The Financialization of the Housing Market

the cost of housing renting or buying it seems to go in only one direction lately and that's up and up and up and while that's making it tough for many to keep a roof over their heads it's providing tidy returns to investors according to a documentary having its Canadian premiere tonight on TV oh right after this program the dock is called push and it makes the connection between profits and the affordability crisis with us now to delve into the details we welcome Benjamin Tao he is the deputy chief economist at CIBC Capital Diana Pett Ramallah senior researcher at Ryerson University's Center for urban research and land development Martine Auguste assistant professor in the School of Planning at the University of Waterloo and Sean Hildebrand president of the real estate market research firm urban nation and we are happy to welcome all of you here at Evo tonight for this conversation I know that you have all seen the documentary right that is airing immediately thereafter you've got a sneak peek and I think just to sort of set up our conversation and then maybe whet the appetite of the viewers to come I'd like to get just some initial impressions Marty munches start us off what what was the sort of most salient fact that emerged for you having seen it I think I think the main point that that they're trying to make in this documentary which I really took away from it it's pointing in a way that housing which many of us view as a home something that ought to be a human right that's certainly the case that Leilani farha is trying to make in this film this is the UN report UN special report or the film follows her at trying to understand this affordability crisis and this rise of financial investment in housing across the globe I think the key point that she's trying to make is the way that we're increasingly seeing housing being treated not as a home but as a financial asset as something that's primarily being used to drive profits for investors and that is having impacts really negative impacts on people on communities and driving affordability and and social and spatial inequality good Shaun what did you take away well I thought the documentary did a very good job of humanizing the issue so I think really the point was when you go through a massive housing booms like we have globally there's going to be collateral damage and there's going to be unintended consequences and being able to tell the stories of the individuals who have been impacted the most by this I think was really powerful I particularly enjoyed some of the statistics that they showed someone who collects data I thought that the documentary did a good job of kind of telling a story with sort of human cases as well as using some of the data I think perhaps what I would have liked to have seen maybe a little bit more is a little bit more focus on some of the policies that have been tried in the past to help correct for you know the housing affordability situation that we have across across the globe you know the sort of the documentary ended on an optimistic note in that there was a lot of these conversations that are starting to be had really across across the globe and we can kind of triangulate that back to what's happening here in Canada where the federal government the provincial government and the municipal municipal governments are all sort of talking about affordable housing now and making it the top of their agenda Diana I found it really interesting the conversation dividing housing or talking about housing as a social good and not a financial asset whereas here in Canada we treated as a financial asset so I there is a predominantly our housing supply comes through some form of investment in profit-seeking you know either whether it be developers in development or investors coming in building purpose-built rentals someone's investing in that asset with the anticipation of making a return we can expect them to do it for free and the government spends very little on housing so I'm not sure why we expected outcomes to be any different in that environment I do feel that there are some challenges but there's also a lot of opportunities with the financialization of housing a one being a lot of our rental stock now is coming from some of this international investment and the construction of purpose-built rentals is now at the highest level since 1992 so in that big time isn't it yeah and a lot of the you know developers if they want to build a development they rely on that embel investment in pre development stages in order to get their findings they have that they have to sell 80% of the development before they can get their finance and so and 50% of those condos that they're building is being added to the rental stock so it is a really important factor helping to drive supply now so I worry about penalizing it when it's actually contribute is from the financialization of housing speaking of financing shall we hear from the banker yes okay Benjamin your view first I think it was a wonderful documentary and I think that viewers should stick around and actually watch the documentary it's a beautifully done documentary it tells the story it tells a story the human face of the crisis we call real estate at this point we also know from this documentary this is not just about Toronto or Vancouver we are not so special it's everywhere this is very important to understand I totally agree with shown that what's missing maybe that was not the purpose of this documentary is solutions this is a very good tale of the problem without discussing potential solutions