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The Current Transcript for March 30, 2021

Host: Matt Galloway

STORIES FROM THIS EPISODE

Prologue

DON Lemon I said no more books. I don't want to do a book. I have a full-time job. I anchor two hours a night on CNN. I have enough of responsibility. And then Charlottesville happened. And then Ahmaud Abery happened. Then, Breonna Taylor happened. And then George Floyd happened.

MATT GALLOWAY: The CNN host joins us to talk about James Baldwin, the racism he himself experienced growing up in the South, and his role as a Black journalist in this moment of racial reckoning. But in an era where the truth can feel under siege, we start with the fight against disinformation in this pandemic. Good morning. I'm Matt Galloway. This is "The Current".

[Music: Theme]

Living Conditions part one

Guests: Jenny Kim, Garrett McPhee

MAN: You've pay mortgage payments. You know, you worked hard. But did you really deserve to go from 18-thousand dollars in equity to two and a half million?

MATT GALLOWAY: Where are we going to live? It is a question asked increasingly these days, as the cost of buying a home from Halifax to Vancouver goes through the roof. Those who got in feel like they've won the lottery, as houses sell for hundreds of thousands of dollars above the asking price. And, of course, not everyone can get through the door, even those who can afford the price of admission.

WOMAN: She said to me, To be honest with you like your credit is good. You have money, you know, that you could put down. I think you're not going to get it because you're Black.

MATT GALLOWAY: This morning, a special edition of "The Current" looking at the cost of housing in Canada. From skyrocketing prices and limited supply to systemic discrimination and unsustainable levels of debt. The dream of homeownership is increasingly out of reach for many Canadians. So, where are we going to call home? Good morning. I'm Matt Galloway. And this is "The Current".

MATT GALLOWAY: Well, in case you haven't heard, the Canadian housing market is hot right now, like a summer day in Death Valley, that kind of hot. In fact, the average house price hit a record high in January at more than 600,000 dollars. All across this country, people are feeling the squeeze. David Savelli is one of them.

[Music: Saloon style piano]

DAVID SAVELLI: Hi, my name is David. I currently live with my girlfriend in Hamilton, Ontario, and I work in municipal planning and development. We've been looking for a house since December of 2020, all types of houses, bungalows, semi's, detached, townhomes, old cottages that can be turned into homes, pretty much anything. We've been outbid multiple times by over 100-thousand dollars easily, which makes us feel defeated, deflated, pretty much a hopeless situation that we find ourselves in. So we're really hoping that 2021 moves on, that things will sort of come back to a sense of normality.

DAVID SAVELLI: So we just put an offer on a house in Welland. It was listed for $399,000, and we went about $45,000 over. We're not super optimistic about it. But either way, we'll find out tonight and see what happens. It'd be nice if we get it because it actually has a basement [chuckling] since most homes don't seem to have basements anymore. And if you're able to get one, you're typically paying a premium for it now, especially if it doesn't leak. So we're not optimistic, but, you know, we'll see.

DAVID SAVELLI: So as predicted, we didn't end up getting it. The listing agent was apparently trying to play the bids off each other in order to get us a minimum $60,000 over asking out of us. So obviously, we didn't go up that high since it's not only out of our budget, but the house does not honestly seem worth it, nor like it would actually retain that value for a long period of time. So on to the next one.

[Music: Saloon style piano]

MATT GALLOWAY: David's story of being outbid and that emotional roller coaster he was on is far from unique. Forty-three per cent of Ontarians surveyed by Royal LaPage said that the pandemic has them looking to move to a less densely populated area. And that means bidding wars in more places like Hamilton and Halifax, where Sandi Lee is a realtor.

SANDI LEE: This would be a nice office table lookout.

WOMAN: Yeah.

SANDI LEE: All right, turn the lights on. Watch your step! And then you have your garage.

MATT GALLOWAY: Today, Sandi is in the Hammonds Plains area of Halifax. And as expected, there is a lot of interest.

SANDI LEE: I would say it would probably list for $499,000 last year. But because the market has been insanely crazy, right now, we have it listed for 100,000 dollars more. And keep in mind that we will definitely have competing offers because this is what everybody wants right now. Inventory is low. There's a lot of buyers, and everybody just wants to get in and find a house right away.

MATT GALLOWAY: In Nova Scotia, sales went up by at least 13 per cent last year. And that has shut buyers like Garrett McPhee out of the market. Garrett was born and raised in Nova Scotia, and he's on the line with us now. Garrett, good morning.

GARRETT MCPHEE: Hi. Good morning.

MATT GALLOWAY: How surprised are you by the figures that Sandi Lee was throwing around in that listing? Five hundred ninety-nine thousand dollars. It jumped more than 100,000 dollars over the course of the year. Does that sound familiar to you?

GARRETT MCPHEE: It's not that surprising at all. But like she said, she said it's insanely explosive. That's pretty... pretty accurate.

MATT GALLOWAY: I was going to say, what's the phrase that you would use to describe [chuckling] the market in Halifax right now?

GARRETT MCPHEE: [chuckling] It kind of boggles the mind, just where where is this coming from?

MATT GALLOWAY: How long have you been looking for a home in Halifax?

GARRETT MCPHEE: Just about a year.

MATT GALLOWAY: And I mean, describe what you're looking for. What kind of place are you hunting for?

GARRETT MCPHEE: Really, just a place to call my own. Nothing fancy, you know? Just, you know, two to three bedrooms, sort of... sort of the same house I grew up in. I grew up in a four-bedroom home in Glace Bay in Cape Breton. Maybe a little yard.

