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

Summary

The script highlights Canada's severe housing crisis, where skyrocketing costs have made homeownership unattainable for an entire generation of youth. It delves into the root causes, including excessive government spending, leading to inflationary deficits and interest rate hikes, as well as restrictive zoning laws and bureaucratic red tape that impede housing supply. The author proposes practical solutions, such as tying federal infrastructure funding to housing completion targets, selling surplus federal land for residential development, and incentivizing cities to streamline permitting processes. The overarching message is the urgent need to address this crisis and restore housing affordability for the middle class in Canada.

Takeaways

• 🏡 Canada is facing an unprecedented housing affordability crisis, with many Canadians, including students and the middle class, unable to afford homes or even rents.
• 📈 Housing costs in Canada have risen dramatically in recent years, doubling in just 8 years, outpacing income growth and making homeownership increasingly unattainable.
• 🌍 Canada's housing costs have risen faster and higher than almost any other country in the world, with cities like Toronto and Vancouver ranking among the most unaffordable globally.
• 💰 Government deficits, quantitative easing, and low interest rates have fueled housing inflation, with wealthy investors being able to access cheap mortgages.
• 📉 Canada's housing supply has not kept up with population growth, leading to a significant shortage of homes relative to demand.
• 🚧 Government regulations, permits, delays, and red tape add significant costs to home construction, acting as a barrier to building more affordable housing.
• 💸 The gap between the actual cost of building a home and its final sale price can be over $1 million, largely due to government fees, charges, and delays.
• 🏗️ Streamlining and incentivizing the housing approval process, and linking federal infrastructure funding to housing completions, could help increase housing supply.
• 🌆 Examples like the Squamish Nation development in Vancouver show that bypassing restrictive city rules can enable rapid construction of dense housing.
• 🔑 Addressing the housing crisis requires a multi-pronged approach, including fiscal responsibility, regulatory reform, and incentives for housing construction.

Q & A

What is the central issue discussed in the script?

The script primarily discusses the housing affordability crisis in Canada, where housing costs have risen dramatically, making it increasingly difficult for the average Canadian, especially the younger generation, to afford a home.

What are some of the striking examples provided in the script to highlight the severity of the housing crisis?

The script cites examples such as students living in their vehicles or homeless shelters, newlyweds paying $1,000 per month to rent a single room, 35-year-olds living in their parents' basements, and middle-class professionals like nurses and carpenters living in their vehicles due to high housing costs.

How does the script compare Canada's housing costs to other countries?

The script states that Canada's housing costs have risen faster and higher than almost any other country on Earth. It mentions that Canadian homes in border towns are often 100% more expensive than their American counterparts, and cities like Vancouver and Toronto rank among the most unaffordable cities globally, even compared to places with higher population densities like Singapore.

What are the two main factors identified in the script as contributing to the high housing costs?

The script identifies two main factors: 1) Government deficits and monetary policies leading to higher interest rates, and 2) Supply constraints and regulatory barriers that limit new home construction.

How does the script suggest addressing the issue of high interest rates?

The script suggests cutting government waste, capping government spending with a "dollar-for-dollar" law that forces politicians to find savings for each new dollar of spending, and bringing down inflation and interest rates by moving towards a balanced budget.

What role does the script attribute to regulatory barriers and "gatekeepers" in the housing crisis?

The script identifies regulatory barriers, permit delays, changing rules, costly consultants, lawyers' fees, charges, and taxes as significant contributors to high housing costs, labeling them as the "gatekeeper gap." It suggests these regulatory hurdles are blocking and delaying home construction.

What solution does the script propose to incentivize cities to permit more housing construction?

The script proposes linking federal infrastructure funding to cities to the number of new homes completed, providing building bonuses to cities that exceed housing targets, and requiring high-density housing around federally funded transit stations.

What example of successful housing development does the script cite?

The script cites the Squamish Nation's development in Vancouver, where they approved and began building 6,000 apartments and condos on just 10.4 acres of land, bypassing the city's regulatory hurdles.

How does the script frame the housing crisis beyond just the financial aspect?

