In our new feature, "Move Smartly Ideas", I talk to Urmi about what I'm reading, writing and talking about right now.
A few day ago, my post on Linkedin about the highly stressful situation being faced by Toronto area renters attracted a lot of interest.
For our first 'Move Smartly Ideas' chat I spoke to my co-host, Urmi Desai, Move Smartly editor, to expand on my thoughts and respond to her questions. You can click on video above to watch our chat or go to our Move Smartly YouTube channel to watch the episode with timestamps.
The text of my original Linkedin is re-shared here in full below.
Last week, I I just got off the phone with someone who was in tears because she’s getting kicked out of her current home by her landlord and is finding it impossible to find a rental for her family of five.
She applied to rent 5 different properties and keeps getting rejected.
I don’t know the details of her background, credit or income, but even attempts to apply with family members with higher net worth and income didn’t work. Her offer to pay 2 years' rent upfront also didn’t work.
This is what happens when a city’s vacancy rate is in the 1% range. Only tenants with the highest credit/income can rent a home.
This is what happens when our government decides to triple the rate at which our population is growing without giving any thought to where everyone will live.
I don’t know what the right population growth rate for Canada should be, but one thing is abundantly clear.
When our population is growing far more rapidly than our ability to build homes, housing costs are going to skyrocket.
Despite the promises from politicians, economists and housing advocates that the solution to our housing crisis is to just "build more homes", it’s becoming very obvious that governments have no ability to influence how many homes the private sector builds each year (at least not in the short term).
We need more homes, yet housing starts in Canada are falling.
The outcome is a housing shortage and crisis that will ultimately affect the poorest households the most. Homeowners have benefited from our housing shortage as home prices have surged over the past ten years.
Meanwhile, renters have seen average rents go up by double digits across most cities in Canada without benefitting from any of the appreciation of housing assets. And households without incredible credit and high income are finding it impossible to actually rent a home.
As long as Canada’s population continues to grow at this rate, and as long as politicians and housing advocates pretend that our housing crisis can be solved by rapidly increasing the supply of homes...we can expect this housing affordability crisis to get worse.
I'll be writing more about the data behind my population and housing concerns in the next few days - stay tuned.
John Pasalis is President of Realosophy Realty and author of the monthly Move Smartly market report. A specialist in real estate data analysis, John’s research focuses on unlocking micro trends in the Greater Toronto Area real estate market. His research has been utilized by the Bank of Canada, the Canadian Mortgage and Housing Corporation (CMHC) and the International Monetary Fund (IMF).