to see reduced barriers and red tape for new rental housing stock.
Back in B.C., the Urban Development Institute Pacific Region has similar suggestions, including encouraging transit-oriented development, building more “missing middle” homes such as townhouses, speeding up the building approvals process and “fair and predictable” development fees and charges.
The “stress test” rules introduced by the federal government to ensure that those getting a mortgage could afford them has come under fire from Mortgage Professionals Canada, the group that represents mortgage brokers.
“Fewer Canadians are now able to obtain the mortgage they need to acquire a home, and many sellers now find fewer buyers to sell their home too,” says Paul Taylor, president and CEO of the organization. “As we first outlined at the time of the mortgage rule changes, it’s now clear that our concerns regarding the cumulative impact of said changes are decreasing competition and increasing costs for consumers.”
The group is asking that the test be uncoupled from the Bank of Canada five-year benchmark rate and instead set at 0.75 per cent above the contract rate set by the lender.
However, another industry group, the Appraisal Institute of Canada, supports the current mortgage lending guidelines. “The regulatory oversightÖhas allowed Canadians to benefit from stable markets; we have not seen some of the fluctuations and volatility that have plagued other countries,” says Keith Lancastle, CEO of the institute. The group says it supports plans to further tighten mortgage approvals, so they are based less on the equity of the property and more on the individual’s ability to repay the loan.
The 2019 PwC Canada Emerging Trends in Real Estate report says the federal mortgage guidelines are flawed because Canada doesn’t have just one national housing market and trying to apply one solution to affordability to all markets will fall short.
The report warns that “millennials may abandon the urban core for the suburbs in search of more affordable housing, and high housing costs in cities like Vancouver and Toronto could make it difficult to retain skilled workers. In a survey of young professionals by the Toronto Region Board of Trade, 42 per cent indicated that they were likely to leave the GTA because of high housing costs.
“Over the next five years, Toronto, Montreal and Vancouver are forecast to see a loss of people to other areas of their province,” says the report. “While forecast immigration rates will help make up these numbers, it is a consistent trend.”