The gap between the poor and the wealthy keeps increasing. The 87 richest families in Canada own almost as much as everyone living in New Brunswick, Newfoundland and Labrador and Prince Edward Island combined. However, we don’t need to look at only the richest of the rich to see a huge gap.  With the price of housing, one of the key status symbols of wealth is simply being able to afford your own home. I thought home prices have been too high for a while, but 2021 has been insane with crazy bidding wars being a regular occurrence and house prices increasing by 25% between February 2020 to February 2021, reaching an average price of $678K in Canada with BC at $888K. 

With a median after tax family income of $71K in Canada ($72K in BC), these prices don’t add up.  Unless they inherit a home or money, there is no way that the majority of Canadians can afford to buy a home. The problem is that rents are also increasing. The average 2 bedroom rental in Vancouver is around $3,000/month, which would be 50% of the median family’s take-home pay.  If you spend more than 35% of your net-income on housing, Gail Vaz-Oxlade the host of Til Debt Do Us Part, says it’s a sign you’re a money moron.  However, what choice do they have? It is not surprising that renters have a hard time saving money. For Canadians nearing retirement age (55 to 64), the median net worth of homeowners was $952,100, compared to only $40,000 for renters.

There is no easy fix.  The high prices increase our GDP, and boosts tax revenues making the government look good.  However, there are only so many warning bells that the government can ignore before they need to intervene. However, if they act and house prices drop to a more reasonable level, thousands of people would find themselves with houses that are worth less than their mortgages.

There have been warnings for decades that treating housing as a commodity —a vehicle for wealth and investment rather than a social good, was a problem. In 1979, the Canadian Council on Social Development indicated that major parts of our population - single mothers, young physically disabled persons, urban, native persons, older, single women, etc., have few, if any, alternatives in the housing market and that Canada has clearly defined target groups and housing need that cannot be accommodated by the marketplace.  The situation has simply grown worse, to the point where housing un-affordability will affect the majority of Canadians.

Drastic change is required to fix the problem. Some argue that we simply need to build more houses. However, increasing the supply of housing doesn't get at the root problem — which is distribution. Canada is not the only country to face this challenge. We need to look at what other jurisdictions have done to help turn this ship around.

• Implement stronger tenant rights and rent control;
• Tax secondary homes at a higher rate;
• Crack down on criminals using real estate for money laundering;
• Shift the current discourse on housing as a place to park capital and make returns, back to housing as a fundamental human right;
• Introduce foreign home buyers tax or simply ban the sale of homes to foreign speculators as was done in New Zealand;
• Limit the number of properties that any one landlord can own;
• Require any company buying property in Canada to list the real owners in a public register of beneficial ownership and punish financial professionals who help Canadians evade taxes;
• Look at models that restrict house prices to increase based on the Consumer Price Index, not the property market;
• Use new taxes on housing to curb housing speculation to build thousands of affordable housing units annually;
• Examine large-scale housing cooperative models.

It was good to see the recent federal budget provide more money for social housing, and include a an annual 1-per-cent tax on the value of non-resident, non-Canadian owned residential real estate that is considered to be vacant or underused.  Let’s hope the government follows up with more measures to get housing prices under control.