OPINION | Will Federal Incompetence Quash BC’s Housing Efforts?
Photo Credit: The Toronto Star
The average price of a home in Canada was $729,044 as of May 2023, according to the Canadian Real Estate Association. In Metro Vancouver, that figure increases to $1,188,000, according to the Real Estate Board of Greater Vancouver. BC’s premier, David Eby of the New Democratic Party (NDP), who came to power in December 2022 promising sweeping action on the housing file, has been acting quickly to stabilize house prices in BC and reduce them in the long-term. Recent actions taken include the Housing Supply Act, a piece of provincial legislation that allows the government to develop a list of municipalities that will receive incentives to build more housing and compliance-enforcement measures if they do not.
BC has also taken efforts to crack down on housing speculation and money laundering. However, federal mismanagement may doom any efforts BC takes to combat the housing crisis. Overspending that may be forcing the Bank of Canada’s hand on interest rates, an unhelpful budget that does little to nothing on housing, an excessively expansive immigration policy, and inaction on toxic money in the real estate market may neuter BC’s housing efforts.
A Record of Mismanagement
In its 2023 budget, the federal government under Justin Trudeau’s lethargic leadership announced one singular action on housing. Often-used but often-failed, the demand subsidies coming in the form of a tax-free first home savings account will likely promise to be yet another ineffective policy from a government that is drained of new ideas and has little to offer to alleviate this country’s spiralling housing crisis. Subsidising demand and continuing to allow Canadians to become overleveraged is no way to tackle a housing crisis stemming from excess demand and insufficient supply.
The government included no funding for social housing, something that successive Canadian governments had done until the budget cuts of the 1980s, when the Progressive Conservative government of Brian Mulroney began defunding the Canada Mortgage and Housing Corporation’s social and affordable housing programs. Nor did the government include any provisions to encourage densification and housing construction in Canadian cities. The government also did not include any measures to combat real estate speculators. Additionally, the government posted another significant deficit without a plan to balance the budget long-term, an act which has been criticised by some, such as the opposition Conservatives and economically liberal think tanks such as the Fraser Institute, as inhibiting the Bank of Canada’s fight against inflationary pressures. Higher inflation means greater costs for construction that could discourage housing expansion.
The government’s immigration policy might also have a negative effect on provincial efforts. In 2022 alone, Canada welcomed approximately one million immigrants. The rapid influx of migrants without the requisite housing stock or public infrastructure could hamper efforts to improve housing affordability. Rapidly driving up demand in an already demand-saturated market through excessive immigration is no way to alleviate housing unaffordability. As well, the government’s lack of action on ensuring that immigration is economically productive, focusing on high-skilled economic migrants, and reforming occupational licensing to allow skilled migrants to immediately enter their trained profession mean that Canada’s immigration policy is even more unproductive.
What has BC Been Doing?
In 2022, Premier John Horgan retired, ending the tenure of the first New Democrat to be elected to two terms in BC’s history. In the ensuing leadership race, then-Attorney General David Eby promised some of the strongest action on housing nationwide, proposing sweeping reforms to land-use and zoning policies in BC and taking drastic steps to encourage housing construction and development. The cornerstone of this policy effort has been the previously mentioned Housing Supply Act, designed to increase housing supply. In Vancouver, major housing projects such as the Senakw, Jericho Lands, and Oakridge developments have promised higher densities and significant quantities of housing. Coercive action by the province has been seen as necessary in the face of public NIMBYism (Not in My Backyard) and obstinate municipal governments.
With uncooperative municipalities and what has been according to the most generous interpretation an unhelpful federal government, BC may be forced to single-handedly play whack-a-mole with cities that do not want to build while the federal government stands by and dumps fuel on the fire of Canada’s housing crisis. The CMHC predicts that Canada will be building around 2.3 million houses by 2030, while 3.5 million more houses are needed in order to restore some modicum of affordability. With a federal government that seems unable or unwilling to take real steps to improve the affordability of housing, the question becomes worthwhile to ask: is it time for a new approach?