Canada has seen an increase in home prices during the pandemic at a rate far beyond what is happening in the US or in other developed countries. This is set in the backdrop of high unemployment, numerous business shutdowns, closed borders and limited immigration. It is a crisis that necessitated government emergency benefits to many Canadians along with large, regular asset purchases in the form of quantitative easing.
How is that possible? The Bank of Canada promised low interest rates now, and in the foreseeable future. Low interest rates make buying property easier by lowering monthly mortgage payments. When the pandemic began and shutdowns occurred in Canada, those with economic means saw a golden opportunity. Hearing the Bank of Canada’s promise to keep interest rates low (otherwise the greater economy suffers), people and corporations began to buy more and more property. Many millennials, seeing property prices begin to creep up, started to panic. Prices have already risen at a breakneck pace in the last decade – what happens if it continues to increase? The millennials then joined the buying spree.
The end result? Ottawa‘s average home price is up a whopping 42% year-over-year (comparing April 2020 versus April 2021), Toronto is up 33% year-over-year (44% increase in the detached market for 905 suburbs outside the GTA), and Halifax is up 35%. Investors and speculators are in full force, with numerous listings showing sales just several months apart, with sellers reaping in massive gains.
Flipping property has become perhaps the most lucrative endeavor in Canada. The gains of some sellers in the past year (potentially tax-free for many) have eclipsed many professions: doctors, dentists, lawyers and engineers. Thinking of 4 years in university plus many more years in grad school? Great, once you graduate, you’re wanted in the US. Not in Canada though. Canadian incomes do not match the cost of shelter and the gap continues to widen.
Despite warnings from around the world, and even Canada’s own economists, the Liberal government has done basically nothing to tackle the housing crisis. The power to enact policy changes to tackle housing is squarely within the purview of the elected officials that govern this country. Young Canadians continue to pay income taxes to support a country that has chosen not to support them.
A Reddit group began, which shares what young Canadians now have to do and the sacrifices they make just to simply live in Canada. The Liberal government has stopped caring about the interests of the middle class. They are alienating the youth, their current and future voter base. Their inaction on something as crucial as the right to secure housing risks pushing their supporters to other political parties. If this current lack of action is to protect their voter base ahead of their next election, this bet may backfire as they risk losing the under-35 vote.
Now is the time for the Liberals to wake up and take action.
Mark Peters is a Senior Editor at Newsrooms.ca – you can reach him here.