MATT GALLOWAY: What was your budget?

GARRETT MCPHEE: I was trying to get something somewhere between $300,000 and $400,000.

MATT GALLOWAY: And when you talk to realtors, and you say that's what your budget is, what did you hear back from them?

GARRETT MCPHEE: Not... not very good responses, usually. It would just be if I even got to speak to one, you know, say I would like to see a property that I would like to... I'm interested in, there would probably be 30 to 40 people who have already expressed interest in it. So, quite frankly, the realtor wouldn't even... they would politely tell me, yeah, don't bother with this.

MATT GALLOWAY: What is that like to go through something like that? I mean, this is a big investment, and you've thought a lot about it. To be turned away that quickly, what is that like?

GARRETT MCPHEE: Pretty soul-crushing. It just feels like you're never going to get anywhere. You know, this thing, this big goal in most people's lives, this thing that you... you build up, you... you plan this for a very long time. And now, when you think that, OK, maybe I'm in a spot where I can maybe make a move on this, and it just feels absolutely impossible. I just feel like this thing you've been trying to do for so long in now impossible, and it just breaks your spirit.

MATT GALLOWAY: You grew up in Nova Scotia, and you mentioned the house that you grew up in. I mean, how does this experience compare to what your parents would have gone through in terms of buying a home in Nova Scotia?

GARRETT MCPHEE: I do know that the house I grew up in, it was a four-bedroom, two-story house with a nice big yard and a paved driveway, and my parents paid 29,000 dollars for it. My dad was the manager of a bowling alley. But, you know, me today, I make, you know, considerably more money than that. I don't have any children, so I don't have that expense. Logic, I should be doing much better, you know. But by any measurement, when you actually compare the two lifestyles, I'm doing much worse, and it doesn't really make sense.

MATT GALLOWAY: What do you think is going on? I mean, what's driving this demand in Atlantic Canada? I had mentioned that... that, you know, real estate prices have been up across the country, certainly, but sales in Nova Scotia were up 13 per cent last year. What's behind that, do you think?

GARRETT MCPHEE: Well, it's a not-insignificant portion is the fact that Atlantic Canada has done so well with the COVID pandemic that a lot of people from markets that are pretty much, you know, where this trend has been happening for years, Vancouver, Toronto, they're selling their properties because they can work remotely. You know, they sell their home for a million dollars in Vancouver, and then they come to Halifax and they buy one for $400,000, $500,000, and they work remotely. And now they've got half a million dollars in their bank account they didn't have before. It sort of feels like it's like a gentrification on a whole provincial scale. Well, you know, I can't fault anyone for doing this. It only makes logical sense. It does, you know, as someone who's born and raised here, and has lived here most of their life that... that I can't take advantage of our good fortunes here. Whereas other people from away are doing that. You know, I can't fault them, but it feels pretty crummy.

MATT GALLOWAY: Do you worry about being priced out of your own community? I mean, you've been looking and the budget that you have. I mean, that's not a small amount of money in the grand scheme of things, but it sounds like it's a pretty frustrating experience. Do you worry about not being able to afford a home in the community that you want to be in?

GARRETT MCPHEE: The prices are only going to get higher and higher. I don't think this is something that's going to... I mean, any reason why that's going to change all of a sudden? So if you don't get in, the longer you wait, the worse it gets. And if you can't, you know, if you can't afford something at $500,000, you're not going to afford it when it's $600,000. And then when you combine this with the rental prices in the city, even renting you could be forced out.

MATT GALLOWAY: Why is it so important for you to... to try to buy your own home?

GARRETT MCPHEE: Owning your own home, to me, is like sort of your freedom. You... [sigh] you know, you're the king of your own castle. You... you are in charge of this place. When you're renting, you know, you don't... you can rent for a decade, and what do you have to show for it after that? Really nothing, you know? You pay the mortgage, you pay the property taxes, you pay the insurance. But the landlord gets the equity. The landlord gets the tax credit. The landlord gets the increased credit score. At some point, maybe, you know, maybe the landlord will double the rent, and you're out of there.

MATT GALLOWAY: And so are you going to continue? I mean, in the midst of this market, which, as you say, is just going to get hotter and hotter, are you going to continue looking for a place, or what happens with that dream of homeownership?

GARRETT MCPHEE: I feel like I have to keep looking, I guess. I have to get a little more creative or... or you can always try to go further and further away. But even when I did look further and further away, it's not really any better. And you can't really, you know, all the... all the people to move further and further out of the core of the city. That's... but yeah, I have to keep looking at it because there's not going to get better. I really don't believe that. Get something, or else you're left in the cold.

MATT GALLOWAY: Just finally, you said something really interesting about, I mean, what your parents went through in terms of, you know, even it was possible back then to buy a home on what would be a working-class salary. In the bigger picture, what happens if we as a country don't figure this out, and don't figure out affordable places for people to live?

GARRETT MCPHEE: I think this is... I've been convinced that this is the reality is that if we don't do something about it, our mindset is going to change in that things like owning a home or even having a family are going to be regarded as things that only rich people can do. And regular working people can't do those things. I think we're on that path.

MATT GALLOWAY: I wish you the best of luck, Garrett, I hope that the search is a successful one for you. In the meantime, I really appreciate speaking with you about this. Thank you.

GARRETT MCPHEE: Yeah, thank you for having me.

MATT GALLOWAY: Garrett McPhee is an I.T. support technician in Halifax. For Brenna Cook, a move to Edmonton from Ottawa made her dream of home ownership more of a reality. Brenna's in the market right now touring homes.

[Music: Pour me a cold one, that piano is back].

