Housing hell: How we got here and how we get out.

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something new and strange has happened

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in Canada Canada is sitting on probably

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one of the largest housing bubbles of

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all times something we haven't seen

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before an entire generation of Youth now

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say they will never be able to afford a

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home this is not normal for Canada we've

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got students who are living in their

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vehicles because they couldn't find a

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place to live tens of thousands of

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Canadians could default mosha on their

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mortgages and are we looking at that

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kind of nightmare scenario after

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generations of a able and stable

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Canadian home prices it now takes 66% of

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the average monthly income to make

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payments on the average single detached

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Canadian house given that most of the

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remaining 34% of the family paycheck is

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taken up by taxes there's literally

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nothing left for food and Recreation and

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that all assumes that you have enough

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for a down payment to get the mortgage

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in the first place saving up for that

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down payment in Toronto now takes an

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average of 25 years not long ago you

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paid off a mortgage in that time so

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young people must rent but rent has

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doubled in the last8 Years newlyweds now

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pay $1,000 per month to rent a single

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room in a townhouse that they share with

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two other couples 35-year olds live in

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their parents' basement rents are so

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high in Toronto that students live in

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homeless shelters others sleep in their

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cars or even under bridges just to

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afford to go to university one

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grandmother posted signs on hydro poles

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trying to find a place to live middle

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class people like nurse and Carpenters

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now live in their vehicles tent cities

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are popping up in almost every major

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city and many small towns in Canada

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mostly in places that never had them

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before and because homeless shelters are

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overflowing with people new refugees are

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now told to live on the streets and

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under bridges like all countries we've

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always had problems throughout Canada's

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past though almost anyone who got a job

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could save up and buy a home by their

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mids when did all that change

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years

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ago it's crazy to think but in a little

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under a decade Canada's housing costs

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have basically doubled the rent has

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doubled mortgage payments doubled the

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needed down payment on an average home

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doubled Double Trouble think about that

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housing costs have gone up more since

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2015 than they had in all the years

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before that combined 8 years years ago

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the average one-bedroom rent was about

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970 bucks the average today

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$1,871 the average needed down payment

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about

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$23,000 today 51 Grand 8 years ago the

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average mortgage payment was about

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$1,400 now it's over

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$3,500 8 years ago payments on an

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average single detach home cost roughly

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4 % of median family income now that

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number is

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66% meaning that paychecks have not

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caught up with the cost of housing and

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we can't blame the rest of the world

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Canada's housing costs have risen faster

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and higher than almost any other country

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on Earth depending on how and when you

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measure it Canada's housing costs are on

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average 45 to 75% higher than in the

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United States in Border towns it's even

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more homes on the Canadian side are

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often 100% more expensive than their

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American counterparts look at this home

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in Niagara Canada versus this home in

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Niagara New York only about a half an

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hour apart from one another Vancouver is

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now the third and Toronto the 10th most

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unaffordable city on earth worse than

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New York London England and even

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Singapore a wealthy island with 2,000

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times more people per square kilometer

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than Canada all these places have more

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money and people and less land yet they

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are more affordable UBS a major global

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bank now lists Toronto as having the

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riskiest housing bubble in the world

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with Vancouver sixth according to UBS

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home prices in Toronto and Vancouver

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have gone from Fair valued to overvalued

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to Bubble risk all in only 10 years this

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two-bedroom property in Toronto's

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Kensington neighborhood cost the same as

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a 20-bedroom castle situated on 5 acres

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of land in Scotland

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this shouldn't be a problem in Canada

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based on our supply demand Dynamics

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think about it with our massive

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geography meaning lots of supply and our

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small population meaning limited demand

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housing should be cheap here in Canada

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we have the most land per person of any

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G7 country that includes much land close

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to big cities where people need to live

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to work so why is it so expensive

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well let's break it down a mortgage

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payment has two parts interest and

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principle interest rates are set by the

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Bank of Canada but heavily influenced by

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the federal government you'll forgive me

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if I don't think about monetary policy

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uh when the government borrows and

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spends it bids up the goods we buy and

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the interest we pay the Trudeau

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government has doubled Canada's debt

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adding more debt than all prime

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ministers combined our finance minister

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has conceded that this deficit spending

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pours fuel on the inflationary fire and

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I'm going to start with what we

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shouldn't do I think that it is very

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important not to make the problem worse

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I am very mindful of the importance of

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not pouring fiscal fuel on the Flames of

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inflation and then a few weeks later she

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poured $69 billion of new fuel on that

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fire for governments to run huge

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deficits or borrow money they sell bonds

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to investors in recent years the trudo

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government spending has exploded and

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they've been boring more than lenders

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will lend so the Bank of Canada has

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started creating the cash the money

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supply has therefore grown eight times

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faster than the economy over the last 3

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years more money bidding on fewer Goods

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including fewer houses equals higher

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prices but the central bank doesn't just

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send a Brinks truck to the prime

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minister office rather they use a

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complicated set of transactions that

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they call quantitative easing I always

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be suspicious when you hear a

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complicated word that makes no sense to

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anyone except those benefiting from it

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here's how it goes first the government

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sells bonds to financial institutions

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then the Bank of Canada buys those bonds

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right back at higher prices Financial

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corporations love it because they're

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guaranteed a big profit but the

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consequence is not only that the

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government gets more easy money to spend

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but the financial system overflows with

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cash which often is Lent out at ultra

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low rates in super large mortgages

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particularly for wealthy investors whose

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banking connections get them to the

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front of the line so as you can see in

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this chart from the Bank of Canada

