STOP Believing These Election Lies About Housing
This week’s discussion focuses on the current state of the housing market and its central role in the upcoming provincial election. With housing affordability and availability at critical levels, this issue has become a focal point for voters and policymakers. We’ll break down the latest developments, key political stances, and potential implications for homeowners and prospective buyers. The provincial election is just around the corner, and it’s no surprise that housing has emerged as the primary battleground.
After decades of underbuilding, BC finds itself facing a severe housing shortage, with estimates indicating a shortfall of hundreds of thousands of homes. The current party in power, the NDP, has attempted to address this issue through various initiatives, such as the Missing Middle Policy and Transit-Oriented Area (TOA) regulations. These measures aim to increase density by allowing for multiplex units on single-family lots and permitting high-rise developments up to 20 stories near transit hubs.
However, the path to achieving these goals is anything but straightforward. While the province has pushed these initiatives forward, many municipalities have been resistant. Cities like Langley, West Vancouver, and North Vancouver have outright rejected the Missing Middle reforms, opting to maintain lower density levels despite provincial pressure. Even in cities that have embraced the policy, such as Richmond and New Westminster, restrictive Floor Space Ratio (FSR) limits have made it economically unfeasible for developers to build larger multi-family homes, leaving the intended impact on housing supply minimal at best.
Burnaby, on the other hand, has adopted the provincial rules and has positioned itself as a more builder-friendly environment. However, increased municipal fees have made margins razor-thin for developers, which dampens the enthusiasm for new projects. This lack of alignment between provincial aspirations and municipal realities has resulted in an unattractive building environment, hampering the overall effectiveness of these policies.
To further complicate matters, the leader of the BC Conservative Party, John Rustad, has voiced strong opposition to the Missing Middle and TOAH reforms, labeling them as “crazy,” “authoritarian,” and “hardcore socialist.” He has vowed to repeal these initiatives if his party comes to power, which would potentially undo years of planning and hundreds of building permit applications that have been submitted to bring much-needed housing to the market.
Moving east, we see a similar struggle in the Greater Toronto Area (GTA), where the latest Municipal Benchmarking Study by the Building Industry and Land Development Association (BILD), developed by Altus Group Economic Consulting, highlights a critical gap between housing supply and population growth. According to the report, the GTA’s housing stock is not keeping up with the rapidly growing population, marking the widest gap in over 50 years. This imbalance points to a worsening housing crisis that demands immediate attention.
One of the primary drivers of this gap is the prolonged approval process for new projects, which takes an average of 20 months. This delay can add between $43,000 to $90,000 per unit, inflating costs for both developers and buyers. Additionally, municipal fees, taxes, and charges now constitute nearly 25% of a home’s cost in the GTA. Since 2022, these fees have risen by $42,000 for low-rise and $32,000 for high-rise developments, adding over $122,000 to the average condo price and $164,000 to single-family homes. With such high barriers to building, the GTA faces an uphill battle in closing the housing gap.
In regulatory news, the Office of the Superintendent of Financial Institutions (OSFI) announced this week that it will be easing stress test requirements for homeowners looking to renew their mortgages. Previously, homeowners wishing to switch lenders at renewal had to requalify under stringent stress test conditions—either at a rate of 5.25% or their actual rate plus 2.0%, which currently sits around 6.5% to 7.5%. This made it difficult for many Canadians to switch lenders, effectively locking them into less favorable mortgage terms with their current lenders. The new policy, which goes into effect on November 21st, allows homeowners to do a straight switch to a new lender without undergoing the stress test, provided they are not looking to extend their mortgage’s amortization period.
We finish up this weeks episode with a quick look into how the housing market performed in September as we tee up next weeks stats episode.
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