MAN: OK, I do believe I've got a few lights on the main floor here for us. Oh, might be a few little shortages here and there. [awkwardly laughing].

BRENNA COOK: That's OK.

MAN: I think there might be one more light I can turn on here I see. Grab this one.

[a few clicks]

MAN: Nope! OK.

BRENNA COOK: OK.

MAN: So you can tell the kitchen actually looks more like it was done in the 90s.

BRENNA COOK: Yes, I grew up with these cabinets.

MAN: So a few upgrades there.

BRENNA COOK: These cabinets are like one of those cabinets, right, that have just been here forever.

MAN: Yeah, late 80s to mid-90s.

[Music: That piano fades back up]

MAN: Yeah, so this wallpaper over plaster. [knocks on a wall].

BRENNA COOK: Yeah.

MAN: And they did it all around the cabinets here, too.

BRENNA COOK: OK.

MAN: So, shall we go upstairs?

BRENNA COOK: Sure, let's.

MAN: I'll lead the way again just to make sure that we do not. OK, we've got one, two, three bedrooms and a cool-looking bathroom. Definetly not historical!

BRENNA COOK: Um, there's carpet in the bathroom. [laughing].

MAN: Lots of it.

BRENNA COOK: I'm going to... that's... that's an interesting choice.

[Music: Oh, hey, it's that piano!]

BRENNA COOK: My name's Rnena. I'm a first-time homebuyer here in Edmonton. And I'm out here just looking at some houses today to see if there's anything I like. So I'm looking for a place that I can really live in for a good, long time. I want to settle in and, you know, grow garden and put down roots. I've been saving for a few years, and I kind of had hit my savings goal for that. And my... I'm renting right now, and my landlords are selling that... that home. So, it's a good time for me to look for a house. Everything kind of came together. So that's why I'm here.

[Music: a piano arpeggio] Edmonton feels really accessible to me. I feel like I have a choice, and I have time. And so I'm feeling really grateful for that. I feel like I hear a lot of other things from other markets, other young people who are like me looking for houses, and they just don't have the time, and they don't have the ability to make a considered choice.

[Music: The piano fades up].

BRENNA COOK: The thing about being a single woman these days is you can do what you want, and I feel like I have, you know, the confidence and ability to tackle big life things on my own. I have the confidence in myself to kind of tackle what comes. And I've built in a lot of sort of backups and failsafes and emergency funds and stuff. So I'm comfortable.

MATT GALLOWAY: Brenna Cook might be taking her time in Edmonton. I mean, you don't have to jump at the first house with carpet in the bathroom. Further west, though, Jessica Rinfret is feeling the pressure. Vancouver's high prices are well known, but she has discovered that even communities an hour outside of the city are quickly becoming out of reach.

[Music: And there's that piano]

JESSICA RINFRET: We've been saving for pretty much as long as we have been together, at this point, knowing that we would like to buy a home for ourselves at some point. We also moved back to our suburban city of Abbotsford because we figured that moving back to my hometown a little bit further out, we would be able to afford more.

[Music: Piano is back]

JESSICA RINFRET: All of a sudden, at the beginning of this year, really started to skyrocket and take off. And to see a 70s-built townhome in the neighbourhood that we were looking in that would have sold for 450,000 dollars last year, now going for 580,000 dollars, which is 60,000 dollars above what the actual list price was. It was overwhelming, and I mean extremely discouraging. At this point, we honestly don't even feel that it's worth trying to put in any offers on anything because things are going so fast.

[Music: The music has changed to a deep standup bass! But the piano is also there!]

JESSICA RINFRET: I'm looking at it as a home, and stability, and a place to raise my family. I think we get caught up in the mania of people making millions off of their homes. But, at the end of the day, it's a home.

[Music: And it's just the piano again]

MATT GALLOWAY: Jessica Rinfret says she will likely start looking for a condo instead. That is what Jenny Kim just bought in Toronto. It is her first home. Jenny, good morning.

JENNY KIM: Good morning.

MATT GALLOWAY: Congratulations!

JENNY KIM: Thank you so much!

MATT GALLOWAY: Moving day is tomorrow, is this correct?

JENNY KIM: [a deep sigh that you probably know all too well] It is. I'm sitting amongst many boxes right now.

MATT GALLOWAY: [both chuckling] Well, how are you feeling aside from the... the cramped space that you're in surrounded by boxes, how are you feeling about moving in?

JENNY KIM: I'm nervous. I'm excited. I'm scared. I am stressed, but looking forward to it.

MATT GALLOWAY: When you were growing up, what were you told about homeownership? Is this something that... that was always in the stars for you?

JENNY KIM: Well, definitely not. As a millennial, I was kind of told forever. You're never going to be able to buy, ever. So just don't even dream about it. Just keep renting. And so I didn't even bother researching or looking. I just kind of accepted my fate as, OK, [chuckle] I'm a millennial. I could never buy.

MATT GALLOWAY: What about for your family, though? I mean, your family moved here from Korea when you were 10. Was that part of their kind of homeownership goal? I mean, did they see you moving into your own home?

JENNY KIM: I'm sure they did. You know, like any immigrant family, the dream is to live that Canadian life. We did on a family home at one point. But we've also lived at various rental properties. And then my parents divorced and kind of lived all over the world. So I don't know if they expected me to be able to buy in my 30s? Definitely, neither of my siblings own, and neither my parents or at the moment either. So I feel very lucky and grateful that I could.

MATT GALLOWAY: So as a millennial, as you say, I mean, this seemed like it was not in the cards for you. What was the biggest hurdle in figuring out that you perhaps could own your own home?