that's gonna be our job over the next half an hour absolutely but it was a wonderful documentary good okay well let's whet the appetites a little bit more shall we here is a short snippet from push-on immediately after this program Sheldon the clip if you would a new owner came in took possession of the building they were breaking locks for the main entrance for the building they were physically pushing their way into people's apartments upstairs I hear stories of nurses and doctors and police officers and firefighters who are unable to afford to live in the city where they're supposed to be guarding and helping I'm giving you this notice because I want to end your tenancy they came after her with hardest harvest the neighborhood's getting gentrified it's moving has come right up to King and Dufferin and and this is it's only one direction into our neighbor and we're in the way when I hear people today say it's gentrification one reaction and ironic reaction is if only it's much deeper than that housing has become overly financialized so it's like gold but gold is not a human right housing is now here you may have seen this chart right at the very beginning of the clip and if you're listening to this right now on podcast let me just describe it a little bit for you it's a graph there are two lines on the graph the bottom line is wages and that is essentially a straight line a straight line across the second line is home prices and that one is on a 45-degree angle and you can see that as time goes by there is an increasing mismatch between what the price of a home costs and what people earn and are therefore able to afford we've got a couple of numbers here we can add to that the average family income has risen by a hundred and thirty three percent the average home price has risen by four hundred and twenty five percent this in the Greater Toronto Area again you see the mismatch that goes on here benjamín let me follow up with you if housing prices are rising so much more quickly than wages are able to purchase what does that tell us about the state of the housing market that is unsustainable that's what we know but the issue is the word average average wage is as we know from high school mathematics it doesn't tell you the whole story we know that the income gap in Canada in the u.s. in Europe is widening at a rate we haven't seen before that's the main issue the focus is always on death how much debt people take in order to buy this house it's not on income the debt to income ratio is at one hundred and seventy percent a record i everybody in canada knows this number I think it should be part of the citizenship test or something but the issue also must be income income in Canada is not rising twenty years from now when people study this Great Recession and the expansion that we have they will realize that what was defining this expression is not Trump not even thread it is the demise of the wage mechanism many people are able to buy real estate in Toronto in Vancouver because they have the income but many people are not they miss much that you were talking about is the mismatch in the labor market people without jobs and jobs without people this income gap is actually being revealed in the real estate market where people that can afford it buy buy expensive and they can do that but many people cannot do that that's a story Sean I want to ensure the data guy here I want you if you can to tell us do you have any idea what percentage of people are buying homes to live in and what percentage are buying homes as an investment vehicle so within the condo market for instance where most of investment activity is focused about 35% of the entire condo stock is investor owned within that about 14 to 15 percent is foreign owned and actually an interesting stat is that about 5% of that stock is actually empty and you can sort of relate that back to one of the interesting stats from the documentary that showed that 80% of properties in London were foreign owned wasn't that man Arak and empty and there empty actually can we see that you got that standing by let's let's play that right now since you've touched on that because that when you see that map that is really an astonishing thing Sheldon if you would let's roll that one to this place is now a bit of a dead zone we're very little indication of who the owners are and a lot of them are completely empty so you can't go up an astronaut actually just empty all the time [Music] now that's in London UK where 80% of the properties are empty and again if you're listening on podcast we're looking at a map of the City of London around Regents Park and there are red dots scattered all over this map it almost overwhelms the map are we far away from this in the Greater Toronto Area yeah I don't think we're there I'm there no no certainly we have a pretty high percentage particularly in downtown core of condominium units that are owned by investors it's probably closer to about 50 percent when you look at a downtown condo building but as Diana alluded to we've been almost entirely relying on these condo investors to supply rental units to the market because we haven't been building traditional market rate purpose-built rental housing to any sort of notable quantity for 35 years so basically what you see is that when a condo reaches completion fully half of the units go directly into the rental market and they're absorbed very quickly but what we're recognizing is that even with all of this condo building that's been happening and all of this condo investment that's been occurring it hasn't been enough to satisfy demand because the rents