In Toronto: The city once again ranks as one of the least affordable cities in North America + How can we tackle unaffordability?
Elsewhere: BoC governor warns Canada's home price rise is 'not normal,' how parking destroys cities, and Iceland signals Europe's first economic tightening.
One of the chief factors in pushing up home prices has been the rock-bottom interest rates that the Bank of Canada has signalled will be with us for at least another year. The cheap cost of money has enabled many consumers to become property investors, using their home equity to buy second properties and introducing an element of speculation into the housing market, said John Pasalis, president of the Toronto real estate brokerage Realosophy.
Vancouver was the least affordable city, with Toronto in second place and Hamilton in third. All three are more expensive places to live than New York and L.A. The report, from Oxford Economics, published on Tuesday, said homes in Canada are 34 per cent more expensive than the median-income household could afford.
I think it will accelerate and I’ll tell you why: There are half a million Canadians residing in Hong Kong. Since COVID-19, about 60,000 to 70,000 moved back to Canada. When I talk with developers in Vancouver and Toronto, they see Hong Kong money coming in at a rate we haven’t seen in a long time. You can tax investors but they will come, regardless, because they have different agendas and enough money.
But we — ordinary Torontonians who are housed — have to do better, too. There is a popular attitude in Toronto that people without permanent homes are not neighbour material. If you don’t believe me check out a city of Toronto planning and housing committee meeting. I did so this week, and the fear-mongering about people experiencing homelessness and mental health challenges was rampant.
“It’s important to understand that the recent rapid increases in home prices are not normal,” Macklem told reporters. “Even without a shock, some of the factors that cause prices to rise fast could reverse later and that could leave some households with less equity in their homes.”
The world's second biggest country by landmass is effectively running out of space, and that has Canada on course for a reckoning. The dream of a detached home and a piece of land, which generations of Canadians have taken for granted, and which continues to entice new immigrants, may soon be out of reach in the places where people want to live. That could force an expansion of the idea of home to include condos and rentals, potentially transforming how the middle class does everything from raising families to saving for retirement.
Nowhere To Buy (Maclean's)
Unlike past surges, the most frenzied action is no longer concentrated in the epicentres of Toronto and Vancouver. Canada has become a nation of epicentres, as buyers from major cities hit smaller towns where, until recently, they could reasonably expect not to be priced out. The pandemic’s transformative impact on jobs and home lives has fuelled the trend. Liberated from their commutes by the mass shift to remote work, urbanites are looking further afield.
How Parking Destroys Cities (The Atlantic )
The trouble with parking requirements is twofold. First, they don’t do what they’re supposed to, which is prevent curb congestion. Because curb parking is convenient and usually free, drivers fill up the curb first, no matter how much off-street space exists nearby. Second—and more consequential—parking requirements attack the nature of the city itself, by subordinating density to the needs of the car.
While “Section 8” has long served as a dog whistle for racist opponents of welfare, recent research suggests that reluctant landlords aren’t entirely motivated by bias. With a few nudges, landlords could even be persuaded to return to the program, meaning better opportunities for families with housing assistance, something that’s crucial for children especially, as research from Harvard economist Raj Chetty’s Opportunity Insights program has shown. This theory is the basis for a bipartisan bill before the Senate that would add new features to the voucher program to try to lure property owners back into the fold — including signing bonuses for landlords.
The policy largely failed people with extremely low incomes, and over roughly the same period, the available public-housing units declined to 958,000 at the end of 2020 from 1.4 million in 1990, according to HUD. “It’s the portion of the housing stock declining the most,” says Andrew Aurand, the vice president for research at the National Low Income Housing Coalition.
With Official Housing Scant, French People Open Their Homes to Migrants (NY Times - Paywall)
The government acknowledges that it has been slow to find accommodation for asylum seekers, and says that it plans to add more places in the coming year. But groups like Utopia 56, the nonprofit that Mr. Marre signed up with, say that the added accommodation is not enough and that the government is dragging its heels on providing housing to deter more people from coming to France at a time when anti-immigrant sentiment is growing.
Iceland Rate Hike Marks Western Europe’s First Tightening (Bloomberg - Paywall)
The north Atlantic island has been more exposed to the pandemic than its Nordic peers with its all-important tourism industry suffering a body blow last year. A string of rate cuts then triggered a rally in house prices. Icelandic inflation, which includes real-estate costs, soared to 4.6% in April, well above the bank’s 2.5% target.
Top Photo Credit: iStock/Getty
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May 21, 2021This Week In Real Estate |