JENNY KIM: Oh, gosh, it's a mixture of the pandemic, lots of things happening in 2020 and kind of thinking, you know, life is too short to try something. And I was just curious, back in January of this year, what I would need to buy. So I got in touch with the mortgage broker, and just ask the question, do you think I could afford to buy something with the salary that I make? And... and they said yes! And just started looking, talked to my agent. And within three weeks, I had fond a condo. [chuckling]

MATT GALLOWAY: How competitive was it?

JENNY KIM: Oh, gosh, you know, I didn't think it would be competitive, you know? It's a pandemic, and, you know, people aren't working, so I thought it would be rather quite easy. But the first place that we looked at, it's quite small, a little one bedroom. It was listed for $549,000. So we went in at the asking price, thinking it was going to be accepted. I got all excited, and then got rejected. And then we counteroffered for $569,000, got rejected. Counteroffer $579,000, rejected. And I think we tried it two more time before we gave up. It eventually sold for over $600,000. And then, we saw a bunch of other places, and the next place I saw that I liked, I went aggressive with my agent and said I'll just put the asking price, ask for a confirmation by tomorrow morning and be really aggressive about it. And I was very lucky that they accepted.

MATT GALLOWAY: That's a lot of money, 549,000 dollars. And then hearing it go up by increments of 10,000 dollars. I mean, did you have difficulty in [chuckling] wrapping your head around and spending that kind of money?

JENNY KIM: Honestly, I don't even know what that amount of money looks like, [chuckling] so it's... it's hard to imagine, but all I could kind of focus on was the maximum amount that I was willing to pull away from my savings and my RRSPS and everything combined, and what I would be comfortable paying as a total monthly price, including, you know, the mortgage and any other bills and stuff like that. So that's the only number I can focus on because if I try to wrap my head around the fact that I bought a condo, a one-bedroom condo that's under 600-square foot for 589,000, it blows my mind. [booth laughing]

MATT GALLOWAY: Why was that so important for you? Again, that's a lot of money to spend, and there's nothing wrong with renting. You could have kept renting, but why was it so important for you to do this?

JENNY KIM: I think it was a mixture of, you know, the mortgage rate being historically low right now. I was very lucky that I got it locked in at one-point-four, which blows people's minds. But, you know, with 2020 being past us and things that are starting to look a little bit more positive, I just didn't want to feel that desperation of what am I going to do again. Because, you know, back in March, I was unemployed for the very first time in my entire life. And it was a very psychologically and emotionally hard time. And now that I'm out of that, I feel very lucky and grateful. And I saw the opportunity and thought, I just have to take it.

MATT GALLOWAY: And so once you move in tomorrow, and you are able to unpack all the boxes that you're currently surrounded by, what are you looking forward to [chuckling] the most in your new home?

JENNY KIM: Honestly, I think I'm just going to lie down on the floor with my dog, have a glass of wine and say, I [both chuckling]own this, and this is mine now. And every mortgage payment I make is going to go towards myself and towards my investment. And I feel very grateful again to have the opportunity to do that.

MATT GALLOWAY: Congratulations, and good luck with the move.

JENNY KIM: Thank you so much!

MATT GALLOWAY: It's great to talk to you. Jenny Kim is a project manager in Toronto who just bought her first home - a condominium. And she moves in, as you heard, tomorrow. We're going to continue these conversations coming up. Your CBC News is next. And then,.

WOMAN: The people with money are able to command even more options for themselves, whereas people without money that tend to be renters are seeing fewer and fewer options.

MATT GALLOWAY: Vulnerable and volatile. That is how experts are describing the Canadian real estate market. We will hear from the people monitoring every spike and dip in that market. That's coming up in about six minutes' time. I'm Matt Galloway. This is a special edition of "The Current", "Living Conditions". Taking a look at where we're living and where we might live in future as the real estate market seems to get hotter and hotter and hotter. Stay with us.

[Music: Theme]

Living Conditions part two:

Guests: Armine Yalnizyan, Doug Porter

MATT GALLOWAY: Good morning. I'm Matt Galloway. You're listening to "The Current".

[Music: Theme]

JAEL JOSEPH: I would constantly wait to hear back from places that we've gone to see, one said that they had not had good experiences with other Black tenants, and they didn't want to rent out to a Black person.

MATT GALLOWAY: Racialized Canadians deal with discrimination whether they are renting or buying. We'll hear more about that coming up. But first, waiting on a bubble that may not pop.

[Music: Theme]

MATT GALLOWAY: We have heard all about the stress that this market is putting on buyers, but it also puts stress on financial systems, houses, markets and people's dreams of owning. It turns out they're all intertwined. And so to unpack all of that, I'm joined by two economists. Armine Yalnizyan is an economist and Atkinson Fellow on the future of workers. And Doug Porter is the chief economist at the Bank of Montreal. Good morning to you both.

BOTH: Good morning.

MATT GALLOWAY: Doug, we just heard from people who can't get into the market. They are facing bidding wars. Homes are going for hundreds of thousands of dollars over the list price. How would you describe what's happening in Canadian real estate right now?

DOUG PORTER: This is about as hot a market as we've seen nationally since at least the late-80s. I think what really stands out is just how broad-based it is. Typically when we have hot housing markets, it's led by Toronto and Vancouver. This one we're seeing sweeping right across the country. For instance, Toronto home prices actually haven't done anything out of the ordinary versus the rest of the country. We're seeing things like 30 per cent gains in small cities in Ontario and even in places like Moncton and Halifax. It's really like nothing we've seen before, frankly.

