Housing crisis "a real drag" on Canadian economy - Trudeau

The seemingly unstoppable growth of home prices in Canada’s hottest markets is proving to be a millstone around the economy’s neck, according to Prime Minister Justin Trudeau.
Speaking to BNN in an exclusive interview, the premier said that the overheated real estate sector is limiting not only the country’s economic strength but also the options available to consumers.
“Rising home prices, uncertainty around being able to buy your first home or upgrade as you want to grow a family is a real drag on our economy and a real drag on Canadians’ opportunities,” Trudeau said, adding that the Liberal administration is already taking a closer look at the market forces spurring on home price growth in Vancouver and Toronto.
Among the sectors most frequently blamed for the out-of-control markets are foreign buyers, but Trudeau emphasized that a circumspect approach to the issue is of utmost importance.
“We have to draw in foreign investment,” he stated. “But the way we welcome foreign investment is by having clear predictable frameworks, and by being unabashed about making sure that it’s in the interest of Canadians, of Canadian jobs, of Canadian economic growth and prosperity.”
“When you talk about federal government action we have such heavy levers that impact the entire country; we have to be very careful about how we engage,” Trudeau added.
The remarks came in the wake of the release of May sales numbers, which showed that the benchmark price of an average home in Vancouver has grown by 30 per cent on a year-over-year basis (up to $889,100). Meanwhile, the cost of a similar home in Toronto increased by 15 per cent (up to $635,700) over the same period.

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  • by Rebecca 2016-06-14 4:41:06 PM

    To be born and raised in a city that's real estate has become so unattainable by the average worker that only the rich or foreign buyers can swoop in and purchase more than one investment while the rest of us are struggling to make the down payment just to get into the market. It's incredible depressing to have gone to school earned an education and then to be squeezed out of the city you dreamed of buying in you cannot afford. There are also other issues that go along with squeezing the working generation out of a city, this leads to no one being able to acre for the ageing population, no money going into the education system or the communities, leading eventually to closures of businesses.
    Also I am so confused that Canadian government has not protected our land from being overly developed due to lack of any rules around foreign buyers buying up as much as they want or not having to have to live in the properties or operating them as rentals is obscured. Then allow us Canadians to go anywhere else in the world and go purchase houses where it is affordable to live.

  • by Scott 2016-06-17 8:08:49 AM

    Just to touch on the development and rules around buyers briefly.

    The whole planning process is very confusing and frustrating for the people who live with the effects of the planning (or lack of planning).

    A big part of the problem is that there are three levels of government - federal, provincial and municipal, none of which can agree in the best of times, all of whom have different taxation powers and responsibilities.

    Just as an example, cities have responsibility for city infrastructure but they also have the least ability to raise money. Usually they have to beg the province and federal levels to cost share the price of projects.

    The provincial and federal governments might have more money but they also have more debts and expenses (health care is the biggest) and when a city that has expanded and expanded wants financial assistance to build additional sewer lines or roads to service the new development in addition to servicing the existing city, well, they're probably saying, "No! You didn't plan for this growth you approved, you figure it out!"

    There really needs to be better planning going into some developments and I think the cities should develop contingency funds for each development to cover 10 years worth of expenses - new schools, roads, sewers, maintenance, etc, etc. Of course....no developer will agree to this - "Give me tax breaks! (Or I'll take my money and build somewhere else!)". And asking exisiting tax payers to allow their tax money to be set aside in a contingency fund to cover potential costs of a new development? "NO!! The city can't even cut the grass, shovel the snow...whatever now with the money I pay in tax and they want me to pay more for a new development?! NO!! Ask the new homeowners in that development to pay for their own services!". And if the tax burden is too high, no one will buy in the new development.

    So......things stay the same and the situation gets worse......

    Is there an answer? Probably not one that will satisfy everyone.

  • by Scott 2016-06-17 12:58:49 PM

    To continue, you're probably asking, well, if they knew this problem was there, why'd the planning department of the city approve the development to begin with?

    Two possible answers. First one is they didn't think it through fully. Second one is they wanted more development (more jobs) and a larger tax base to tax. Of course, they forgot that expenses also go up as new developments go up.

    A better question is why do they continue to do this when they KNOW the results? Easy - all politicians at every level are in it for the short term. Not one of them is planning 20, 30, 40, 50 years ahead and that's what we need.

    A perfect example in Winnipeg would be the fact that we have vacant schools due to a lack of students and we have a serious lack of personal care homes for seniors. When I think of those two situations, I ask myself, couldn't anyone build a school that could be converted to a personal care home in 20 or 30 years? If I can think of it, why can't the people who build and plan out the growth of a city consider it?

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