keep rising the average rent for a condominium in Toronto is $2,400 a month and it's risen by 30 percent in the last three years for what size apartment this would be 650 square feet yeah then the one plus ten something like that the two-bedroom would run you closer to around $2,800 a month and we've been relying on these condo of esters to continue to do this the issue is that we sort of view this as somewhat precarious supply in the sense that you're relying on mom-and-pop investors to supply rental units to a population that's seeing the highest levels of rental demand that we've seen in a generation and when we look at the financial situation of these condo investors they're barely breaking even on a cash flow basis and the situation is only going to continue to become more challenging as prices continue to rise let's stop there for a second Diana can you talk to us about what you think the implications of that math are of prices continuing to go up and then housing continuing to become unaffordable of all of what he just said particularly as it relates to to lots event lots of empty units but they're sitting empty 5% of the unit's there essentially I mean we got people who are looking for places to live and we've got lots of empty units and people can't get in anyway implications of all of this and I think there's again productive and unproductive and investment in the housing market and so vacant units are definitely unproductive and the government needs to know how to get those back on on the market I think implications are we're seeing home ownership is moving out of reach for a lot of people in the region and we're seeing now higher income households that would have been homeowners or eating up what would have been affordable supply for households in the rental market so the average income for renters is rising faster than the average income for homeowners and that's not because we're seeing employment Gamer seen because we're seeing higher income households staying in longer or going into the rental market when they should be in the homeowner mark market and that's crowding out people who have lower incomes so it's it's it's coming at the expense of people who can't afford home who could never afford homeownership and we're in the hub rental market because it once was more of an affordable option so you know it's becoming more of a challenge now to provide that affordable housing so the financialization would talk about the financial asian financial ization of purpose-built rentals why are they doing it they're doing it because they can they can turn these units around and charge $2,400 for a one plus plus ten 650 square feet amazing you want to pick up on that what do you see is the implications of all of this well sure if you're building new rental supply and it's gonna cost twenty four hundred dollars that's not addressing the affordable housing crisis that we have and it won't because the investors that are doing this purpose-built rental are doing it because they want to charge those top of market prices so I think it's disingenuous to argue we need more supply if there's not gonna be any controls on those prices I'll also say that a lot of the rental housing that we're looking at here in the GTA and across the country isn't new purpose-built it's the old stuff that was built in the 60s in the 70s and that is being financialized too which gets covered in the film with she talks about country companies like Blackstone private equity firm but we have lots and lots of financial vehicles in Canada that are acquiring and in fact consolidating ownership of existing multifamily rental stock and the strategy that these owners are using in order to drive profits for their investment for their investors I should say really rely on driving up ramps for people and ultimately rely on pushing people out of their homes the biggest way that these companies make money for their investors is what they call unit turns create taking a unit where somebody lives getting it vacant and then driving that bin that rent op in Ontario you you can raise the rent pretty much as much as you like if you can get the old tenon error in their new tenant yes it's called vacancy decontrol something that was brought in by the Harris government in 1997 that created this tremendous incentive for these types of firms real estate investment trusts private equity other types of financial vehicles to acquire and consolidate ownership of multifamily housing they did it specifically to take advantage of vacancy decontrol seeing it coming down the pipeline and we've been seeing rents going up ever since then and we've been seeing the transformation of neighborhoods I mean we just saw a clip from Parkdale that's a place where lots and lots of buildings are are being acquired people in those buildings working people who lived in that community forever have a connection to those places are finding that their landlords are pushing them out raising rents and then the next person that comes in you know the gentrify er they're also being gouged and so those are I think are the natural allies of the tenants that are being displaced but let's understand Benjamin a bit of how we got here what role did low interest rates historically low interest rates for the last many years play in where we're at today it was basically the main reason why we're seeing what we are seeing because we know that for the past 20 years interest rates have been going down and down and down for many many reasons demographics people are getting older we look at Japan interest rates are negative there Europe interest rates are