MATT GALLOWAY: Last year, the Canada Mortgage and Housing Corporation predicted that the housing market was going to cool by upwards of 20 per cent. Armine, how did CMHC get that so wrong?

ARMINE YALNIZYAN: I don't know when they get their forecasts. I know that economists in every sector were having difficulty predicting the future. I don't think anybody saw the pandemic unfolding the way it did. And economists and forecasters are not very good at psychology and what makes people choose to buy or sell at any given time. So we should not be counting the economic forecasters [laughing] to get the future right.

MATT GALLOWAY: Doug, I think a lot of people were counting on that forecast, perhaps being correct because they thought it might let them into the market. What happened? I mean, what, if anything, did CMHC get get wrong in that forecast?

DOUG PORTER: Well, I think in a way we had an incredibly unusual recession. We had a recession with a loss in incomes. We had a loss of jobs. But the income from those jobs was replaced by the federal government. So we actually had personal incomes go up by 10 per cent last year. That was the strongest gain in household income that we'd seen in 40 years in a recession. And then, meanwhile, at the same time, you have the Bank of Canada, of course, cutting interest rates pretty much to the bone. And then, for all intents and purposes, promising that they'd be there for years to come. You know, essentially, it gave homebuyers free rein. And we're able to, you know, work from remote areas or suburbs or even small towns or rural areas. So that's why we're getting, you know, 50 per cent price increases in places like North Bay.

MATT GALLOWAY: When you say that sellers were given free rein, how do you go about determining actual value in that, Doug? Because you have... and it's not just in Toronto and Vancouver, but you're seeing it across the country, houses going for well above the asking price. And again, that could be, you know, 800,000 dollars above asking in Toronto and Vancouver. But the asking price seems to be, you know, an aspirational figure in some ways. How do you determine what value is?

DOUG PORTER: It's incredibly tough, especially when interest rates are so very low. Essentially, the value is, you know, what the highest buyer is willing to pay for it.

MATT GALLOWAY: At what point in time, Armine, does that become an issue when people are willing to pay prices for a home that might have cost hundreds of thousands of dollars less even a couple of years ago?

ARMINE YALNIZYAN: Well, I think we're poised for some kind of a pivot in how we value homeownership. You know, we've been living under the ethos of homeownership is the best thing. The ownership society concept was brought in about 40 years ago, and that is viewed as quite normal, especially for our young people, that if they don't buy a home, they are somehow failing in being an adult. But adulting doesn't require homeownership to be successful. We just simply are not helping people that are not homeowners to succeed because the rental market is so sucky as well. I just want to circle back to Doug's point about personal incomes having risen by 10 per cent, which is unheard of during the recession because of the type of income supports we put into the economy. I want to underscore that that happened very unevenly. And the people whose incomes rose most dramatically were the people at the very bottom of the income spectrum. They were never going to be homeowners. The people that are buying rural and remote homes that are buying second property so that they can escape from the pandemic into a cottage setting or work remotely, were never the people that were like having a hard time finding a home. And it's not just investors and speculators, but people deciding, well, I'll have this home in the city when things get better. But I'll also move to cottage country. That's what's happening, is that people with money are able to command even more options for themselves, whereas people without money that tend to be renters are seeing fewer and fewer options.

MATT GALLOWAY: Well, you mentioned the mentality. I mean, the idea of owning a home being kind of like the sign of adulting. Evan Siddal, the outgoing CEO of CMHC, said recently that the homeownership party is ultimately going to come to an end. Are we seeing a turning point? I mean, is that designation of homeownership as a point that you strive towards. Is that going to change?

ARMINE YALNIZYAN: I think that we are going to get much more likely where pre-1980s, where a larger share of residents of big cities were renting their accommodation.

MATT GALLOWAY: Doug, do you see a change in the mentality when it comes to home ownership in Canada?

DOUG PORTER: I doubt that there'll be a significant long-term change. I believe that the desire to own a home won't be dimmed at all. And just one slight push back on something Armine said, and I regard this as a somewhat positive development of all this, is we've actually seen rents stabilize in the last year. They were showing quite a bit of strength before the pandemic began. First of all, partly because of the slowdown in immigration, but also because of a number of folks looking outside of the city to buy homes. We've actually seen rents in some cases actually come down a bit over... over the last year. And nationally, they've they've been about flat.

MATT GALLOWAY: Why don't you think that this will be a moment of change? I mean, if people are taking on outsized mortgages... and I mean, yes, money is is very cheap, if not free right now, but that probably won't last forever. Why won't that lead to... to a turning point, Doug?

DOUG PORTER: You know, we've seen cycles before. We had a boom in home prices in the late-1980s and then a crash in some cities in the early-1990s. That's, you know, frankly, lasted about a decade. You know, we've been through a number of pretty wicked cycles in this country. And I don't think it really changes the broader desire to own... to own a house. You know, it could for some people to become renters. But I don't think that takes away the desire to ultimately own.

MATT GALLOWAY: Armine?

ARMINE YALNIZYAN: I absolutely agree with Doug that the desire won't be dimmed for a whole host of reasons. But the reality will be that there will not be enough houses to buy affordably where most people are moving to, which is the big cities and the bedroom communities around the big cities. And there, I think everybody is talking about densification. Look, the trends are moving towards we're going to have to bring more people into the country. Our own fertility rates have been dropping for decades. Canadians are moving from smaller towns to bigger towns, at least were before the pandemic. The pandemic might actually change that. But what it won't change is the fact that we will be facing widespread labour and skills shortages on the other side of the pandemic. And newcomers come to big cities. We're not going to be seeing this kind of outflux of people. There will be more of an influx of people without enough stock being built. And the boomers haven't yet started their really massive phase of moving out of their single-family homes and into condos. It started before the pandemic hit for about five or ten years. But we haven't seen the full impact of that yet. And that's going to also affect rental markets dramatically.

