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Ottawa Citizen
06-06-2025
- Business
- Ottawa Citizen
Canada's housing crisis calls for more than ‘cranes on the skyline'
This week three of four Canadians declared they have no confidence in Prime Minister Mark Carney's ideas for solving the country's housing affordability crisis. Article content Like most premiers and mayors, Carney is promising to 'build, baby, build' to stimulate a record amount of housing construction. But Angus Reid Institute polling suggests the public is more than skeptical, perhaps in despair. Article content Article content Article content While voters understandably get lost in the complexities of solving a house-price catastrophe that sees average prices at a ridiculous $1.2 million in Greater Vancouver and $1.1 million in Toronto, at least one veteran housing analyst is making a clear and devastating case that Canada's dilemma is being significantly fanned by a wave of investors. Article content Article content John Pasalis, author of a new report titled The Great Sell Off: How Our Homes Became Someone Else's Business, says politicians are abandoning people who want to live in their homes, and they're selling a generation of voters a 'fantasy' that their worn ideas will lead to affordability, he writes. Article content 'As long as politicians and housing economists insist that 'more supply' is the only solution — ignoring the financial dynamics driving demand from investors — we will continue to fall short. This is not just a supply problem. It's a financialization problem, and solving it requires more than cranes on the skyline,' writes Pasalis, president of Realosophy. Article content Article content 'We are at a crossroads. For too long, we've operated under the assumption that today's housing market is simply a more expensive version of the one our parents knew. It isn't. We are living through a paradigm shift — one in which homes are no longer primarily bought by local families, but by global investors. Housing has become a financial asset unbound from local incomes, and policy has yet to catch up.' Article content Article content Last year 30 per cent of all homes in Canada were owned by investors —domestic and foreign — who buy properties they don't intend to occupy. That's a 50-per cent jump in 10 years. Article content In B.C., an incredible half of all condos built in the past decade have been snapped up by investors. In Ontario, the proportion is 57 per cent. Pasalis says government policies are largely to blame.
Vancouver Sun
06-06-2025
- Business
- Vancouver Sun
Canada's housing crisis calls for more than ‘cranes on the skyline'
This week three of four Canadians declared they have no confidence in Prime Minister Mark Carney's ideas for solving the country's housing affordability crisis. Like most premiers and mayors, Carney is promising to 'build, baby, build' to stimulate a record amount of housing construction. But Angus Reid Institute polling suggests the public is more than skeptical, perhaps in despair. While voters understandably get lost in the complexities of solving a house-price catastrophe that sees average prices at a ridiculous $1.2 million in Greater Vancouver and $1.1 million in Toronto, at least one veteran housing analyst is making a clear and devastating case that Canada's dilemma is being significantly fanned by a wave of investors. Stay on top of the latest real estate news and home design trends. By signing up you consent to receive the above newsletter from Postmedia Network Inc. A welcome email is on its way. If you don't see it, please check your junk folder. The next issue of Westcoast Homes will soon be in your inbox. Please try again Interested in more newsletters? Browse here. John Pasalis, author of a new report titled The Great Sell Off: How Our Homes Became Someone Else's Business , says politicians are abandoning people who want to live in their homes, and they're selling a generation of voters a 'fantasy' that their worn ideas will lead to affordability, he writes. 'As long as politicians and housing economists insist that 'more supply' is the only solution — ignoring the financial dynamics driving demand from investors — we will continue to fall short. This is not just a supply problem. It's a financialization problem, and solving it requires more than cranes on the skyline,' writes Pasalis, president of Realosophy. 'We are at a crossroads. For too long, we've operated under the assumption that today's housing market is simply a more expensive version of the one our parents knew. It isn't. We are living through a paradigm shift — one in which homes are no longer primarily bought by local families, but by global investors. Housing has become a financial asset unbound from local incomes, and policy has yet to catch up.' Last year 30 per cent of all homes in Canada were owned by investors —domestic and foreign — who buy properties they don't intend to occupy. That's a 50-per cent jump in 10 years. In B.C., an incredible half of all condos built in the past decade have been snapped up by investors. In Ontario, the proportion is 57 per cent. Pasalis says government policies are largely to blame. The frenzy of investment is forging two big problems. First, it's excluding younger generations from home ownership. Second, it's creating a bizarre economy where investment money passively goes into hoarding homes, rather than into business innovation and creating good jobs. Who are the investors? The answer may hit close to home for many readers. As opposed to 'end users' who live in the dwellings they buy, Pasalis says there is a tremendous range of investors. 'From a family purchasing a home near a university for their child — renting it out when it's not in use — to foreign investors buying condo units on speculation, and billion-dollar corporations acquiring low-rise houses to rent out in communities across Canada and the U.S. — all fall under the broad category of investors.' Alas, most politicians show no interest in curtailing this giant cohort. One reason may be that many politicians are themselves investors: A study in 2023 found almost two in five federal MPs are real estate financiers or landlords . We don't know if Carney owns investment property because he's not making public his personal assets , which he says are in a blind trust. Also, most politicians rely heavily on property developers for donations. Carney, for instance, took part in a Liberal party fundraiser in Vancouver in February that included a who's who of B.C. property developers. 'Canada has built an economy where the best way to get rich isn't to invent, create or build anything, it's to own homes and wait for prices to rise,' says Pasalis. That means the usual free-market belief that increasing supply to meet demand will eventually lower prices does not stand up in regard to houses. That's because homes are not like manufactured widgets, such as vacuum cleaners. One big difference with widgets, says Pasalis, is housing is a 'human necessity.' The other is that widgets, once bought, go down in price. Homes tend to appreciate. Pasalis describes how an affordable house used to be one that costs four times a household's annual income. Now, in Toronto the actual ratio is a grim 10 to one. In Vancouver it's a destructive 12 to one. As if that isn't bad enough, the industry's addiction to investors is causing the wrong kinds of homes to be built. 'Investors tend to drive up condo prices beyond what they would be in a more balanced market because of their better access to capital than end users,' says Pasalis, noting that global access to wealth, credit and leverage for some is almost limitless. 'Equally as important, investors have come to shape the projects that developers build — small units that offer the highest returns.' Metro Vancouver and Toronto offer prime examples of this problem — with their flood of tiny new apartments in towers, which can most easily be rented. It would be better if developers built more medium-rise, three-bedroom dwellings suitable for young families. What can governments do to help so many who are frozen out of the market — especially the almost three in five young and middle-aged adults who told a TD Bank survey they feel buying a home is unattainable? Reducing record population growth is one thing. But the best way to fight investment mania is to make it less lucrative, says Pasalis. One of Pasalis's ideas (there are many in his clearly written 82-page report) is to hike taxes on the way investors profit from their dwelling's increasing value, referred to as capital gains. 'Today, capital gains from real estate are taxed at a lower rate than income,' Pasalis says. 'The solution is to remove this preferential tax treatment and tax any capital gains from single-family homes used as investment properties at the same rate as income.' Such a tax reform would not be meant to be a punishment, but a realignment of incentives, says Pasalis. Developers and most politicians will no doubt protest. Yet Pasalis is dead-on that Canada is going through a housing paradigm shift— and revolutionary new solutions must be attempted. dtodd@
