Comment
Call for urgency
Finding an affordable place to live is too hard. For some, it is becoming impossible. This crisis has deep and profound societal impacts that reach far into each of our lives. Whether looking to buy or rent, prices are out of reach and getting further away. Housing costs are chewing up an increasingly unsustainable portion of our available income.
Rising interest rates were supposed to throw a wet blanket on home prices. The fastest escalation of rates in recent memory was expected to discourage buyers, and prices would fall. But it didn’t happen. Fourteen months after rates began climbing—across North America, mortgage rate averages have doubled from 3 to 6 per cent—home prices continue to push higher. The phenomenon has confounded economists and policymakers across the continent. But for many ordinary folks, a precarious situation is becoming desperate.
While the challenges may be common on the macro level, the solutions may only be found at the micro or local level. This is where the bottleneck exists. This is where the levers are. This is where change must happen.
Housing occupies a rarified spot in our economic psyche. It is the foundation upon which the broader market exists. We must live somewhere.
We have heard for decades that we daren’t spend more than 30 per cent of our monthly income on housing. Recently, Canadian Mortgage and Housing nudged this recommendation to 32 per cent. Why do you suppose they did this? Likely not because they believe it is more prudent, but rather because they know that this rule precludes a large swath of Canadians from ever owning a home. When the market becomes unsustainable, what is deemed prudent becomes flexible.
Zonda Home is a data aggregator and insight provider to the housing sector, academia and policymakers. It gathers and sorts the information and trends builders need to understand when to build, when to stay on the sideline, and when to buy land. For policymakers, the housing market underpins the entire economy—they must understand what the housing data is saying.
Zonda reports that entry-level home prices have risen 3.5 per cent in the past year (against rising interest rates and mortgage costs), while higher-end homes have increased by nearly 7 per cent. No one expected this. Rising rates and the threat of a looming recession were certain to cause a correction in home prices. It didn’t happen.
Zonda’s chief economist, Ali Wolf, knows why. It’s a supply problem. We are not building enough homes. Or apartments. In markets from San Francisco, Dallas, Charlotte, Vancouver, Toronto to Prince Edward County, not enough homes are being built to meet demand. While many and varied factors play this mismatch, Wolf reports that these markets all share one thing in common: The permitting process has become too burdensome and lengthy while the not-in-my-back-yard folks provide cover for slow-walking new homebuilding through municipal processes.
According to Wolf, these jurisdictions are hobbled by a lack of urgency in moving these files through their regulatory processes. Others point to a lack of resources and a general lack of qualified staff. No matter the cause, it is adding months to permitting and regulatory timelines across North America, thus slowing the creation of new homes to meet the demand.
So, while it is true that the problems plaguing home ownership in Prince Edward County are pervasive across North America, the solutions are unequivocally local. It starts with County council. They must show a renewed urgency in addressing a scourge that is existential to many families and individuals in this community.
Words won’t cut it. Nor will throwing dollars at the problem. While noble in intent, the County’s recently announced housing plan and affordable housing initiatives won’t fix a broken market. The County doesn’t have the resources, expertise, or tools to build homes at a pace that will improve the supply problem. It does not diminish the benefit it will provide the lucky few who will benefit from these initiatives, but it cannot be confused for a solution.
To do this, we need more supply. It is that simple. In Prince Edward County, Minneapolis and Calgary. Builders and developers need a clear and reliable pathway. Council can grumble and howl over Doug Ford’s heavy-handed intervention in municipal jurisdiction, but inaction by local governments, like Shire Hall, nurtured this problem. It is in a morally untenable position to second-guess those attempting to fix it.
Restoring the supply imbalance will mean much more than the scattering of homes rising around the edges of Picton. Supply must find a balance with the demand for new homes—not the wishes of neighbours who would rather they not be built at all.
Specifically, Council must set targets for permitting times, new homebuilding starts, and rental units. And then enforce them. In Wellington, Shire Hall must release the waterworks capacity, where currently a single developer is allowed to bide its time. Others must be encouraged to pick up the slack.
But it starts with some urgency. Council must show it understands what unaffordability means to those buckling under the weight of rising rents and mortgages.
When the traditional means to lower housing to affordable prices fail, policymakers must innovate. It starts by recognizing the urgency of the situation.
Comments (0)