MATT GALLOWAY: Doug, there is a huge amount of our economy that's wrapped up in the housing market. Something like 10 per cent of the country's GDP is invested in housing. Are you concerned about that?

DOUG PORTER: Oh, I am. And to be clear, that number that's often widely quoted, you know, we're at an all-time high. It's a little bit more than nine per cent of the economy goes into residential construction. That's... that's just the building part of it. That doesn't take into account, you know, the amount that people are spending on things like rent and the, you know, the value of their mortgage payments and their utilities. When you take that into account, it's... it's more like a quarter of the economy is directly tied to the housing market. It's the highest we've ever seen. Canada is, you know, as this closely tied to the housing market as any, I would say, any other economy in the world. It's notable that this strength in housing prices that we're seeing, this is not a Canadian story. This is going around the world. But we're definitely at the leading edge of it. We're among, you know, right at the top of the world in terms of how fast our houses are rising in price and the share of the economy that's absorbed by the housing sector. And... and, yes, I am concerned, A, how quickly it's happened. And B, given just how cyclical a sector it is.

MATT GALLOWAY: If you are lucky enough to own a home, in some ways it's like you've won the lottery because you know, I mean, unless there is that crash, that it will continue to increase in value and you have the opportunity at some point in time perhaps to cash-out. And there are questions as to what to do about that situation. Take a listen to Max Fawcett. He recently wrote a piece in The National Observer about capital gains taxes on primary residences.

MAX FAWCETT: Where I grew up in Vancouver, boring old houses, nothing special about them. No major renovations done to them. Have turned into winning lottery tickets. You know, they're worth three-million, four-million dollars now. I think it's worth considering the way we treat homes and the way we treat the capital gains that have piled up in them, and whether that's the best use of our resources? If the federal government had not brought in CERB had not brought in the emergency wage subsidy, hadn't propped up the entire economy with billions of dollars, I guarantee you house prices would be down, not up. If the government, and by extension, your fellow taxpayer, has helped prop up the value of your home. And, you know, in cases in Toronto and Vancouver, add hundreds of thousands of dollars to your net worth, shouldn't they also be entitled to a share of the profits?

MATT GALLOWAY: Doug Porter, it's a time to consider a capital gains tax on some of this money being made when someone is able to sell their house.

DOUG PORTER: Well, of course, this has become a subject of lively debate recently. [Matt chuckles] I think I do have a little bit of a problem in applying a capital gains tax to someone who's owned a house for 10, 20, 30, 40 years. First of all, you do have to take inflation into account. And then you get into the whole sticky wicket of, you know, what kind of improvements have been done in the house and sort of interest expenses over the years. You know, there could be a lifetime exclusion. For instance, you know, perhaps if, you know, something like 500,000 dollars are tax-free. But I think at the very least, we should be talking about it because clearly there's a major subsidy there. And it's played a big role in the... the reason why home prices have done so spectacularly well as an investment over the years.

MATT GALLOWAY: Armine?

ARMINE YALNIZYAN: Well, you know, you referred to it, or at least Max Fawcett referred to it, as a lottery. And we don't tax lottery winnings in Canada. [Doug and Armine laugh] So, I mean, it does... it does beg the question that when you get this windfall that you did nothing to earn, things just like kind of happened. Why should you why should you not have to pay some share of it is a really important question that has emerged in the post... like during the pandemic, and certainly will be there post-pandemic. The idea that the people that took off like gangbusters in the stock market, why should they be able to keep most of that money? So the issue is not just should we apply capital gains on a principal residence or not, which is a lively debate, but it's also what should the capital gains inclusion rate be? Right now, only half of your capital gains, which do not apply to your principal residence, are taxed. Is that the right amount? We've varied that from 50 per cent to 75 per cent over the years, and it has not one whit changed the investment rate. So expect a very lively conversation about how we tax both wealth, capital gains and winnings [laughing] going forward. I think it it's about time that we talk about how we tax income of all sorts, not just earnings.

MATT GALLOWAY: If homeownership was sold, as, you know, this... this destination point and now that's out of the hands of the majority of people, it's unaffordable to many, many people. We heard about, you know, working-class people in Halifax being unable to afford a home in that city. What happens to people in that city, Armine, if they can't do that in the towns across this country, if that goal, which was attainable to many, many people across the country, is now out of their hands?

ARMINE YALNIZYAN: I've been talking since the beginning of this recession about the need to understand that putting flesh on the bones of that clarion call by the IMF and the World Bank for an inclusive growth strategy. Now, that might not be in the form of how much money you earn. It might be in the form of how we take care of one another? And not just through health care and long-term care and child care, but through affordable housing with the vast wealth that we have in this country. We're the 10th largest economy still on the surface of the planet. We could be anything we choose to be.

MATT GALLOWAY: Give us one or two of those interventions that the government could perhaps have on the table to... to further that goal, Armine.

ARMINE YALNIZYAN: I see the social wage as relying very heavily on everything in health and education, from early child care to long-term care, including pharmacare and mental health care, which we don't do very well. But it also includes making sure people are adequately housed, to the point of this conversation.

MATT GALLOWAY: You see that all connected?