negative and we are very low so clearly the demographic story people getting older is a main factor inflation expectations went down therefore interest rates going down so that will remain the case that's not something that will change tomorrow and therefore we have to get used to this kind of situation now when interest rates are very low and all those big financial players are play are looking for return and the GIC will not do so what do you do you look for alternative investment which is real estate so illicit has been king over the past 20 years and it will remain a very attractive investment given low interest rates so that's how we got there the demographic story and no which is the main facto demand for real estate is rising and rising and rising and especially in Canada well immigration is so significant in terms of playing a role in the demand equation so all those forces are ill to stay going back to the issue of friend we have to distinguish between affordable housing and housing affordability affordable housing is clearly a market failure people need a place to live and the government needs to provide this kind of assistance but I'm talking about some the other part of the equation namely young families trying to buy a house in Toronto they simply cannot afford it and that's why I believe and we can discuss it may be that the next wave of real estate in Toronto to an extent in Canada is actually renting as opposed to owning I think that at 70% we have reached the peak of homeownership in Canada and I think that you will see more and more people renting and we will start changing the way we view renting namely you're 35 years old you are married you have two kids and you're renting nothing is wrong with you that's an OK scenario dottie what do they want yeah I think lots of people are renting I don't have any problem I know that rent we have a home ownership ideology in North America that sometimes stigmatize those renters is not quite there yet in their in their housing housing a career I disagree with that i think renting is fine however we just see the prices going up and up and up that $2,400 figure is so high people can't afford that and so what we need I mean I agree with Benjamin we need a more government investment in housing we need rent controls we need to make it so that people can afford to stay live in the city where they work raise their families in places that they love having said that Shaun tell me what it is about whatever makes Toronto magic at the moment that it is such a supremely wonderful place apparently to invest in real estate well if you look at housing prices historically in Toronto they've only declined one year in the past 22 years so basically you've seen almost uninterrupted growth in housing prices for almost a full generation and now we have basically a generation of homebuyers that have only seen the value of real estate and they've seen only record low interest rates so it factors into their psyche that investing in real estate is a very you know wise decision you know it's the fact that you know 70% of all household assets are actually in real estate we also have seen immigration levels rise above a hundred thousand a year in the GTA we have one of the or if not the fastest growing economy in the country so job creation has been exceptionally strong we see immigration coming in and boosting housing demand to the point that we're seeing demand for rental housing at twenty twenty-five thousand units a year we're building maybe on a good year between the condo rental stock and the purpose-built rental stock maybe ten to fifteen thousand units a year so there's 10,000 units a year that we're not getting so the rental development industry is starting to recognize this and we're starting to see some progress made on supply we have about 14 to 15,000 units under construction which may sound like a lot but there's 75,000 condos under construction so it's still a very very tiny portion of overall housing development but one of the things that we noticed happen after the provincial government removed rent control for anything newly built going forward is that we saw a 40% spike in proposals coming in for new purpose-built rental developments so now we have close to 60,000 units in the pipeline I can tell you from the work that we do on doing market feasibility studies for rental developers there's probably another fifty sixty thousand that's planned ahead of that so we're gonna get there eventually the problem is that a lot of these units are located downtown the rents are relatively high but what are the magical things that you see happen when more supply comes into the market is that rents begin to stabilize and we're starting to see that right now this year in Toronto we'll see the highest level of apartment completions that we've seen probably on record and because most of those condos were bought by investors they'll go directly into the rental pool some of the stats that I'm seeing over the last six months suggests that rents are actually flattening out and as that happens you begin to see a filtering effect down to the rest of the marketplace we're also starting to see more development applications coming into the suburbs where the rents don't need to be $2,400 a month well let me pick up on that with Diana there is a tendency when you live in Toronto to think that this is the center of the universe and whatever's happening here is happening maybe everywhere I want to know in the province of Ontario is it basically a Toronto phenomenon but everywhere else it's normal well I I think that's the interesting part about