Topic: Home ownership, affordable housing, and the 'Canadian dream'

Q. Based on the following analysis below provide a brief Conclusion - (Where did you land after completing a comprehensive analysis of the issue? Are you all in agreement or divided along different stakeholder positions? Did your views change as you learned more about the issue, and if so, why? Do you better understand the positions of the various stakeholders even if you don't agree with them? What are the key takeaways you think people should know about this topic?)

So what are the factors causing Canadians unable to afford the housing. We will be focussing on the "prices", the "economy", the actors playing the role in deciding the housing prices.

I know.... When it comes to Housing and Pricing and who to blame...We all have just one word in our mind "THE GOVERNMENT" . But is the government to be blamed entirely?

The main issue today is the imbalance in the average income of the people working in a particular city is not in proportion with the affordability of the houses. CONFUSED? I will explain... I want everyone to think of a person working in DOWNTOWN TORONTO and living in ____. Why does the person not stay and work in downtown? Do you think they like travelling everyday back and forth? NOOOOO... that's the issue here is the "AFFORDABILITY". An average person working in downtown CANNOT afford the house in downtown and as rightly pointed out by my fried here is.... It the "DREAM" of every person to call themselves the owner of the house which they turn to "HOME".

There is a huge gap between the average income and the the affordability which the government along with the people need to control. The government is.... Definitely one of the main actors in the pricing control but not everything it is that the government can do by themselves. Alot of housing prices and the affordability depends on the people/earning and also the "Bureaucrats". The high prices in the Toronto and the low pricing in some other city has caused a huge imbalance which needs to be controlled.

The main problem lies between the affordability of the house by an average person. The houses today stands unaffordable for most of the Canadian. There is a huge imbalance in the system between the price of a house versus (v/s) the salary of the person. The prices of the house are in exorbitantly high which cannot be afforded with a salary of a person working a high pricey market as pricey as DOWNTOWN TORONTO.

My script:

The existing strategies to bring down the housing prices by the government are not adequate. Prime Minister Justin Trudeau announced the budget for 2022 to be focused on 3 strategies to solve the housing affordability problem: doubling the supply, increasing savings capabilities of the first homebuyers and cutting down on speculation by banning foreigners from purchasing residential properties. Canada Mortgage and Housing Corp claims that the housing supply does not meet the high demand and that 3.5 million housing unitsbeyond current projectionswill be required by 2030 to return to affordability levels last seen in 2003 and 2004. The persuasiveness of the claim is anchored upon the assumption that housing supply is elastic as estimated by the bank of Canada. Then, provision of government incentives like tax measures or capital contribution would potentially increase the housing stock. However, the reality is that housing supply is inelastic due to stringent municipal city planning in major cities of Canada where housing prices and demand are the highest. 2/3 of the housing unit gap is in Ontario and British Columbia. Construction costs and labor shortage are other contributing factors. In order for increased supply to be able not only to slow down but decrease the home prices, quantity supplied needs to significantly exceed demand and with the current population growth and increased immigration, doubling supply is an unrealistic and rather ineffective goal.

In attempt to increase savings capabilities for the homebuyers, government introduced the tax -free savings account HBP that allows to withdraw up to 35000 from your RRSP and First-Time Home Buyer Incentive that provides up to 5% of the existing property and up to 10% of the newly construction home. The underlying value assumption is that this would help Canadians to pay the afford the down payment. In reality, withdrawal from RRSP impacts the retirement savings and both incentives require repayments just like a second mortgage, thus another debt. In order for you to become eligible for First-Time Home Buyer Incentive, your salary should not exceed 150 thousand in major city of Toronto or Vancouver, while total borrowing should not exceed 4.5 times your salary which makes 675,000 CAD. 5% of that amount would be 3375cad which is a maximum amount provided by this program and is merely enough to make any impact on affordability. Additionally, you would have to repay this amount in 25 years and if you sell the property this amount would be adjusted to the fair market price, which means that government potentially makes money out of these good intentions.

Government claims that housing crisis is caused by the lack of supply and excess of foreigners' ownership. However, these claims lack accuracy and do not hold sufficient evidence. There is a correlation between the factors of housing shortage and increased immigration that leads to investing into buying a house, but it does not mean that foreign ownership raises the housing price and causes that issue in the first place. Correlation does not mean causation. Immigrants are important for supplying labor to construction companies that are supposed to resolve the housing shortage and taking away the chance to buy home undermines the values we cherish as Canadians.

The population growth and actual percentage of properties owned by non-residents do not represent the main reason of increase in housing prices. Proportion of non-resident owned properties in the densest areas of Toronto and Vancouver is 3.5-7%.(StatCan).Competitors to first home-buyers such as multiple-property owners(investors) accounted for 31 per cent of all homes in Ontario as of early 2020 and about 40% in Nova Scotia. The bidding process lacks transparency and regulation. The sources of the evidence that disprove these claims are represented by authorized experts, such as Canada Mortgage and Housing Corp (CMHC) and StatCan.

Critics are also claiming that real estate investors and big firms like hedge fund companies and pension managers are adding to the problem. Real estate has proved to be a stable asset class to hedge against inflation. Moreover, Canada being an immigrant nation, with an average rental vacancy rate of 3.1%, has a booming real estate industry. Over the past two years, multibillion-dollar firms like Blackstone and Core Development Group have been eying the Canadian real estate market. Blackstone, which is the world's largest alternative investment firm, opened its real estate office in Toronto in May to expand on its $14 B in real estate assets in Canada. Similarly, Core Development Group, a major Toronto based real estate firm, also announced its plan to spend $1 billion over next year to buy single-family homes in mid-sized Canadian cities. Moreover, individual investors have also been aggressively building up their real estate portfolios since the summer of 2020. As of April, data from Statistics Canada shows that individuals who own more than one property hold 29% of houses in BC, 41% in Nova Scotia and 31% in Ontario. The first-time home buyers and the renters are finding these trends very concerning as this threatens the affordability of both buying and renting a home. First-time buyers can't stand the deep pocketed firms in the bidding wars, given the limited supply of homes against the high demand. And the renters are worried that their rights as tenant are going to be exploited if a few firms take control over the rental market. However, the investors have a different say. They find people's outrageous reaction surprising as their intention behind buying houses is to fix them and upgrade the underinvested properties to offer not only a better living space but also creating new spaces. When we went digging, there is not much info to support either claims. There is a lack of data on what proportion of real estate is held by institutional investors in Canada. When approached by CBC News, all the major Canadian brokerages including Royal LePage, Century 21 and Keller Williams refused to comment on the topic and so did the Canadian Real Estate Association. Moreover, neither CMHC nor Statistic Canada collect such data. We find that the renters are better off with corporate landlords than the single mom and pop landlords as individuals are more likely to sell off when the prices are in a strong run-up and that upends the renters from that place.