Housing affordability is a complex issue requiring an informed, targeted approach
When it comes to Canada’s housing crisis, policymakers should focus on addressing regulatory and procedural roadblocks rather than chasing supposed signs of corporate greed, according to Fraser Institute analyst Steve Lafleur.
Current market trends point to an increasing likelihood that the market is “about to return to the bad old days of low rental-vacancy rates and pricey condos,” Lafleur wrote in a recent contribution for The Globe and Mail. “But rather than addressing the root cause of the problem, it looks like critics are going back to the same old well to find villains, rather than solutions.”
Lafleur cited the recent reports of condo developer Core Development Group Ltd. buying hundreds of detached homes in several provinces, with the intention of establishing a massive rental portfolio using these properties.
“But this type of thing isn’t new,” Lafleur stated, adding that “Wall Street firms bought up detached houses after the global financial crisis, and have since become significant landlords in the United States.”
Focusing on these corporate entities might be missing the forest for the trees, Lafleur argued.
“It’s easy to paint these firms as villains capitalizing on tight housing markets, but the real problem is the tightness of the markets themselves,” Lafleur said. “That’s largely because of policy choices, not corporate greed; these ‘villains’ are just reading the room, and so are assuming that government regulations will continue to prevent the housing supply from responding to demand in North America. And they’re probably right.”
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Instead, public pressure should be directed at the problem of red tape, particularly seemingly capricious zoning and building codes. Lafleur noted that these roadblocks are the main factors strangling housing development across both Canada and the United States.
“Fundamentally, we must end artificial housing scarcity. We should care about whether or not there are enough homes, rather than who owns them,” Lafleur said. “Instead of worrying that a small proportion of detached homes will be converted from ownership to rental units, we should address the underlying factors that would motivate companies to invest in detached homes in the first place.”
“For example, municipalities could improve and accelerate the permit process to allow more homes to be built more quickly,” he suggested. “If policymakers want to increase the affordability of home buying for young people, families and newcomers, they should reduce barriers to housing construction – whatever the policy, that should be the overarching theme.”
