Liberal Party leader Justin Trudeau has recently promised that, if re-elected, he will implement an aggressive new housing policy meant to combat the disparities in the housing market. His stated plans are quite comprehensive, and quite controversial. $2.7 billion over four years to build or repair more affordable homes, a $4 billion reserve for cities to help create “middle-class homes,” a doubling of the first-time home buyers tax credit… all impressive measures. Most impressively, he even intends to implement a two-year ban on new foreign ownership and a “flipping tax” meant to tamp down speculation, in the hopes that doing so will stabilize the erratic housing market. To quote Mr. Trudeau directly, “You shouldn’t have to move far away from your job or school or family to afford your rent. You shouldn’t lose a bidding war on your home to speculators. It’s time for things to change.” A big promise, right?
This sounds very familiar
I agree with Mr. Trudeau in concept. However, I can’t help but remember a similar claim made back in 2019, promising to implement a program that would deter foreign speculation on Canadian markets. This plan, which would have consisted of a nationwide 1% annual speculation tax on residential real estate owned by non-resident non-Canadians, was meant to do exactly what Mr. Trudeau is now promising; to cool down the housing market in favour of the prospective Canadian buyers. It has not done this, if the two billion dollars worth of deferred mortgages in 2020 is anything to go by. Up to today, Canadians are still suffering from bloated, abusive rent and our next generations are basically unable to buy their own house - our basic human rights!
Arduous, Ponderous Change
According to the CBC’s Pete Evans, housing prices as of July 2021 are, while lower than the all-time high of March’s $716, 828 average, still much higher than they were in the July of last year. This, as Canadian mortgage debt rises to $1.6 trillion, nearly $2 trillion if Home Equity Lines Of Credit, or HELOCs for short, are taken into account. This, as the market still somehow faces a persistent shortage of inventory, a statement here meaning that despite the nonstop construction of condos there is still, somehow, a lack of available houses to buy. There are assertions that Toronto is close to having a “normal” housing market, but some of those assertions predate Mr. Trudeau’s promises by a year. At best, we’re treading water. At worst, we’re still drowning.
A Nebulous Future in the Housing Market
So where are we now? It’s hard to say. It’s worth noting that any appeal to housing reform is split between the demographics of first-time buyers and homeowners, the former benefiting more from the price going down while the latter benefit from the price going up. As noted by Jacob Lorinc in an article published in the Toronto Star, there are multiple factors that contribute to the housing bubble as it currently exists, ranging from the aforementioned shortage of inventory to foreign purchases, financialization and speculation and even outright criminal action, and the only thing that can be said for certain is, “the deck is stacked against younger Canadians.” The housing market as it exists now is a convoluted mass of money and issues, the price of buying into which is prohibitively massive. It could get worse, or it could stay the same. We don’t know. Which begs the question…
Why trust Trudeau again?
With all this in mind, I really must ask; why exactly should we trust Mr. Trudeau’s promises now? The specifics of his plan may have changed, but the Liberal Party is still selling us the same story as they did in the last election cycle, and nothing of consequence seems to have changed. Surely, the Party could have done better in three years’ time than promise toothless reforms while Canadian debt continues to accrue and the housing market towers ever higher. It is good that Mr. Trudeau intends to implement a two-year ban on foreign property speculation. Such a measure, in my opinion, will help. It would, however, be better left to a party with an actual vision for addressing the housing crisis to implement. The market needs to change, and the Liberals have not proven themselves capable of changing it.