Ontario is that prices are rising just as quickly outside of the city and the gap between rents within the city and the rest of the Greater Toronto Area if you include Hamilton the Greater Toronto and Hamilton area don't vary by that much you're not going to be spending less by moving to say the York Region and then now you have to add the commute into because all the jobs are in the City of Toronto which is why I think you saw a lot of the demand what is interesting now though is you know we take it for granted that everybody wants does want to be in the City of Toronto we are starting to see Millennials first-time homebuyers and other generations other age groups also leaving the City of Toronto we have intra provincial migration which is people moving within the province people shows that people are actually leaving the city of Toronto in the toronto cma for other areas in ontario like they're not even staying within sort of that general commute area they're going beyond the what we call the greater Golden Horseshoe and those decisions are made overwhelmingly because of housing reasons yeah you you can chart you know migration flows with housing affordability and as a homeownership has been going up you've seen the opposite trend people leaving the region how are they doing that because presumably if they if they needed to be here it was because there was a job here that that required them to be here if you're moving to three hours away you can't take the job with you in many cases so how is that working well actually the most interesting is the Ottawa seems to be benefiting from inflows in Ottawa has the lowest is the city is the region with the lowest unemployment rate across the country so they are moving for affordable housing but I think they're also moving for job prospects altmer now hmm what's happening in Ottawa as well or the financialization of rental houses absolutely yeah it's happening all across the country you can see this in the major markets in the GTA Toronto Vancouver you can also see it filtering down to secondary tertiary markets mobile home parks the far north resource communities these types of financial vehicles are rapidly acquiring multifamily housing rental housing across the country and applying a series of aggressive property management strategies to drive greater returns to their investors and as I mentioned at the beginning this is a strategy there really gets that those profits don't come at as if from magic they really come from the pockets of the tenants living in those buildings there's really only so many ways that you can can raise value for your investors and the value is being raised is for the investors and it's coming from the tenants so what we're seeing here is this sort of wealth transfer it is almost mirroring the broader transformation of wealth that's been happening with financialization over the last couple decades this is the type of thing that Thomas Piketty talks about in his book capital this is the type of thing that the Occupy Wall Street we're talking about this shift in which you have the 1% increasingly growing wealthier while you see working people's wages stagnating and so we see that happening now where people who are living in apartment buildings are seeing a greater portion of their income go towards investors who are pooling their capital and buying these properties if you would like to see us transform into a society where you can be in your mid-30s have a family and live in rental accommodation and that's just fine then presumably we want to start introducing policies to ensure that there's going to be a lot more rental stock out there what have you got in mind absolutely and I think that purpose-built is a solution I totally agree that the condo market cannot be the rental market and the rental market cannot be the condo market because the new wave of renter's and that's the reality are going to be families with kids or baby boomers that will be downsizing both of them don't want to deal with a landlord they want to deal with the company stable and they need this kind of arrangement there for increased supply of purpose-built apartment building is crucial for the solution to the real estate crisis we are facing and therefore we need to make sure that people a getting used to the idea so we have to change expectations when it comes to housing it's not just you graduate you get from University or not you get married you have two kids and then you buy a house now maybe you'll be renting but we need to make sure that the supply is there the unit size must be relevant to families so we have to rethink the way we Supply and governments can play a role here by let's say allowing those builders to actually make money out of this development so what policies do we need to make sure that happens for example you can reduce development charges you can actually give them a break on HST there are many many factors or tricks that you can come up with just to increase supply sean was talking about some increase that is happening I say that's not enough we need much more than that that's a solution to our crisis reducing development charges does that not mean you're gonna have fewer parks fewer daycare spaces in the neighborhood fewer amenities in the neighbor that's the trick we have to find a real practical solution to the issue we need more supply and then try to come up with a way to live smarter and we can do it with technology so I think that that's the direction we need more supply the issue is not demand I'll tell you one thing I was not about the other day and some people are starting to talk about