Canada’s housing crisis has become a defining issue, but it’s not a shortage of homes that’s at the heart of the matter—it’s the shortage of homes people can actually afford. In Toronto, the condo market is awash with unsold units as investors scramble to offload properties. With high interest rates pushing mortgage payments beyond rental income, the situation is a stark reminder of the disconnect between wages and housing prices.
The average price-to-earnings ratio in Canada has skyrocketed from 3.2 in 1980 to 6.7 in 2020. In cities like Vancouver and Toronto, this ratio has reached 12.3 and 9.3, respectively. To put this in perspective, a household needs an income of $208,000 to buy a house in Vancouver and $226,000 in Toronto as of July 2024. These figures are hardly attainable for the average middle-class family.
In response to this escalating crisis, the federal government, led by Prime Minister Justin Trudeau, has unveiled a new housing plan. The proposal involves converting unused public lands and buildings into housing. This idea is not entirely new; it’s been floating around as part of Conservative policy discussions. However, Trudeau’s twist is that the government will lease the land to developers rather than sell it outright. The goal, according to the Liberals, is to “keep home prices low” by retaining ownership of the land.
The catch? Residents won’t own the land their homes are built on. Instead, they’ll be subject to long-term leases with the government acting as their landlord. This is a stark shift from traditional homeownership and introduces a range of potential issues. Long-term leasing can erode equity accumulation because homeowners don’t own the land beneath their homes. Additionally, lease fees, akin to rent, can rise unexpectedly, often dictated by government decisions rather than market forces.
This plan mirrors the precarious situations faced by leasehold property owners across the country. In Ontario, leasehold cottage owners in public parks have lived with the constant anxiety of lease renewals. In Saskatchewan, leaseholders have been forced to move when First Nations changed lease terms. In British Columbia, leaseholders faced a shocking 180% rent hike due to increased property assessments. Such examples highlight the potential pitfalls of a leasehold system managed by the state.
Moreover, Trudeau’s plan to build “affordable” homes—promoted through a glossy new video—raises more questions than it answers. How will the government ensure these homes remain affordable? Will they be sold at below-market rates? Will construction quality be compromised? Will there be means-testing for buyers? And what happens when these homes are sold in the future?
The Liberal government’s strategy seems more focused on public relations than on providing concrete solutions to the housing crisis. The shiny videos and announcements appear designed to counteract the growing perception that the Canadian dream of homeownership is slipping away, a concern that’s resonating strongly with voters.
On a more fundamental level, the real solution to the housing crisis lies in addressing demand. The government is taking some steps in this direction by reducing the influx of low-wage temporary workers and international students, although this issue has not received the same media spotlight as their housing strategy. The lack of a comprehensive approach to managing immigration undermines the broader narrative of diversity being our strength and fails to address the root causes of housing affordability issues.
As Trudeau’s government prepares to lease Canadians their homes, the question remains: will this plan actually make housing more accessible, or is it simply another way to push the dream of homeownership further out of reach?