The script frames the housing crisis as a threat to people's lives, financial futures, security, and ability to raise families, arguing that a home is central to everything people do in their lives.

What is the script's overall message regarding the housing crisis and its potential resolution?

The script's overall message is that the current housing affordability crisis in Canada is a recent phenomenon caused by government policies and regulatory barriers, and that it can be resolved by changing these policies, reining in government spending, and removing obstacles to new home construction.

Outlines

00:00

🏡 Canada's Unprecedented Housing Crisis

This paragraph highlights the severe housing crisis in Canada, where an entire generation of youth cannot afford homes. Housing costs have doubled in just 8 years, with rent, mortgage payments, and required down payments all doubling. The situation is worse than other countries, with Toronto and Vancouver ranking as some of the most unaffordable cities globally. It compares housing costs to income levels, showing how a significant portion of income goes towards housing expenses, leaving little for other necessities.

05:00

💰 Understanding the Root Causes: Government Deficits and Interest Rates

This paragraph examines the root causes of the housing crisis, primarily focusing on government deficits and their impact on interest rates. It explains how the Trudeau government's deficit spending and borrowing have contributed to inflation, forcing the Bank of Canada to raise interest rates, which in turn increases mortgage payments. The paragraph also touches on the Bank of Canada's quantitative easing policies and their effects on housing inflation, particularly for wealthy investors.

10:02

🚧 Government Gatekeeping and Barriers to Housing Supply

This paragraph explores the issue of government red tape and barriers to housing supply. It highlights the significant gap between the cost of building a home and its final sale price, attributing this difference to government permit delays, changing rules, consultants' fees, taxes, and other charges. The paragraph provides examples of cities blocking housing developments and advocates for incentivizing good behavior by tying federal infrastructure funding to housing completions. It also suggests selling off federal land and buildings suitable for housing development.

15:06

🏡 Conclusion: A Call for Action

This single-line paragraph serves as a concluding statement, emphasizing the importance of addressing the housing crisis and its far-reaching implications for people's lives, financial futures, and overall well-being.

Keywords

💡Housing Bubble

A housing bubble refers to a situation where housing prices rise rapidly and become overvalued in relation to incomes and other economic factors. The video suggests that Canada is experiencing one of the largest housing bubbles in history, with home prices becoming increasingly unaffordable for the average Canadian, especially the younger generation.

💡Affordability

Affordability refers to the ability of individuals or households to purchase or rent housing without overly straining their financial resources. The video highlights the declining affordability of housing in Canada, where it now takes 66% of the average monthly income to make payments on an average single-detached home, leaving little room for other expenses.

💡Down Payment

A down payment is the initial upfront amount paid towards the purchase of a home, typically a percentage of the total cost. The video states that saving up for a down payment in Toronto now takes an average of 25 years, illustrating the significant financial barrier to homeownership faced by many Canadians.

💡Mortgage Payments

Mortgage payments are the regular installments paid by homeowners to their lenders, consisting of both principal and interest. The video notes that the average mortgage payment in Canada has doubled in the past eight years, further contributing to the housing affordability crisis.

💡Rent

Rent refers to the periodic payment made by a tenant to occupy a residential property owned by a landlord. The video highlights the rapid increase in rental costs in Canada, with newlyweds paying $1,000 per month to rent a single room in a shared townhouse, and some students living in homeless shelters or cars due to high rents.

💡Quantitative Easing

Quantitative easing is a monetary policy tool used by central banks to increase the money supply and stimulate economic growth. The video suggests that the Bank of Canada's quantitative easing measures have contributed to the housing crisis by flooding the financial system with cash, leading to low interest rates and large mortgages for wealthy investors.

💡Supply and Demand

Supply and demand are the fundamental economic principles that determine prices in a market. The video discusses the imbalance between the supply of housing and the demand for housing in Canada, with population growth outpacing home construction, leading to a shortage of housing and upward pressure on prices.

💡Gatekeeper Gap

The 'gatekeeper gap' refers to the significant cost added to new home construction due to government regulations, permit delays, consultant fees, taxes, and other bureaucratic obstacles. The video suggests that this gap can account for up to $1.3 million in additional costs for a new home in Vancouver, hindering housing affordability.