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itself investors doubled the number of

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Home purchases they made in just over a

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year the black line well it shows when

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the quantitative easing began cause

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money printing effect housing inflation

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so the government deficits forc the Bank

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of Canada to boost interest rates to

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push inflation back down former liberal

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Finance Minister John Manley put it this

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way it appears that fiscal monetary

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policy are not aligned and the

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importance of that alignment is is key

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we're still running very large fiscal

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deficits um the government still talks

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about how much they're going to they're

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going to continue to spend and uh this

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is a bit like driving your car with one

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foot on the gas and the other on the

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break Common Sense solution stop the

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inflationary deficits so the bank

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doesn't have to raise the rates that

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means cutting government waste and

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capping government spending with a

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dollar Ford dooll law that forces

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politicians to find a Dollar of savings

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for each new dollar of spending by

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getting back towards a balance budget

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will bring down inflation and interest

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rates on your mortgage payment so that

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helps address the interest cost of the

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mortgage payment what about the

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principle which is determined by the

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home price Canadian prices which are so

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much higher than in other countries are

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determined by supply and demand we have

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the fewest houses per capita in the G7

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even though we have the most land to

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build on we have fewer houses per capita

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today than we did 8 years ago as

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population has outgrown Home Building

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Canada built fewer homes last year than

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it built in 1972 50 years ago consider

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this in 1972 Canada's population was 22

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million and we built about 230,000 homes

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in 2022 Canada's population was 39

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million and we built about 220,000 homes

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in other words far more people far less

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home build

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and the shortfall is only growing

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Canada's housing agency the cmhc

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predicts a 32% drop in home building

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this year as higher interest rates and

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red tape are blocking construction the

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agency projects that we will be 3.5

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million homes short by the year 2030

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based on our current estimates of

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building and population growth where

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will those 3.5 million families live

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live more importantly why can't we build

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homes to house them what do you think is

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the most expensive thing that goes into

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a new house and say Vancouver is it

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labor Lumber land nope government a CD

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house study added up all the costs of

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labor materials land and profit needed

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to build a home and compared it to the

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final sale price in Vancouver the Gap

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was nearly 1.3

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million that Gap or as I call it the

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gatekeeper Gap is the cost of government

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permit delays changing rules pricey

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Consultants lawyers fees charges taxes

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Etc another study showed Montreal City

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Government blocked 24,000 homes the city

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of Winnipeg meanwhile just lost a

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lawsuit because it tried to block the

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construction of nearly 2,000 homes right

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next to a newly built Transit System as

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an example of the Mindless red tape

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costs the Ontario housing affordability

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task force report stated that quote

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minimum parking requirements add as much

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as

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$165,000 to the cost of a new home even

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as demand for parking spaces is falling

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and that one of the strongest signs that

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our approval process is not working of

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35 oecd countries only the Slovak

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Republic takes longer than Canada to

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approve a building project the UK and

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the US approve projects three times

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faster without sacrificing quality or

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safety government development charges in

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Ontario can be as much as

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$135,000 per home and some have

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increased as much as

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900% in less than 20 years and those

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charges don't include governmental costs

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like taxes delays and uncertainty worst

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of all the trudo government has

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encouraged this gatekeeping with

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billions of dollars in new grants to the

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same city governments that block Home

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Building he is literally funding the

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hiring of more Gatekeepers to stand in

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the way of building homes so you lose

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two ways you pay more in taxes so that

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you can pay more for a home so what if

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we incentivized good behavior rather

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than reinforcing the bad here's how we

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can the federal government spends about

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$4.5 billion on direct and continuous

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Municipal infrastructure transfers big

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city politicians care about getting that

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money more than anything else they'll

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only permit more Home Building faster if

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their Federal money depends on it my

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Common Sense plan One require big cities

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to complete 15% more Home Building per

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year as a condition of getting Federal

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infrastructure Money Two give building

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bonuses to cities that exceed the 15%

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Target dollars should be based on

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housing completions not promises three

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require federally funded Transit

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stations be permitted for high density

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Apartments all around it and withhold

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Federal Transit grants until the

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apartments are built and occupied four

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sell off 15% of federal buildings and

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thousands of Acres of surplus federal

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land suitable for housing instead of

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funding promises the federal government

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should fund results it should link the

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number of federal dollars big city

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governments get for infrastructure to

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the number of new homes completed money

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should flow after the keys are indoors

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pay for promises get more promises pay

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for results get results the good news is

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we have examples of success look at the

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Squamish nation and their development in

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Vancouver they've approved and begun

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building on 6,000 apartments and condos

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on just 10.4 acres of land that's nearly

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600 homes per acre now they could do

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this because being a reserve they did

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not need to follow Vancouver City Hall

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rules that means 6,000 hardworking local

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residents will get a place to live

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because there were no City Gatekeepers

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standing in the way but let's bring this

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back this isn't just about the price of

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a home it is not just about numbers this

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is people's lives if we don't fix this

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we could have hundreds of thousands of

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middleclass people living on the street

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in Canada a home is your financial

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future a home is the place you're secure

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a home is where you raise a family a

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home is at the center of everything you

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do in your life if the government stands

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in the way of you getting a home it

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stands in the way of your entire life

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going forward the good news is housing

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costs were not like this before Justin

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Trudeau and they won't be like this

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after he's gone we can borrow less and

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build more we have all the natural

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advantages abundant land labor and

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lumber the best Carpenters plumbers

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framers and electricians and

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homebuilders we just need to get The

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Gatekeepers out of their way and yours

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so that we can bring it

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home