Parties’ housing promises build castles in the sky

There are basically three ways to make housing affordable in Vancouver.

The first is to scratch out a zero from the end of the transaction when the deal gets to the lawyers.

The second is for the state to confiscate all property and redistribute it in inverse income order.

The third is to experience the one-in-five chance of a major earthquake due in the next 50 years.

With days left in the election campaign, the freneticism of the major leaders has not brought them to this point. Of course, we’re not done yet. Let’s see where we stand Monday.

No, the parties parrying for our votes and their victories would prefer housing policies that involve illusions, delusions and pretensions.

Rather than heed the policy wonks, they heed the political sloganeers. Thus NDP’s Jagmeet Singh: “I’m working to make rent more affordable for all Canadians.” Or Justin Trudeau on how speculation and high prices have made people move away from where they wish to live: “It’s time to change that.”

The true, perhaps sad fact is that the federal leaders do not much control even what is controllable: land-use permits, the speed with which federal funds can be used to build, neighbourhood pushback that prolongs approvals, among other things.

And, while it seems silly to have to mention this, they do not at all control what is out of their control: the market in general. It won’t stop them from suggesting a vote for them overcomes this impossibility.

This election has seen the step-up of politically shrewd policy proposals that each hold flaws. The two-year ban on foreign purchases proposed by the Liberals and Conservatives is likely already leading to last-minute buying, itself driving up prices, and probably prompting American legislators to contemplate the same for Canadians.

The Liberal idea for a tax-free savings account (TFSA) for those under 40 purchasing their first home rewards affluent young people more than it produces new buyers. The plan to ban flipping of properties and blind bidding on them has fallen flat since proposed, mainly because the former is full of holes and the latter is no different in effect than open auctioning of homes. The Liberal plan to build, preserve or repair 1.4 million homes will go slowly, as it has since 2017 when it re-entered the housing business. Mostly its measures add buyers to the market, which is no way to make housing more affordable.

The Conservatives are going the supply route, pledging one million homes over three years, switching 14% of federal land to housing and permitting developers to defer capital gains when they sell a rental property and invest the funds into rental housing. Supply in and of itself does do much more than stabilize pricing unless it gluts the market, and nothing in anyone’s plan indicates an overwhelming supply is imminent.

While the two major parties are trying to ease the burden on those with means, the NDP is aiming more for the population that can’t actually afford housing today – and won’t easily do so tomorrow. But its targets are comparably modest – 500,000 affordable units over a decade – and that would barely cover Greater Vancouver’s needs, much less the country’s.

No one appears ready to fiddle with monetary policy to raise interest rates or impose a loan-to-income ratio from the big banks, measures that might at least cool the market or dissuade buyers by forcing them into more expensive alternative financing. The banks would not be happy, for certain.

And no one, with the exception of the People’s Party of Canada, is suggesting as a solution to the housing supply-and-demand issue that our overall economy stall by reducing the necessary immigration to this country in order to build its general prosperity. The combination of land constraint and population growth is unhelpful if affordability is the goal.

For the time being, housing affordability remains an issue most everyone cares about but most everyone cannot do much about. There is no rolling back the clock to produce the $300,000 four-bedroom Shaughnessy pad for the blossoming family. In this market the notion of an “affordable” home – one that consumes 30% of one’s income – has been a conceit for ages.

Even an “attainable” home buckles a household budget and prevents most mortgage holders from doing something more interesting with their funds than transfer them to an enforced and inefficient savings plan at a financial institution with a presumed pot of gold at the end of its rainbow.

Once, just once, it would be cleansing to hear a politician say something along the lines of: “Listen, all sorts of things went haywire in the last three decades in our market. We fell asleep at the switch. We grew and did not notice inequity. The effect is irreversible. There is insufficient appetite in our neighbourhoods to rearrange the cities to provide enough below-market housing for the market we occupy. Can we just give up the charade and realize that it’s a losing war with battles we will only occasionally win?”

Of course, admission of the obvious isn’t in the political talking points, even if it’s in the political backrooms where ultimately policy will need to take precedence over politics.

It won’t be long, for instance, before a serious conversation takes place in Canada about what to do with tax-free capital gains on principal residences. In the next government term, the sacred cow will be pulled in from the pasture and threatened with the abattoir. No one wants that discussion this week, though.

For now, it’s all about finding sunny ways out of the stormy housing picture. Such is a parallel universe of a political campaign.

Kirk LaPointe is publisher and editor-in-chief of Business in Vancouver and vice-president, editorial, of Glacier Media.