ARMINE YALNIZYAN: A hundred per cent. That is the social wage. We had all of those elements in 1948 when the veterans returned from the Second World War. We had our first housing program in 1948, understanding that people would not be able to afford their own home. And it might sound radical to some of your listeners, but I'm not saying anything we didn't do. If we wanted to, we could create the place where everybody wants to move to. And believe me, we are going to be in competition with all the other rich nations to attract newcomers. So we need to make our country a people magnet.

MATT GALLOWAY: And if you don't do that, Doug, and you have tied stability and, you know, the generation of equity to the idea of home ownership, and that's been a huge anchor of stability for the middle class. If that's removed, what's at stake?

DOUG PORTER: I do worry that a number of the purchases that are now underway, these people might find that they've, you know, taken on a great deal of debt that's going to be with them for decades. And they've potentially overpaid. The other thing I'm concerned about is, you know, we saw this in Vancouver and Toronto before the pandemic. It was tough to attract young talent in some cases to to Vancouver and Toronto because it was simply unaffordable. And, you know, if this problem is fanning out to even smaller centres, I worry about the competitiveness of the economy as a whole if... if a moderate-income family can't... can't afford a place to live.

MATT GALLOWAY: It's great to speak with you both about this. This is an issue of our times, as they say. Thank you very much.

DOUG PORTER: Thanks for having me.

ARMINE YALNIZYAN: Thank you!

MATT GALLOWAY: Armine Yalnizyan is an economist and the Atkinson Fellow on the future of workers. Doug Porter is chief economist at the Bank of Montreal. Scraping together a down payment is one thing. A very tough thing. But what if you've got the money, and you still can't find a place to live?

JAEL JOSEPH: My name is Jael Joseph, and recently, I started the process of looking for a home.

MATT GALLOWAY: Jael Joseph is a single mom, and she hired a real estate agent. At first, she was looking to rent.

JAEL JOSEPH: I would constantly wait to hear back from places that we'd gone to see. One place the man suggested that he only rented to other Indians, and I was not Indian. One said that they had not had good experiences with other Black tenants, and they didn't want to rent out to a Black person.

MATT GALLOWAY: And so after multiple rejections from multiple landlords, she asked her agent why her rental applications weren't panning out?

JAEL JOSEPH: And she said to me, to be honest with you, Jael, like credit is good. You have money, you know, that you could put down. I think you're not going to get it because you're Black.

MATT GALLOWAY: Fed-up, Jael decided that she was done with landlords, and so she and her cousin decided they would buy a house together. Even then, she says, they faced hostility from agents at open houses.

JAEL JOSEPH: It was my cousin who suggested that she enlisted her husband, a white husband, that is. He used his contacts and was able to get us a house in less than a month.

MATT GALLOWAY: Jael believes the reason she has a home is because a white relative became their representative both at the bank and for interactions with agents. Henry Yu looks at discrimination and Canadian real estate. He's a professor of history at the University of British Columbia. Henry, good morning to you.

HENRY YU: Good morning, Matt.

MATT GALLOWAY: When you listen to Jael Joseph's story, what goes through your mind?

HENRY YU: What goes through my mind is actually the longer history of it. I think a lot of people don't actually realize racism, who is excluded from the real estate market, was built into the way we created a speculative real estate system right from the beginning.

MATT GALLOWAY: But there are laws. I mean, if we go to... to Jael's story, I mean, she's talking about people denying her a place to live based on race. It's illegal to do that. So how is the law squaring with what's happening in reality?

HENRY YU: Well, I think one of the things if you look at the 1916, and you see the passage of all these laws, well, you don't often hear is, well, actually, how did they enforce these and how many cases, how many people went to jail or were fined for breaking that new law? We've had a long history where the power of the state was actually enforcing things like housing covenants in certain neighbourhoods, actual legal clauses in the titles of land that said, you cannot sell this to a non-white, you can't sell to an Asian, you can't sell to someone's Black, or you can't sell to someone who's Jewish, can't sell to a Catholic some covenants. And so certain neighbourhoods were monetized as white. And I use that very specifically. Race was monetized in the real estate market. It literally meant that some neighbourhoods became desirable based on who lived there and who didn't live there.

MATT GALLOWAY: What about before you even get to the door to... to, you know, go to an open house, you need to have your financing lined up. And I mean, in the United States, there used to be a policy perhaps that still exists in some areas called redlining, to deny certain people mortgages. Just briefly describe what redlining is?

HENRY YU: So in the United States, redlining refers to actually drawing a red line around an area. And within that area, you would only give mortgages to those who were white. Outside that red line, on the other side, that's where non-white people could get financing, if they could get financing. And so if that red line moved to start to have Black people or non-whites move into a neighbourhood, well, there goes to neighbourhood, literally, that's the phrase. That people would begin to move out. And so banks, in fact, in terms of protecting their investment and protecting their mortgages, they would begin to actually have these explicit maps. Now, in Canada, when it became illegal to discriminate, there weren't actually investigations. They weren't going into banks and looking, hey, are there any maps here? Are you redlining? Are you doing this? And so part of the history of Canada and race is we don't want to know what's going on. We just assumed by passing that law it didn't happen anymore. A lot of these anecdotal stories here were not systematically, you know, often examining the story I'm telling of real estate is one that has always valued certain neighbourhoods for who's living in there and who's not living in there. And I think once you think of it that way, then what's going on now, and whether we're even aware of it, and that's where a story like today that you're having on "The Current", and listening to people's actual day-to-day experiences, you begin to see that actually it matters what you look like.

MATT GALLOWAY: How have you seen this play out in British Columbia?

