An Idea to Improve Housing Affordability

Recent polls suggest that many renters believe they’ll never own their own home due to lack of affordability. High home prices and interest rates are the main barriers.

We need big ideas and solutions to help prospective homeowners, especially first-time buyers.

Here’s an idea I think could help, however, I’m proposing it only as an example of how we need to think “out-of-the-box” to move the needle.

How about if every first-time home buyer was allowed to choose to claim their mortgage interest payments as a tax deduction (thereby reducing their income tax burden and increasing their after-tax cash flow) in exchange for being obligated to pay capital gains tax in the future, if applicable, on any appreciation in the value of their property upon disposition (thereby reducing their net proceeds)? This is the practice in the U.S. In effect, this would mean paying tax in the future in exchange for a tax break during ownership.

First-time home buyers who are not interested could follow the current practice of not deducting their mortgage interest payments and not paying capital gains on their home’s appreciation.

Seems to me there is no shortage of ideas and possible solutions. In my opinion, there is a shortage of political and societal will and understanding.

Builders and developers are not the cause of our housing crisis. We are forever accusing them of greedily filling their own pockets at society’s expense, so we restrict their ability to deliver housing and society pays the price through lower supply and higher prices. How ironic.

What are your thoughts? I’d love to hear! Leave a comment or connect with me on LinkedIn to join the discussion.

Whose Fault Is This Housing Crisis, Anyways? Stand Up, Municipalities!

We have all heard the hopeful solutions to our national housing crisis that are being offered up by our federal and provincial governments. And we have seen the result of their past promises: an ever-deepening housing crisis.

Silent during all of these tribulations have been our municipalities – the current, true gatekeepers of housing creation. Their primary response, through the Association of Municipalities Ontario (AMO), has been to push the Province and the federal government to do more. At the same time, the AMO states they want more autonomy to deliver their own solutions rather than a “one size fits all” solution imposed by provincial or federal mandates. The AMO does not like LPAT (Local Planning Appeal Tribunal) intervening in decision making. They want to make their own decisions without answering to another authority. They want the right to oppose new housing creation without any higher authority overruling them.

Looking into the federal and provincial efforts to stimulate housing creation, you will see that they are trying to incent municipalities to approve more housing. In the latest federal budget, $4B of the $10B announced for housing is allocated to incenting municipalities to approve more housing. In fact, it is the municipalities that are most responsible for creating the untenable situation we are in. 

Sure, the municipalities can blame Provincial legislation, such as Ontario’s Planning Act, which encourages municipalities to engage local stakeholders, which usually means NIMBYs (not in my backyard). Sure, the Province of Ontario could modify the Planning Act by reducing the ability of local stakeholders to hold up projects for extended periods and sometimes unwarranted reasons.

In my opinion, however, the biggest issue is that municipally elected officials answer to their voters more than they do to the larger community. Everyone knows that at the municipal level, homeowners are more engaged in local politics than tenants and other marginalized groups. Who shows up at Public Hearings regarding new developments? Not the people who would most benefit from new housing creation. The people who show up at Public Meetings are predominantly those who feel they would be most negatively impacted personally. This is who our municipal politicians are answering to the most, in my opinion.

Why are we letting municipally elected officials and selfish stakeholders determine our housing future? Why can’t public servants decide on new housing, just like public servants administer so many other things in our lives such as public infrastructure, health care, education and justice? Imagine local councillors having jurisdiction in those areas!

I am encouraged that all levels of government finally acknowledge that the main problem is a lack of supply. I’m also pleased that Doug Ford and Justin Trudeau are leaning on municipalities. Trudeau stated on April 13, 2022, “We know that municipalities are an essential partner in solving the housing crisis.”

We are in need of drastic leadership that is prepared to make bold decisions that will truly change our housing future. Can we really expect our housing crisis to be solved by our municipal politicians?

Tackling the Housing Crisis Head On – by Increasing Supply

Everyone has an opinion about the housing crisis we are facing in the GTA, in Ontario, and throughout most of Canada.

Recommendations run the gamut, from increased taxation, to inclusionary zoning, to freezing immigration.