💡Infrastructure Funding

Infrastructure funding refers to the financial resources provided by the federal government to municipalities for the development and maintenance of public infrastructure. The video proposes linking this funding to housing development targets, incentivizing cities to permit more home construction to receive infrastructure grants.

💡Home Ownership

Home ownership refers to the possession and legal ownership of a residential property. The video emphasizes the importance of home ownership as a financial investment, a place of security, and a foundation for raising a family, highlighting the potential societal consequences of a generation unable to afford home ownership.

Highlights

Canada is sitting on probably one of the largest housing bubbles of all times, with an entire generation of youth saying they will never be able to afford a home.

It now takes 66% of the average monthly income to make payments on the average single detached Canadian house, leaving little for other necessities.

Housing costs have gone up more since 2015 than they had in all the years before that combined.

Canada's housing costs have risen faster and higher than almost any other country on Earth.

Vancouver is now the third and Toronto the 10th most unaffordable city on earth, worse than New York, London, and even Singapore.

A major global bank now lists Toronto as having the riskiest housing bubble in the world, with Vancouver sixth.

The Trudeau government has doubled Canada's debt, adding more debt than all prime ministers combined, contributing to inflation.

The Bank of Canada has started creating cash through quantitative easing, leading to more money bidding on fewer houses, resulting in higher prices.

Investors doubled the number of home purchases they made in just over a year, contributing to the housing inflation.

Canada built fewer homes last year than it built in 1972, despite having a larger population.

The most expensive thing that goes into a new house in Vancouver is the cost of government permit delays, changing rules, consultants, lawyers, fees, charges, and taxes.

The Ontario housing affordability task force report stated that minimum parking requirements can add as much as $165,000 to the cost of a new home.

The Trudeau government has encouraged gatekeeping by providing billions of dollars in new grants to the same city governments that block home building.

The solution proposed is to link the federal infrastructure money big city governments receive to the number of new homes completed.

The Squamish Nation in Vancouver has been able to approve and begin building 6,000 apartments and condos on just 10.4 acres of land because they did not need to follow Vancouver City Hall rules.

