Does the Liberal Strategy Really Mean a “Home for Everyone”?
Throughout the election, the Liberal party’s approach to Canada’s housing affordability crisis was to promise a “home for everyone.” The platform was detailed under three key areas: unlocking home ownership, building more homes, and protecting Canadians’ rights. While we commend them for taking steps to tackle this problem in Canada, the task is not an easy feat, and there are a few missing elements that haven’t been factored into the plan.
Before we dive into that, let’s examine the root of the problem – lack of housing supply. This is the biggest challenge facing the Canadian housing market. Canadian real estate is experiencing unprecedented levels of demand and resulting upward pressure on prices, regardless of the region or home type.
While COVID-19 has made this drastically apparent, the issues facing Canada’s housing market were brewing long before the pandemic struck. From a longer-term perspective, as we start to return to a more normal economic rhythm and as immigration to Canada resumes, the strain on supply will intensify.
A constructive criticism
The Liberal government’s current plan tables some concerning “solutions,” specifically the criminalization of blind bidding. RE/MAX is supportive of fairness in the transaction, and it is apparent that consumers want reform when it comes to blind bidding, but we caution policymakers when it comes to overarching policies and their potential ripple effects. While RE/MAX has advocated for a fair bidding process for all, the proposal to ban blind bidding by amending the criminal code is not the answer. In fact, pitting homebuyers against sellers could make the housing supply shortage worse, by putting sellers at a disadvantage and discouraging them from listing, creating even more competition in the market. This is just one example of a piece-meal tactic, which doesn’t focus on the bigger issues at play.
One part of the Liberal housing plan will stimulate more demand. Giving first-time homebuyers incentives and assistance to get into the housing market is a positive step, but these buyers will be entering into a market that is already sorely undersupplied. We completely support the opportunity for all to enter the market, but we need to add more supply to accommodate more buyers.
Instead of band-aid measures such as many of those proposed, the federal government should focus its efforts on leading a collaborative national housing strategy, involving all levels of government. Many Canadians agree. A recent Leger survey we commissioned just before the election, showed that 43 per cent of Canadians believe that a national housing strategy is one of the best ways to solve Canada’s housing affordability crisis.
So, what should a national housing strategy should look like?
- Add more housing supply: First and foremost, a national housing strategy that successfully increases housing supply must be a coordinated effort between all three levels of government. Full stop. This is the most critical solution to our housing crisis.
- Incentivize developers: Rather than penalizing with taxes and policies that do nothing to boost supply levels, we need to incentivize more development of affordable, family-sized housing like three-bedroom condos, and allow for more detached housing beyond our existing urban centres.
- Reduce red tape: Tax rebates, reducing red tape and easing the application and approval process can go a long way. Right now, in cities like Toronto and Vancouver, it can take two years or more to get a project approved and then a couple more to build. During that time, Canadians are waiting, immigration is happening, demand is growing, and prices continue to rise. Now is the time to consider expanding the boundaries of developable land.
- Add a mandatory “cooling off” period to every offer: Having governments work together to extend the cooling off period on home purchases on every purchase would reduce buyer’s remorse and help to ensure that people can afford what they are buying.
- Regulate unethical businesses practices: We urge the federal government to work closely with and encourage all provincial regulators to enforce unethical business practices such as underpricing home listings that create an artificial buying frenzy. This will help ensure fair listing prices and prevent homes from being listed well below market value to create bidding wars.
Two of the biggest lessons we’ve learned from the pandemic, should be noted by governments – the importance of flexibility, but more importantly, Canadians’ home stability. This is critical, now more than ever – especially for first-time homebuyers. Canadians deserve the opportunity of home ownership if it’s something they desire. It’s the responsibility of the federal government, to ensure Canadians get access to affordable home ownership options.
Christopher Alexander is Senior Vice President, RE/MAX Canada, and Elton Ash is Executive Vice President, RE/MAX Canada.