Very few solutions focus on increasing supply, which is the most practical and sustainable means of addressing the demand/supply imbalance. Canada has the lowest amount of housing per capita of the G7 countries. (Source: Scotiabank, May 2021)

I believe that what we need most is a reframing of the planning process. Let the planning staff have more authority and greatly reduce the public’s power. Why should homeowners be able to impede/thwart a housing project that the planning staff supports? The public does not get to adversely affect other types of construction/development in their communities. Imagine residents being able to delay infrastructure development such as roads, antenna towers, transit, or anything other than housing which could affect their home values or their personal experiences…

Dare I say that socialism is partly to blame? Sure, it’s politically popular to let the public weigh in on the merits of development, but how likely is it that residents will support what is best for their community as opposed to what is best for them personally?

Is it not ironic that we support the creation of new housing when we aspire to it, but we fight against it once we have it for ourselves? Why is the public allowed to weigh in on what happens in their community, when it is clear that they are protecting their own interests, but not the interests of those who have the same aspirations? Why do homeowners have greater power to delay/thwart new developments more than aspiring homeowners get to support them?

It is high time that our leaders stepped up to make the difficult decisions needed to address this worsening crisis. Anything less is an abrogation of their responsibilities.

The Greater Good – The Housing Crisis and NIMBYism

We all know there is a housing crisis in Canada. It used to be concentrated in major metropolises like Toronto and Vancouver, but now it has spread like wildfire to other cities and towns. The one constant throughout is a shortage of supply driving up prices. We simply aren’t building enough to meet the burgeoning new household formation.

Most new housing is either “greenfield” or “infill.” Greenfield consumes more resources to create and it often depletes valuable agricultural lands. Infill, on the other hand, uses existing infrastructure such as roads, sewers, water supply, schools, parks, transit and so on. Infill new construction is usually deliverable more quickly, because of the aforementioned existing infrastructure. 

Here in Ontario, infill development is encouraged in provincial, regional and municipal legislation.

The reality is, however, that infill is fraught with its own unique obstacle: NIMBYism. Not as many people object to the destruction of an agricultural farm on the fringes of a community as they object to something nearby (NIMBY: not in my back yard). We all understand that.

What I did not know is that the motivations for NIMBY objection go beyond the actual infill proposal itself – they’re also rooted in jealousy and hate. The tighter the land supply, and the more onerous the approval process, the more NIMBYs figure the developers who prosper and who can navigate the complex system are most likely to be the richest and most aggressive.

“The result could be a self-fulfilling process that fulfills people’s worst expectations: communities suspicious of development clamp down on it, partly because they believe developers are rich and confrontational, and by clamping down they increase the probability that developers will be rich and confrontational.” 

This quote is from an article published on

Most of us live in housing that was created by a profit-motivated developer, just as most of the other consumables in our lives were thus created. The disdain for developers is entrenched in our psyche – too bad we’re all paying for it and being hurt by it!

Building Boom? I Think Not!

2019 building levels in the GTA are comparable to 1990s levels – it’s astonishing. Let’s hope that the current/upcoming recession/depression/immigration decrease/foreign investment decrease aren’t how we solve this longstanding supply problem.

Building boom? I think not!

One of the benefits of aging is having a longer history of experiences. I remember the housing recession in the early 1990s – it’s when I lost my job and my house. This was a period of housing stagflation (persistent high inflation combined with high unemployment and stagnant demand) in the GTA. 1995 was the worst year for housing completions in the 1990s.

A comparison of early 1990s with 2019 is truly astounding. Thank you, Ben Myers from Bullpen Consulting, for the outstanding data!

  • The total amount of square footage built in 2019 is comparable to what was being built annually in the early 1990s.
  • The number of bedrooms built in 2019 is the lowest in the past 22 years, and is comparable to 1990s levels.

The main cause of the GTA housing problem has not changed in decades! We are simply not building enough homes. Supply is sorely lacking. All levels of government are contributing to this problem, and none have been able to make any meaningful improvements.

We can expect this situation to deteriorate before it improves, if past performance is any indication.

The most likely thing to ease the problem is a total collapse in demand as a result of (take your pick(s)) recession/depression/immigration decrease/foreign investment decrease. All of these reductions in demand have significant adverse impacts on the economy. Let’s hope this isn’t how we solve the supply problem. I would love to see policy changes from all levels of government. That is the solution.

I’d love to hear your take on this issue. Comment below or find me on Facebook or LinkedIn to join the conversation.

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