Canada’s housing market is in crisis. For most politicians and the mainstream media, it’s about skyrocketing house prices and the challenges facing first-time home buyers.
But the real housing crisis is found elsewhere: in a lack of affordability and security in rental markets.
For the last decade, rents have surpassed wages by wide margins, especially in large cities. The result is that at least a quarter of all renters now spend an unsustainable amount of their wages on housing costs alone—especially single mothers, new immigrants, and Indigenous and racialized households.
Decades of Canadian government policies that prioritized homeowners over renters created the conditions for this crisis. But the affordability crisis is being exacerbated by large institutional investment funds—pensions, private equity groups, and real-estate investment trusts—that are buying up older apartment buildings at break-neck speed. The flow of big money into residential real estate is contributing to the rapid disappearance of relatively affordable units, as investors “revitalize” the sector through “value-add” projects that evict tenants and jack up rents. They’re also helping to finance new rental construction, almost all of it ultra-luxury units.
Meanwhile, more and more renters find themselves in housing not originally built for the rental market. Contrary to popular belief, the supply of rental units in Canadian cities has grown considerably in recent decades—but in the form of condominiums. Tenants in condo rentals, or any other unit designed for owner-occupation, face an added layer of legislated insecurity: their landlords can evict them by claiming “personal use” of the property. Many of these evictions are fraudulent, opportunistic moves by landlords to raise rents to market levels.
Rising rents and heightened insecurity in rental markets is putting pressure on an already overwhelmed and underfunded emergency and transitional housing system, leading to deteriorating physical and mental health, abuse, and rising homeless. It is estimated that more than 235,000 people experience homelessness each year. Every winter, more homeless people die.
Chasing the dream of ownership: what the political parties are offering
Given the extent of the crisis, we might hope that politicians would be coming up with new ideas. But in general, they are sticking to the usual playbook.
This election, all three major national parties are promising to keep the “dream of homeownership” alive with more incentives for first-time buyers and a ban on foreign buyers. They want us to keep buying houses by taking on mountains of debt.
Tax breaks, shared-equity plans, lower insurance costs, and other schemes to help first-time buyers contribute to the problem they’re trying to solve. By fueling more demand, they lead to higher prices and debt for the next cohort of buyers.
Policies to address foreign buying miss the forest for the trees. Despite some evidence that these buyers drive up prices, reports show that the vast majority of investors and speculators in housing markets are locals. In a best-case scenario, a ban on foreign buying might help to slow the rate of house price growth—but it won’t fundamentally change market conditions.
Predictably, the Liberals and Conservatives are promising to address affordability concerns by building more houses. Rezoning land at transit hubs for higher density will provide windfall profits for developers and land speculators, but it wont help first-time buyers. House prices are rising due to falling interest rates and other financial factors, not insufficient supply. Besides, left to their own devices, developers build the most expensive thing they can get at every location. They never have, and never will, build affordable housing.
When it comes to addressing the crisis in rental markets, there are some notable differences in the party platforms.
The Conservatives hardly mention renters. Their main “support” for renters is a promise to extend capital gains tax deferrals for small-scale landlords, which will likely make things worse. The Liberals, by contrast, are better at public relations. They say they will address affordability concerns through a continuation of their National Housing Strategy (NHS), trumpeted as “the largest and most ambitious federal housing program in history.”
The NHS is a stellar example of Liberal deception. It does not, in fact, mark a historic increase in federal funding for housing. To the contrary, it mostly replaces direct support for social housing with low-interest loans for “affordable” housing projects. Here, affordability is defined as below-market rent, not rent that is actually affordable in relation to people’s incomes.
As usual, the NDP is on the right path but just isn’t bold enough. In its platform, the party promises to build “500,000 units of quality, affordable housing in the next ten years.” While this is a welcome idea, the reality is that unless we can reverse the disappearance of below-market rentals due to upgrades and demolitions, it won’t be nearly enough. Their plan also does not clearly define what “affordability” means, signaling their hesitations to commit firmly to the de-commodification of rental housing. We need to go further.
The fix for housing is to transform the underlying economic system
Canada’s housing crisis demands bold transformation, and a good place to start would be dramatically increasing federal spending on social housing whose rent is geared to income. That would provide immediate relief for the hundreds of thousands on waiting lists.
Furthermore, we desperately need a large-scale community-based land acquisition strategy based on sustainable living, not returns for investors. The strategy should empower community-based land trusts to create permanently affordable, energy-efficient, community-oriented rental housing en masse. If the federal government can find $150 billion to buy government-insured mortgages during the pandemic, it should have no trouble financing this transformation of rental housing.
Beyond a major revitalization of the social and community housing sector, we also need robust inclusionary zoning targets for private-sector housing, stronger rental protections for tenants, and emergency funding for shelters and transitional housing operations.
But what politicians are hesitant to tell you is that the housing crisis goes beyond housing. If we are to address the affordability crisis in rental markets, house prices will likely fall. More bold housing policies are thus unlikely to find much favour among homeowners who increasingly rely on rising prices to secure their retirement or to access further bank credit. As the Parliamentary Secretary on Housing put it in a recent interview: “We know that Canadians rely on homeownership to secure their place in the economy.”
The fact that so many households depend on rising home equity gains to generate wealth for their families speaks to the failure of our “financialized” economy, where money is increasingly made from holding or inheriting assets alone, not productive, collaborative, and meaningful work. If we are to truly fix Canada’s housing system, we need to wean households off their growing reliance on the inflation of asset prices.
This means reversing decades of stagnating incomes and cuts to employment benefits, pensions, and other social services. To see this through, we need a historical renewal and innovative transformation of the welfare state, which includes things like universal long-term care and a job guarantee program. We also need to reform the financial system so that money flows away from real estate speculation and towards where it is needed: infrastructure renewal, green-energy transformation, and public transit expansion.
We can’t fix the housing crisis through housing policy alone. The only real solution is a broad-based, socialist transformation of our society.