reducing immigration as a solution we are an aging society we need new immigrants we'll need them more than ever in life so I don't think it's a good idea but it's in it's basically a sign of desperation and one more point about that if we don't fix this housing issue we will not get those 100,000 coming to Toronto because they will go somewhere else because at one point they will say Toronto is not a city we can live in because you know the infrastructure is not there housing is not there that's not good enough so we need to attract them not to reduce the number and the only way to do it is make sure that housing is affordable and well is the solution in which case martine ideas ideas ideas how are we going to put the policies in place that will encourage more purpose-built rental yeah I think the financial investment by these types of firms into a purpose-built rental and into acquiring the existing rental isn't really solving the problem so what we've seen happen over the decades is more and more investment in luxury housing that's where people pay expensive rents we haven't seen prices falling in fact it's been the opposite so I think there's an argument out here about how we need more and more supply it's an argument that's really favored by developers and we don't see that magical we don't see it filtering down you know and I think the idea of filter down economics is debunked years ago okay in which case what do you what have you got an offer I'm saying that the government actually shouldn't be subsidizing real estate investment trusts and private equity funds with with with government backed lending and providing with those low rates and then allowing them to drive this affordability crisis pushing people out of their homes and raising rents in an affordability crisis so I don't think that CMHC for example our Federal Housing Agency should be giving these people the access to the cheap financing so that they can keep worsening the problem okay you've told me twice now what they shouldn't do what should they do I think that they should they should build I mean social housing this is what Benjamin is saying we don't need to have this middleman that's making the profit with don't think he was saying that I didn't hear him saying okay I let me I don't need say is that we haven't tried this in a while we've had decades and decades in which we've had the federal government step away from providing social housing the private sector has not swept in and provided us with affordable housing in fact we just seen prices get worse and worse and worse and people are getting squeezed so what we need to do is is have the government which has lots of money invest in social housing I'm not talking about low quality social housing I'm talking about wonderful you know net zero emissions social housing that's D stigmatized that would be an interesting and innovative solution that we could try and we haven't tried it in decades and we haven't seen the private sector come in and provide a better solution you don't look all that excited no I think that social housing is definitely the right thing to do but social housing would not solve the problem because social Russian is dealing with the margin of you know society that are struggling and we need 12m as a society so I totally with you on this one but social housing is not the main issue the main issue is middle income families with two kids that cannot afford housing in Toronto that's not social housing we need to help them as well and that's where you need a supply so we have to distinguish between those two forces martine i just say on the slope i think to the other thing we need to do is stop the rents from going up if we're so worried about affordability don't allow companies to gouge families anymore implement actual rent controls I think what we need to do is also prevent there from being loopholes that allow landlords to raise rents through above guideline increases in which you can charge back the cost for major capital repairs on to tenants really cut that off so that rents will stay low so the people will have security of tenure so they can stay in their communities and I will just say because I can anticipate the response that I'm gonna get from economists on this which is that you know 1991 we had this rent control was removed on anything built after 1991 let's go back and look at how much got built it only started very very recently then we started to see there was decades and decades and decades in which the private sector could have capitalized on the magical incentive that was going to be provided by removing Rankine control didn't happen well they weren't 1991 because it was the worst recession since the Great Depression it's been a while and we've just seen the start of the investment and guess what else we're seeing you know federal government investing in in private multifamily rental construction right now and we're starting to see a little bit more public incentive for that I think if the federal government has money to put in building purpose-built rental it should be built for social purpose I believe that there you know we talked earlier but whether housing is a social good I think it should be I believe people are coming around to that way of thinking let's get some wisdom from this side of the table okay Sean some ideas from you so first I think you know just kind of going back to that 1991 exemption so one of the big reasons why developers didn't start building rental back then when when rent control was removed was because there wasn't really much rental demand growth actually on a net basis we were