For years, Canadian cities and suburbs have experienced skyrocketing real estate markets, but now in the midst of a pandemic, they present a challenging bottleneck scenario for buyers. Still while these challenges emerge, professionals in the industry are increasingly weighing the means to reach market stability, whether they include an alteration in the buying and selling processes themselves or a more overarching strategy to increase supply.
As far as buying and selling processes are concerned, many argue that the blind bidding mechanism that is used widely throughout the Canadian real estate market works disproportionately in favour of sellers while overwhelming some buyers out of the market. At the same time, across Canada and particularly in Ontario, governments of all stripes have consistently emphasized the right of the seller to seek maximum returns on their property as they plan financially for their future.
Setting aside the buying and selling processes concerning the Canadian real estate market, former Ontario PC leader and current CEO of the Ontario Real Estate Association says that the clear and obvious solution to inflated housing prices is increasing supply. Now, increasing housing supply often means one of two things: expanding residential areas into protected lands or residential intensification, meaning the development of townhomes and apartments. Hudak also raises the point that there also exist regulatory strategies that may be proposed to limit the oversaturation of the housing market by targeting investment purchases as well as property flipping. Both strategies have been employed in the past to address housing shortages, and they proved to be steadfastly successful in stabilizing the market and opening pathways to homeownership. Imposing heightened taxes on vacant homes and apartments and those that are bought and swiftly re-sold in areas facing supply strains can be used as effective measures to curb the investment exploitation of residential spaces.
Looking instead towards residential development, while intensification is an option, it is naturally preferable to first find public inefficiencies that would be better suited for private development. On this front, it is necessary to look into the use of public properties in urban areas that may be able to better perform their operations in a more spatially efficient manner which may very well include entirely virtual operations. By freeing up public property in urban and suburban areas, its reallocation and redevelopment as residential land can play a critical role in accommodating rising real estate demand while also increasing public sector efficiency.
Moreover, the context of a global pandemic has forced interest rates down to near-negligible levels for the foreseeable future, which provide all the incentive developers need to build swiftly and efficiently so long as supply chains are in order. It is important though for residential development to take place at a faster rate than foreign and investor buyers are already buying properties, contributing to continuously skyrocketing prices.
On the issue of intensification, Toronto MP and former city councillor Adam Vaughan says that major Canadian cities need to employ infrastructure to accommodate the natural population growth in cities and suburbs without directly forcing residents into particular areas or neighbourhoods. As cities grow, residents will make decisions about where to go based on location factors like infrastructure and proximity to employment and education. It is the government’s role to facilitate these population movements by ensuring that wherever they go, residents have access to what they need.
Further, Vaughan argues that Ontario’s planning strategy with respect to Toronto has in many cases left little potential for growth as it has zoned a significant amount of space as detached only residential space, repressing the potential for residential growth and development. As a rather mature city, Vaughan says that the Toronto city council and municipal stakeholders are well equipped on a local level to organize the city in the most conducive way for Torontonians, and are only being blocked by provincial legislators.
The key takeaway here is that municipal governance in Canada must be allowed a heightened level of decision making with respect to their own local level. The centralized system of governance on the provincial and federal levels in Canada that allow for politicians from elsewhere to decide the outcome of very local issues in metropolitan areas like Toronto and Vancouver have been a key factor in causing the housing crisis Canada finds itself in now, and giving more leeway to local governance is part of the solution.
Considering the housing crisis that Canada currently finds itself in, experts outline a combination of increasing supply, employing regulatory strategies, and expanding the powers of municipal governments as some of the clear steps towards relieving the strain. As the pandemic continues to impose irregular market activity as well as fiscal and monetary circumstances, it is still plausible that when normalcy brings stability back to these factors, so too will the real estate market in Canada stabilize. In any case, it is critical that governments and stakeholders at all levels take proactive measures to ensure the viability of Canada’s housing market both in the present and in the future.