Every week, buyers ask me for a practical solution to the housing crisis. Housing supply and affordability have always been hot topics, but they matter even more now, given the rising home prices we have seen recently.
This post was written in late 2022. The measures and figures below are from that time.
Why we need a solution to the housing crisis
As a real estate agent, I face this question every day. How can the public in general, and our youth in particular, ever afford a home of their own?
It is not an easy question. Young people finish school, find jobs and start families. Yet many feel that owning a home is out of reach. So they rent for longer, move farther away or put their plans on hold.
I remember when a detached home in the mid-90s, or even the early 2000s, cost in the range of $200K to $300K. These days, that seems like a fairy tale.
Measures that did not dent prices
Governments at the federal, provincial and municipal levels have taken several steps. These include the NRST, the mortgage stress test, a ban on purchases by foreign buyers and changes to zoning.
Unfortunately, these measures only caused a short pause in the housing market. They could not make a major dent in rising prices.
In March 2022, the Ontario government raised the Non-Resident Speculation Tax (NRST) from 15% to 20%. It also expanded the tax to the entire province, not just the Golden Horseshoe area. Separately, the federal government banned most purchases of residential property by non-Canadians, starting January 1, 2023.
Then, on October 25, 2022, Finance Minister Peter Bethlenfalvy announced a further bump in the NRST, raising it to 25%. That made it the highest such tax rate in Canada. Still, a tax change alone is not a real solution to the housing crisis.
What the data says about foreign buyers
In the past, when the NRST came into effect, many people believed that foreign nationals buying for investment were driving prices up. However, a Statistics Canada report published on December 19, 2017, told a different story.
It showed that foreign buyers owned only 3.4% and 4.8% of all residential properties in Toronto and Vancouver, respectively (read the Statistics Canada report). Having said that, non-resident buyers do focus more on condo buildings, occupying 44% and 53% of condos in Toronto and Vancouver, respectively.
So raising the NRST rate may not solve the real issue of supply and demand. It may only affect a small share of total homebuyers, with almost no effect on overall demand. Therefore, any lasting solution to the housing crisis has to look beyond foreign buyers.
Why more towers alone are not a solution to the housing crisis
Pushing for more housing supply within the major urban centres still may not bring the results we want. Instead, it could create more traffic jams on road networks that are already overcrowded.
Building more and more high-rises in the main city hubs may solve one issue. But it adds even more stress to roads that are already over-stressed, and there is practically no room left for new roads.
What I see is a lack of long-term planning at each level of government to tackle the real issue.
Plan new cities as a practical solution to the housing crisis
The major reason being ignored is simple. Most people like to live near cities, where jobs and the amenities of life are easy to reach and the commute to work is shorter. Hence, people flock to the existing major cities that meet those needs.
By area, Canada is the second-largest country in the world. Yet most development has taken place on a tiny portion of our huge land. It sits mainly in and around the GTA in Ontario, Montreal in Quebec, Vancouver in BC, and Calgary and Edmonton in Alberta. Of these, most of the population lives in and around the GTA, Vancouver and Montreal.
Governments need to plan new cities and give incentives for new businesses to move there. We have plenty of land just a few minutes outside the major cities. That land could be developed for new business centres and more housing.
I hope this message reaches the decision-makers. I also hope we soon see concrete planning from each of the three levels of government in Canada: federal, provincial and municipal.
What this means for buyers and families today
Big policy changes take years. Meanwhile, families still need a place to live. So while we wait for a lasting solution to the housing crisis, it pays to plan carefully, know your budget and understand the programs that exist today.
Policies have changed since 2022, so always check the latest rules. For more of my thoughts, read my call for accountability on Ontario housing and my review of Canada’s 2024 housing plan.
There is always a better solution a professional can provide, sometimes beyond what one might think of alone. A local agent can help you find options in Mississauga and nearby communities that fit your budget.
Talk to a Mississauga real estate agent
Do you have questions about buying, selling or simply planning your next move in Mississauga or the GTA? I am happy to help, so please send me a message or call me at 416 908 5600. If you found this helpful, I would greatly appreciate a Google Review for my real estate services. Thank you for your continued support. A. Q. Mufti, Sales Representative, RE/MAX Real Estate Centre Inc., Brokerage
Disclaimer: this article was published on 18 January 2025 and reflects the information available at that time. Interest rates, prices, and government programs change, so check the current position before acting on anything here. It is provided for information only and is not financial, mortgage, tax or legal advice. A. Q. Mufti is a registered Sales Representative with RE/MAX Real Estate Centre Inc., Brokerage, Ontario, Canada.