Transcripts

something new and strange has happened

in Canada Canada is sitting on probably

one of the largest housing bubbles of

all times something we haven't seen

before an entire generation of Youth now

say they will never be able to afford a

home this is not normal for Canada we've

got students who are living in their

vehicles because they couldn't find a

place to live tens of thousands of

Canadians could default mosha on their

mortgages and are we looking at that

kind of nightmare scenario after

generations of a able and stable

Canadian home prices it now takes 66% of

the average monthly income to make

payments on the average single detached

Canadian house given that most of the

remaining 34% of the family paycheck is

taken up by taxes there's literally

nothing left for food and Recreation and

that all assumes that you have enough

for a down payment to get the mortgage

in the first place saving up for that

down payment in Toronto now takes an

average of 25 years not long ago you

paid off a mortgage in that time so

young people must rent but rent has

doubled in the last8 Years newlyweds now

pay $1,000 per month to rent a single

room in a townhouse that they share with

two other couples 35-year olds live in

their parents' basement rents are so

high in Toronto that students live in

homeless shelters others sleep in their

cars or even under bridges just to

afford to go to university one

grandmother posted signs on hydro poles

trying to find a place to live middle

class people like nurse and Carpenters

now live in their vehicles tent cities

are popping up in almost every major

city and many small towns in Canada

mostly in places that never had them

before and because homeless shelters are

overflowing with people new refugees are

now told to live on the streets and

under bridges like all countries we've

always had problems throughout Canada's

past though almost anyone who got a job

could save up and buy a home by their

mids when did all that change

years

ago it's crazy to think but in a little

under a decade Canada's housing costs

have basically doubled the rent has

doubled mortgage payments doubled the

needed down payment on an average home

doubled Double Trouble think about that

housing costs have gone up more since

2015 than they had in all the years

before that combined 8 years years ago

the average one-bedroom rent was about

970 bucks the average today

$1,871 the average needed down payment

about

$23,000 today 51 Grand 8 years ago the

average mortgage payment was about

$1,400 now it's over

$3,500 8 years ago payments on an

average single detach home cost roughly

4 % of median family income now that

number is

66% meaning that paychecks have not

caught up with the cost of housing and

we can't blame the rest of the world

Canada's housing costs have risen faster

and higher than almost any other country

on Earth depending on how and when you

measure it Canada's housing costs are on

average 45 to 75% higher than in the

United States in Border towns it's even

more homes on the Canadian side are

often 100% more expensive than their

American counterparts look at this home

in Niagara Canada versus this home in

Niagara New York only about a half an

hour apart from one another Vancouver is

now the third and Toronto the 10th most

unaffordable city on earth worse than

New York London England and even

Singapore a wealthy island with 2,000

times more people per square kilometer

than Canada all these places have more

money and people and less land yet they

are more affordable UBS a major global

bank now lists Toronto as having the

riskiest housing bubble in the world

with Vancouver sixth according to UBS

home prices in Toronto and Vancouver

have gone from Fair valued to overvalued

to Bubble risk all in only 10 years this

two-bedroom property in Toronto's

Kensington neighborhood cost the same as

a 20-bedroom castle situated on 5 acres

of land in Scotland

this shouldn't be a problem in Canada

based on our supply demand Dynamics

think about it with our massive

geography meaning lots of supply and our

small population meaning limited demand

housing should be cheap here in Canada

we have the most land per person of any

G7 country that includes much land close

to big cities where people need to live

to work so why is it so expensive

well let's break it down a mortgage

payment has two parts interest and

principle interest rates are set by the

Bank of Canada but heavily influenced by

the federal government you'll forgive me

if I don't think about monetary policy

uh when the government borrows and

spends it bids up the goods we buy and

the interest we pay the Trudeau

government has doubled Canada's debt

adding more debt than all prime

ministers combined our finance minister

has conceded that this deficit spending

pours fuel on the inflationary fire and

I'm going to start with what we

shouldn't do I think that it is very

important not to make the problem worse

I am very mindful of the importance of

not pouring fiscal fuel on the Flames of

inflation and then a few weeks later she

poured $69 billion of new fuel on that

fire for governments to run huge

deficits or borrow money they sell bonds

to investors in recent years the trudo

government spending has exploded and

they've been boring more than lenders

will lend so the Bank of Canada has

started creating the cash the money

supply has therefore grown eight times

faster than the economy over the last 3

years more money bidding on fewer Goods

including fewer houses equals higher

prices but the central bank doesn't just

send a Brinks truck to the prime

minister office rather they use a

complicated set of transactions that

they call quantitative easing I always

be suspicious when you hear a

complicated word that makes no sense to

anyone except those benefiting from it

here's how it goes first the government

sells bonds to financial institutions

then the Bank of Canada buys those bonds

right back at higher prices Financial

corporations love it because they're

guaranteed a big profit but the

consequence is not only that the

government gets more easy money to spend

but the financial system overflows with

cash which often is Lent out at ultra

low rates in super large mortgages

particularly for wealthy investors whose

banking connections get them to the

front of the line so as you can see in

this chart from the Bank of Canada

itself investors doubled the number of

Home purchases they made in just over a

year the black line well it shows when

