Housing affordability in Canada is facing a mounting crisis, with housing construction not keeping pace with population growth since the 1970s. While experts and the Canada Mortgage and Housing Corp. (CMHC) have highlighted the need for 5.8 million new homes by 2030 to restore affordability, Prime Minister Justin Trudeau recently placed the blame on investors and corporations for exacerbating the issue.
Speaking in Brampton, Ontario, Trudeau pointed to investors and corporations commodifying homes as an investment vehicle, instead of a place for families to live and build equity.
“But we do know that one of the factors that is challenging for so many people is the commodification of housing (and) the fact that people are using homes and houses as an investment vehicle — particularly corporations using homes as an investment vehicle — rather than families using them as a place to live, grow their lives and to build equity for their future,” the Prime Minister said.
However, the concerning commodification trend could be a symptom of greater policy issues. Toronto.com cites Ron Butler from Butler Mortgage in Etobicoke in saying that “ridiculously low” interest rates may be the main culprit.
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“(Investor involvement) was constantly growing all the way up to 2021. That was the peak year when mortgage interest rates were at their very lowest point. They were ridiculously low. That really favored investors,” Butler said in an interview.
Butler believes that in order to stem the commodification of housing, the government needs to encourage purpose-built rentals, which the Trudeau administration says is one of the main goals of the Housing Accelerator Fund.
On the other hand, some critics say that vilifying investors may be counterproductive.
“The prime minister’s comments, which reflect his understanding of the housing crisis, or lack thereof, should alarm Canadians, especially those facing acute affordability challenges,” Murtaza Haider and Stephen Moranis wrote in an opinion piece for Financial Post.
At Brampton, Trudeau announced $114 million in funding for housing initiatives through the $4-billion Housing Accelerator Fund. Although this may seem substantial, it is a mere fraction of the investment needed to achieve affordability goals.
CMHC estimates that over $1 trillion will be needed to meet the housing demand, but with Trudeau targeting investors as part of the problem, many are left wondering where the rest of the funds will come from.
Haider and Moranis posit that Trudeau’s critique of investors would have been more justified if he had identified alternative funding sources, as housing is inherently a commodity, and investor involvement is common in cities worldwide.
Trudeau’s government has invested in housing through the 10-year, $75-billion National Housing Strategy since 2018. However, this has yet to significantly impact affordability.
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