Ian Lee, business professor at Carleton University, says governments at all three levels have messed up housing policy, each in their own way..“There are reasons from all three levels, some deliberate and some accidental,” Lee said in an interview with Western Standard..Federal fiscal policy has created a lot of “easy money” and low-interest rates, driving up prices, Lee said..“We have a very good system of foreign investment creating a lot of new housing in Canada as we add immigrants and grow the population” and “Canada has become a very safe market for foreign investment,” but “not a great market for Canadians looking for choices around housing,” Adam Vaughan, the Parliamentary Secretary for Housing, recently said in a TV Ontario interview with Steve Paikin..Lee said some provinces have failed too..“Provincial governments have imposed rent controls, or have threatened to impose rent controls, and which caused investors, understandably, to exit the market. And now we have a shortage across Canada of rental properties,” he said..That means buy a home or be homeless. But it’s hard to get a home..“There are numerous policies at the municipal level across Canada, municipalities, GTA, City of Ottawa, Vancouver, where they’ve not only put very serious restrictions in their attempt to limit urban sprawl. Who goes to buy houses at the edge of any city? Young people because they don’t have a lot of money. And immigrants because when they come to Canada they don’t have a lot of money,” said Lee..Lee added bedroom communities are burgeoning outside of Ottawa, where he lives, proving urban sprawl actually spreads under such policies..“Most counselors are want to slow down the development, stop it and or slow it down. So they put lots and lots of barriers in front to slow it down. And they’ll say, well, we’re just being careful, we’re being prudent,” said Lee..That is, until developers try to get a project going that goes through various city departments trying to get approval. .“They’re making minor changes in one department, then we go over to another department that goes back to the first department. These are deliberate choices,” Lee said..A 2018 Fraser Institute study showed it took one to two years for Ontario municipalities to approve building developments. In the Golden Horseshoe around Lake Ontario, the average regulatory cost per dwelling unit was over $48,000..Lee used to manage mortgages for the Bank of Montreal. He said even when interest rates went crazy in the early 1970s and 1980s, the delinquency rate was only around one percent..“The more money you have in equity in a property, the more likely you’re gonna pay your bill because you don’t want to lose your skin in the game. Delinquency is absolutely statistically correlated to down payment. Secondly, it’s absolutely statistically correlated to income. So all the rest is just smoke and window dressing and posturing.”.If Lee is right, governments have little to worry about. Canadians are making large down payments when buying a home, especially in expensive provinces like BC (22.5%) and Ontario (20.4%). Nova Scotia (18.54%), Alberta (15.15%), and Quebec (14.68%) were much lower..Another surprise is that during the pandemic Canadians got more mortgages than ever..“In the context of a negative economic shock, we would have expected a decline in the total number of mortgage borrowers. Instead, the total number of mortgage transactions averaged 276,401 in Canada over the last three quarters of 2020. This is up from 265,773 over the same period in 2019 and 231,064 in 2018.” read a recent CHMC report..The dollar value of Canadian building permits fell to $9.5 billion in May, a record 14.8 % drop from the month before. A pullback was expected, however, after four consecutive months of new record highs and higher material prices..Harding is a Western Standard correspondent based in Saskatchewan
