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So what do we need to do?
The surge of pandemic savings has flooded into the housing market, driving up home prices - a huge problem for younger Canadians. So what do we need to do about it? And how can we build more rental housing, not just owner-occupied homes?
From my perspective in Vancouver, here's a summary of what I think we should do, across all levels of government. I've tried to keep it concise.
(1) Add housing fast enough to keep up with jobs
In places where we have a lot of jobs and not enough housing, like Vancouver and Toronto, housing is scarce and expensive. In those places, we need to build more housing:
In local shopping areas, allow medium-density rental buildings by-right, so that developers can add more rental vacancies without having to go through a 12-month rezoning process. Rental buildings are important because they provide a more affordable form of secure housing than condos - buying a Vancouver condo is super-expensive, and renting a condo isn't secure. In the city of Vancouver, city council just approved this; maybe other local governments should do the same.
In rapid transit corridors like Broadway, allow high-rise development, with fixed fees for taller buildings (lowering the fees over time if there's not enough take-up) instead of time-consuming negotiations. This is the kind of big project that city council should be spending time on, instead of having to approve every project no matter how small.
All of the above is the responsibility of local governments, but the provinces can put pressure on them because they can override zoning rules, as the West Coast states, New Zealand, and Japan have done, and the federal government can make infrastructure funding conditional on upzoning (like Broadway).
Build more student residences. Post-secondary students account for a lot of rental demand. This should be a quick way to add more housing. Mike Moffatt.
Provide funding to non-profits to buy and preserve older, cheaper rental housing, so that it doesn't get torn down and redeveloped. This is going to be more cost-effective than buying new expensive housing as below-market rentals. MacPhail Report.
(2) Take advantage of the land we have
The maddening thing about high house prices in Canada is that we're not running out of land!
Deepen labour markets in smaller cities (like Calgary), so that we're not all crowding into Vancouver and Toronto.
Build more rapid transit, expanding the radius of land within a reasonable commute from downtown. (For example, in Greater Vancouver, more housing can be added along the Evergreen Line.) Joseph Heath.
(3) Restrict investment in existing housing
We want large-scale investors (REITs and pension funds) to build new housing, not buy up existing housing. We also want to limit individual speculation (betting that prices will go up in a short time), and foreign investment in real estate.
Restrict large-scale investment in existing housing, e.g. by providing right of first refusal to non-profits when an older rental building comes up for sale. Vancouver Sun article.
For retail investors, require a larger down payment (smaller loan-to-value ratio). Not sure what the right lever is - maybe the OSFI mortgage underwriting guidelines.
Make risks more salient - earthquake, natural disasters more generally, risk of a housing crash. Risk = probability x impact. Prepare for low-probability, high-impact risks, and talk about them more. I think people are overly complacent about the risks of owning real estate.
Continue increasing scrutiny, restrictions, and taxation of foreign investment in real estate. In BC there's already been a lot of measures put in place in the last few years, and it hasn't actually helped that much, but I think tightening them further is a legit option: foreign buyer surtax, empty homes tax, speculation and vacancy tax, progressive bracket on school tax, Land Ownership Transparency Registry.