Canada's Housing Crisis: Tackling Affordability and Investor Influence

As Canada grapples with a burgeoning housing crisis, the interplay of high investor activity, stringent regulatory frameworks, and a pressing need for modern infrastructure highlights the complexity of the challenge. With investors owning a significant portion of the housing market, driving prices up and availability down, the dream of homeownership moves further out of reach for many Canadians. This essay delves into the root causes of Canada's affordable housing dilemma, exploring the impact of investor dominance, regulatory hurdles, and the potential pathways to a more inclusive and sustainable housing landscape.

The real estate market is flooded with investors which makes the demand for houses even stronger. Although most homes are lived in in Canada a lot of them are owned by investors and either the homes are empty or they have tenants. Even the home rental market has become monopolised as oftentimes investors own 3, 4, 5, 6 or more properties. Investors own over 20% of all homes in Canada and well over 40% of condos: “Paglinawan, D. (2023) ‘Investors own a big chunk of Canada's housing market’ Financial Post. Thus when property is in high demand and only a select few own it the price will skyrocket. Especially if there isn't much new development. When a good is highly sought after by investors it increases the attention to it and a lot more people want to buy it. Thus further reducing the amount of affordable housing. However, many of these investors were relying on rent income to cover mortgages but with interest rate hikes it may be that some investors lose some of their secondary properties as many of them do not keep enough cash to sustain their properties at a 5% higher interest rate than negotiated at. However, the problem becomes that there are very few people who can purchase the home as rent prices have gotten so high that in some parts of Canada, even people with jobs sleep in tents. Thus even if one investor loses 3 or four properties it is highly likely another investor will buy them. Thus what might work is imposing a limit on how many properties a single person can own; however, it is likely that it would not be received well by the people and the politician who imposes this may become unpopular. Thus there would be many driving factors in deciding as such. Canada has many issues with creating affordable housing, some of it due to its urban sprawl; everyone wants to live in a house and drive a car instead of owning an apartment and using public transit. Thus looking at other nations with relatively affordable housing and what could be done to reduce red tape and ensure there is enough development so that everyone can own a home.

Canada needs to modernise and adapt. For its citizens to own homes Canada must reduce red taping and invest in infrastructure and public transit. If public transit is improved instead of building outwards it can build up and change the culture around living in the suburbs versus the cities. This would not only use less land and ensure that land conversion is done to a higher efficiency but it would also mean that housing would be cheaper as more would be available. However, doing all of this would take time and effort. Yet, it could also give the Canadian economy a boost. If the government chose to incentivise builders and developers by reducing red tape and giving grants to those that build up, build apartments instead of detached houses. Another approach Canada could try is developing financial literacy courses so that people understand how money works and how they should spend their money to better budget themselves.

Although a multitude of nations across the globe have mastered creating affordable housing Canada is still working towards it. The high demand and low supply have been driving up the cost of real estate in Canada and the problem is exacerbated by enormous amounts of red-taping and investors artificially stimulating the market. However, if there was less red tape and fewer investors the problem might be calmed. However, the main problem is in production. Canada needs to produce more homes, not only would this reduce the prices but this would also result in a stronger economy; and productivity in equal economic output. The Canadians should observe other nations such as South Korea when it comes to red tape and they should attempt to incentivise developers to build in Canada.

Bibliography:

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Halpert , M., & FitzGerald, J. (2023, March 23). Immigration fuels Canada’s largest population growth of over 1 million. BBC. Retrieved August 16, 2023, from https://www.bbc.co.uk/news/world-us-canada-65047436#.

Mallees, N. A. (2023, August 14). Long way home: Blamed for affordability crisis, liberals look to pivot on housing. CTV News. https://www.ctvnews.ca/politics/long-way-home-blamed-for-affordability-crisis-liberals-look-to-pivot-on-housing-1.6517952#:~:text=The%20Canada%20Mortgage%20Housing%20Corp,the%20housing%20stock%20by%20then.

Paglinawan , D. (2023, February 9). Investors own a big chunk of Canada’s housing market. Financial Post. https://financialpost.com/real-estate/housing-market-investors-own-big-chunk