losing renters for a good couple of decades and the reason behind that was that there was a big push to put renters into the homeownership market right we saw CMHC introduced things like 40-year amortization 0% down programs and we saw this massive run-up in home ownership during that during this period of time however you know 15 years later at this point where housing prices in the GTA or 107 percent higher than they were ten years ago and now we're starting to show to shut out a lot of renter households into the homeownership market so I think some of the things that we're starting to see happen like public partner private partner public/private partnerships that are seeing you know the City of Toronto release 11 transit-oriented sites that are you know mandating to include 50% of the units as affordable housing the other 50% being market rate is helping to sort of bring in more thing that's housing with a public spirit admission right yeah so the the rents are about eighty percent of the average tenant rent according to the CMHC average so they're they're probably you know thirty forty percent below actual market value so that will go some way to dealing with some of these issues yeah I think a little bit if we see more and more of that happen you know what on the provincial side we're seeing provincial lands being opened up to developers and then there's a bit of a rebate or market rebate on the land because there's also affordable housing component thirty percent of the units being being affordable housing so these initiatives I think are starting to help on the margins but really I think going back to what Benjamin said we just need more market rate purpose-built rental supply and I do think that there's an argument that even if that market rates supply comes in at twenty three or twenty four hundred dollars a month there's been a lot of empirical research that has shown that it does help call rent growth for the rest of the marketplace right real estate is priced on a relative basis it's very simple so when the top end of the market begins to slow down you start to see that happen across the rest of the market one of the issues is that with rent control people don't move people don't move as often in Toronto we have the lowest level of rent rent the turnover in the country nine percent of people are moving on an annual basis and why is that because they're locked in at their rents that are only growing about one percent a year so I think there's an argument that can be made that yes rental control plays of role in a market that's become relatively unaffordable like Toronto but there's also an argument for maybe it being a little bit more dynamic and allowing rents to grow by a more reasonable rate so you don't get into situations where the landlord is not doing repairs on the units because they can't make economic sense of doing so furs in some cases and the rents are allowed to grow in line with their costs which could be you know inflation plus 1% or 2% or something like that Diana a couple of minutes to go here you got some ideas you want to share well first I just want to point out yes the region is building a lot but I think we're under estimating the demographic impact of aging and Millennials and they are wealthier wealthier and moving into their high income earning years so there's a lot being built but we still can't accommodate for that demographic shift so and if you look at a chart of rent growth versus vacancy rate so vacancy rates or how many units are sitting and empty there is a direct correlation so I do think that supply is part of the of the answer so yes we're building a lot but we're still not meeting demand in terms of social housing it's a great goal but it's also quite expensive so we look at a place like vienna where they make sure that everybody has an affordable place to live 60 percent of the population live in somehow in housing that has been supported by the government but the country itself devotes 3% of GDP to housing expenditures and I'm not sure like the federal government here if that's a realistic outcome for the government here in in Canada so in the meantime if we can't get that we do need more supply and I think you know regulation not all regulation is good we need to start looking at what is productive and what is unproductive so we think about these areas that are gentrifying particularly let's say the City of Toronto why then is the municipality or supporting or allowing gentrification of poorer neighborhoods but then protecting wealthier neighborhoods with zoning regular rules and a lot of keeping development out of those areas we've got a lot to chew on here today yeah I want to thank all the four of you for coming in tonight and helping us out with this Diana Pat Ramallah from Ryerson University's Centre for urban research Sean Hildebrand from urban nation and on the other side of the table Martine Auguste the professor in the School of Planning at the University of Waterloo and Benjamin Towel deputy chief economist CIBC Capital Markets and of course we urge everybody to stick around and watch push the documentary that we that kick-started our conversation here in which the four of you all gave two thumbs or I guess eight thumbs up if we add them all up together eight thumbs up too thanks everybody good stuff thank you the agenda with Steve Paikin is brought to you by the chartered professional accountants of Ontario CPA Ontario is a regulator an educator a thought leader and an advocate we protect the public we advance our profession we guide our CPAs we are CPA Ontario and by viewers like you thank you

