For those who wish for a better future, owning a home has always been a main goal to achieve, especially for the millennial generation.
Posted at 11:00 a.m.
But when we look at the prices of the houses which inflate, the massive competition in the purchase of the houses and the inflation which eats more and more our purchasing power, this wish is only a dream.
We were very happy to see that housing was at the center of Liberal Prime Minister Justin Trudeau’s budget. But instead of advancing real reforms in order to give our generation the best means to become owners, we only see symbolic actions.
Putting an end to foreign investment, taxing vacant homes and granting even more tax credits to those who buy their first home could please many, but does not deliver what all serious economists recommend: building more houses.
There is enough money in the system (even more with inflation), but there is not enough construction of new houses and condos. Supply is limited, demand is growing.
However, the problem in Canada is not the demand for residential properties. This is the offer. There are not enough for our growing population.
In February, the average price of a house in Quebec increased to $474,941, an increase of 18.3% compared to 2021. The average price of houses sold in Montreal is 18% higher and 12% in Quebec .
In Montreal, the average price of a four and a half apartment is $1,982, which requires an annual salary of $89,000, while the average salary (before taxes) is only $56,220.
As many others have acknowledged, Montreal is doing well, but we still have work to do.
At the federal level, Ottawa helps people save, but its policies are not focused on increasing the supply of housing. The federal government is seeking to create a new tax-free savings account for the purchase of a first home, which combines the tax aspects of a TFSA and an RRSP, allowing Canadians to put more than 40,000 $ in their account, deduct the savings from their income and withdraw them to buy a house without any repayment obligation.
They also plan to double the first-time homebuyer credit from $5,000 to $10,000. While both of these policies improve homebuyer savings, if they don’t address the problem of chronic undersupply, they won’t do anything to make housing more affordable. At best, these policies will help those who are actively looking to cross the finish line, but leave the real estate market unchanged.
Other policies put forward by Ottawa, such as banning blind bids, do nothing to increase supply. William Strange, a professor of economic analysis at the University of Toronto, says a ban on blind bidding would not significantly reduce prices and “there is no economic evidence that it matters. “. Bid wars are a symptom of an extreme seller’s market, not the cause.
Exclusionary zoning is a policy that aims to limit the number of dwellings that can be built on the same property. These rules often prohibit multi-family dwellings or set minimum lot size requirements. These restrictions ultimately limit the amount of housing available in a city.
A ban on this zoning would give owners more freedom to build different types of housing and increase the housing stock. By ending exclusion zoning, large urban centers like Montreal could immediately allow for the construction of more duplexes and small apartments.
This is exactly what is being done abroad to combat rising prices.
For example, Oregon recently passed a law that abolishes single-family zoning for all communities over 10,000 residents. Landlords will thus be able to build different types of housing, if they wish, which will considerably increase the supply of housing.
New Zealand has begun the process of restructuring its zoning laws in a bid to dramatically increase supply and put downward pressure on prices. The Brookings Institute in Washington has described New Zealand’s approach to housing as an ideal model for other countries to follow.
Much remains to be done if we wish to become such an example throughout the world.
Canadian legislators must follow the example of those abroad, and even in Montreal, and make zoning reform a key priority in tackling the housing crisis.
If our generation wants the same level of wealth as that of our parents, we would need real reforms instead of measuring spoons that only address the symptoms.