the quantitative easing began cause

money printing effect housing inflation

so the government deficits forc the Bank

of Canada to boost interest rates to

push inflation back down former liberal

Finance Minister John Manley put it this

way it appears that fiscal monetary

policy are not aligned and the

importance of that alignment is is key

we're still running very large fiscal

deficits um the government still talks

about how much they're going to they're

going to continue to spend and uh this

is a bit like driving your car with one

foot on the gas and the other on the

break Common Sense solution stop the

inflationary deficits so the bank

doesn't have to raise the rates that

means cutting government waste and

capping government spending with a

dollar Ford dooll law that forces

politicians to find a Dollar of savings

for each new dollar of spending by

getting back towards a balance budget

will bring down inflation and interest

rates on your mortgage payment so that

helps address the interest cost of the

mortgage payment what about the

principle which is determined by the

home price Canadian prices which are so

much higher than in other countries are

determined by supply and demand we have

the fewest houses per capita in the G7

even though we have the most land to

build on we have fewer houses per capita

today than we did 8 years ago as

population has outgrown Home Building

Canada built fewer homes last year than

it built in 1972 50 years ago consider

this in 1972 Canada's population was 22

million and we built about 230,000 homes

in 2022 Canada's population was 39

million and we built about 220,000 homes

in other words far more people far less

home build

and the shortfall is only growing

Canada's housing agency the cmhc

predicts a 32% drop in home building

this year as higher interest rates and

red tape are blocking construction the

agency projects that we will be 3.5

million homes short by the year 2030

based on our current estimates of

building and population growth where

will those 3.5 million families live

live more importantly why can't we build

homes to house them what do you think is

the most expensive thing that goes into

a new house and say Vancouver is it

labor Lumber land nope government a CD

house study added up all the costs of

labor materials land and profit needed

to build a home and compared it to the

final sale price in Vancouver the Gap

was nearly 1.3

million that Gap or as I call it the

gatekeeper Gap is the cost of government

permit delays changing rules pricey

Consultants lawyers fees charges taxes

Etc another study showed Montreal City

Government blocked 24,000 homes the city

of Winnipeg meanwhile just lost a

lawsuit because it tried to block the

construction of nearly 2,000 homes right

next to a newly built Transit System as

an example of the Mindless red tape

costs the Ontario housing affordability

task force report stated that quote

minimum parking requirements add as much

as

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

as demand for parking spaces is falling

and that one of the strongest signs that

our approval process is not working of

35 oecd countries only the Slovak

Republic takes longer than Canada to

approve a building project the UK and

the US approve projects three times

faster without sacrificing quality or

safety government development charges in

Ontario can be as much as

$135,000 per home and some have

increased as much as

900% in less than 20 years and those

charges don't include governmental costs

like taxes delays and uncertainty worst

of all the trudo government has

encouraged this gatekeeping with

billions of dollars in new grants to the

same city governments that block Home

Building he is literally funding the

hiring of more Gatekeepers to stand in

the way of building homes so you lose

two ways you pay more in taxes so that

you can pay more for a home so what if

we incentivized good behavior rather

than reinforcing the bad here's how we

can the federal government spends about

$4.5 billion on direct and continuous

Municipal infrastructure transfers big

city politicians care about getting that

money more than anything else they'll

only permit more Home Building faster if

their Federal money depends on it my

Common Sense plan One require big cities

to complete 15% more Home Building per

year as a condition of getting Federal

infrastructure Money Two give building

bonuses to cities that exceed the 15%

Target dollars should be based on

housing completions not promises three

require federally funded Transit

stations be permitted for high density

Apartments all around it and withhold

Federal Transit grants until the

apartments are built and occupied four

sell off 15% of federal buildings and

thousands of Acres of surplus federal

land suitable for housing instead of

funding promises the federal government

should fund results it should link the

number of federal dollars big city

governments get for infrastructure to

the number of new homes completed money

should flow after the keys are indoors

pay for promises get more promises pay

for results get results the good news is

we have examples of success look at the

Squamish nation and their development in

Vancouver they've approved and begun

building on 6,000 apartments and condos

on just 10.4 acres of land that's nearly

600 homes per acre now they could do

this because being a reserve they did

not need to follow Vancouver City Hall

rules that means 6,000 hardworking local

residents will get a place to live

because there were no City Gatekeepers

standing in the way but let's bring this

back this isn't just about the price of

a home it is not just about numbers this

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

we could have hundreds of thousands of

middleclass people living on the street

in Canada a home is your financial

future a home is the place you're secure

a home is where you raise a family a

home is at the center of everything you

do in your life if the government stands

in the way of you getting a home it

stands in the way of your entire life

going forward the good news is housing

costs were not like this before Justin

Trudeau and they won't be like this

after he's gone we can borrow less and

build more we have all the natural

advantages abundant land labor and

lumber the best Carpenters plumbers

framers and electricians and

homebuilders we just need to get The

Gatekeepers out of their way and yours

so that we can bring it

home