Channel: The Agenda with Steve Paikin

Views: 21,347

Rating: 4.5775576 out of 5

Keywords: The Agenda with Steve Paikin, current affairs, analysis, debate, politics, policy, real estate, housing crisis, Push documentary

Id: nxZ0d_ZtU0Q

Length: 37min 0sec (2220 seconds)

Published: Tue Mar 03 2020

Reddit Comments

[u/Yiksta]

There is only 1 global city that has entirely solved the housing problem. That city is Singapore.

About 80% of their citizens live in public housing and about 90% them are owned by their occupants (which speaks volume on their affordability). This leaves 20% housing for the investors or richer people to live in more luxurious buildings while totally respecting the basic human rights of housing. By the way their public housing are actually very nice, check it out.

Unfortunately you need a totalitarian state to completely solve housing affordability issue.

[u/[deleted]]

At 9 minutes: "What percent are buying homes to live in and what percent are buying homes as an investment vehicle?"

That venn diagram is a circle, bruh. That's the problem.

[u/AngryJourno123]

This is sort of a long video, but here's some highlights:

• 80% of rental properties in London, UK is investor owned

• In the condo market 35% is investor owned, of that 15% is foreign owned and 5% are completely empty

• 50% of downtown Toronto properties are investor owned

• the average rent price for a condo in Toronto is ~$2,400/month, and the rate has risen 30% in the last three years, for apartments that are about 650 sqft., two bedrooms are more along the lines of $2,800/month

• The only banker on the panel flat out stated that "affordable housing is clearly a market failure, people need a place to live, and the government needs to provide this type of assistance"

These types of issues can't be addressed without without a fundamental reworking of our economic model, cities are in a good position to experiment with this since what we know as the "economy" is disproportionately produced in cities and urban areas. There just needs to be a class of people with political will to try and drive the types of changes that we need in orderto make cities actually affordable again.

The biggest blind spot that this sub has is dancing around the issue of what to do about capitalism

[u/papapapineau]

Steve Paikin never disappoints

[u/helper543]

Has this sub become extremist left urbanplanning?

Posts about rent control being upvoted, despite universal acceptance among even politically left wing economists that it is terrible for cities and affordability.

People talking about affordability issues without mentioning Tokyo and Osaka, 2 of the most affordable safe cities on earth, because they have modern zoning laws.

It is not profitable for any developer to build large numbers of apartments and condos and leave them vacant. It loses money long term. Very rich people park money in condos and leave them vacant when NIMBY's and zoning laws block enough development to meet demand.

Supply is the best response to housing price shortages. It is possible for private developers to build new construction for the MIDDLE CLASS. It's hard to imagine for Californians, but every day in flyover states there are new houses being built and sold for well under $300k. These developers are making a profit, and the houses are big. None of these developers think "maybe I should build an ultra luxury mansion for $500k and leave it vacant". They are thinking "locals can afford $250k new homes, I will build them and make a profit".

The only reason developers are not doing the same with condos and apartments in the middle of cities, is because it's illegal. They can't just buy a couple of houses, knock them down, and put up a condo building. They need personal approval from local government to upzone the lot, which is complicated and very expensive. That expense means only ultra luxury developments are viable.

There is a place for government subsidized and owned housing to help those in need. But to propose it before you even legalize private development is madness. In cities today, often the per unit cost of government built housing can be double what private developer costs are. We can't afford that on a mass scale. Let the private developers house the middle class by getting out of their way (modernize zoning laws, remove local overlays on building codes to enforce national code, remove parking minimums, remove setback laws). Then use government housing for those in need, ideally through vouchers so they can integrate into middle class housing.

[u/Phantazein]

How do I watch this documentary in the US?

[u/FastestSnail10]

I hate to say it but the female panelists didn’t do a great job representing their schools.

Does anyone actually think rent controls (more than what they are) should be implemented in order to solve the lack of supply? I thought the Urbanation panelists easily shut down that idea from the Waterloo professor.