HENRY YU: In British Columbia, real estate is hot. And you could say also that the history of real estate in British Columbia was tied to both the taking of land from Indigenous peoples, but also of making sure that Asians, those who are coming across the Pacific, were not to benefit from this speculative real estate industry. And so recently in the last 40, 50 years, part of this reaction to the idea that there's foreigners and there's Chinese who are somehow benefiting from real estate --

MATT GALLOWAY: The whole concern around foreign buyers driving the price of real estate.

HENRY YU: Exactly. And who who's driving up prices? Who's making these place unaffordable? There's a lot of people making money from real estate. But who shouldn't make money? Who shouldn't be allowed to benefit from it? That has a long history.

MATT GALLOWAY: If you have people who are kept out of the market, kept out of an investment that we're told, and we've been told for decades, is the biggest investment you'll make, and it's an investment that you live in but will generate wealth down the line, what's the cost of... of... of certain groups being left out of homeownership?

HENRY YU: I think that is a really key way of understanding structural inequity or structural racism. In other words, if for the long history of Canada, and I'm going to use very specifically the example of Indigenous peoples and and their territories. If land is taken away, and then you're not allowed to participate in this speculative real estate market. And for 150, 200 years, you have no way to build wealth, and you have no way of catching up, because, as you know, someone buying, let's say, a house in 1970 for $18,000, and is now worth two and a half million dollars, you can't catch up if you've been left out of that equity market. And so that is a way to understand, in fact, the material benefits of structural racism. You know, you paid mortgage payments. You know, you worked hard, but did you really deserve to go from 18,000 dollars in equity to two and a half million?

MATT GALLOWAY: Practically, how does the industry go about correcting this if the laws are on the books, but as you say, there are loopholes, there are ways to skirt around some of those laws, How does the industry correct this?

HENRY YU: The first thing I do is actually begin to take seriously stories like Miss Joseph's story, and just start to look into, OK, what's going on? We have commissions like in British Columbia that are investigating the role of corrupt money that's Chinese in our real estate industry. How about investigating the role of race? How on the ground stories like Miss Joseph's and others, how is this playing out? You know, how are decisions being made? And that kind of researches is, as I said, unfortunately not something that many of our researchers are keen to do. And so that is actually first and foremost a need is to understand what is going on the ground in local areas and give our Charter of Rights, give these laws that say you can't do this, give them a chance to actually be enforce.

MATT GALLOWAY: Henry Yu, it's really good to speak with you about this. This is fascinating. Thank you very much.

HENRY YU: Thanks for the conversation, Matt.

MATT GALLOWAY: Henry Yu teaches history at the University of British Columbia. Coming up after your regional updates, problems for renters, problems for buyers. So what are the solutions? I'm Matt Galloway. "The Current" is back in 90 seconds.

Living Conditions part 3

Guests: Andre Picard, Don Lemon

MATT GALLOWAY: Hi, I'm Matt Galloway. You're listening to "The Current".

FLYNN: My name's Flynn. I live at 2419 Keel Street. I've lived there for a little over 10 years. Without notice, our previous landlord has sold the building to a numbered company. It was a real shock. We had no warning. Shortly after that, we received N13 eviction notices that explained that we had until June to leave. The building right now, everyone pays around 1,000 dollars for a two-bedroom unit. Next door to us, that is upwards of $1,700. Across the street from us, that's over $2,000. So if we move, the best we can hope for is around double the price. We found our little corner that we can live in. We had a little community. And it turns out that's just not good enough.

MATT GALLOWAY: Toronto's Flynn Daunt, living through what's known as a renoviction. With those sorts of loopholes, and rent control, and sky-high prices for buyers, long-term secure housing might just be a thing of the past. While some people say that simply building more will solve the problem, urban planners are warning that most new developments aren't matching what people actually need or want. Andy Yan is director of the City Program at Simon Fraser University and an urban planner in Vancouver. Naama Blonder is an architect and urban planner at Smart Density, an architecture firm in Toronto. Good morning to you both.

BOTH: Good morning.

MATT GALLOWAY: There are many Canadians who feel that this dream that we have been sold for generations, I think, of owning a home is dead, that this is not going to be possible. Is the end of homeownership necessarily a bad thing, Andy?

ANDY YAN: Well, I think that it is, I think, a change. You have to understand that for... well, since the end of the Second World War, that the idea of owning one's home was effectively our national housing policy. Now, it, of course, kind of changed from city-by-city, but that the idea of owning a... owning a home was a form of attainment, of security, of tenure.

MATT GALLOWAY: Naama, for you? Is the end of homeownership, and we'll talk more about what that's going to look like, but but broadly, is that a bad thing?

NAAMA BLONDER: I think we need to describe what home means. If we're talking about a single-family with a backyard steps away from the subway, yes, that's probably not the best way for Toronto to grow. It's also impossible.

MATT GALLOWAY: Ownership is one part of where we're going to live and where we're living right now. Renting is another element of this. And for many people in many communities, renting has been seen in some ways as one step along the road to homeownership, that you rent and then you buy down the line. Why, Andy, has renting been given a bad name?

ANDY YAN: Well, I think renting has been given a bad name because it's exactly what you've identified is that I think previous generations, they saw it as a kind of zone of transition, that, of course, you're going to own a home. But then I think that with the kind of changes we've seen in employment in the economy and how our cities have grown and developed, that I think that that has, of course, shifted. And I think that this is probably one of the biggest challenges as we, I guess, as Canadians enter this, I think post-COVID urban age.

MATT GALLOWAY: Naama, how do you change that? Because there are cities around the world where renting is just perfectly fine. That's where people live. That's how people live. It's not seen as some sort of stigma that you can't own. You choose to rent.

NAAMA BLONDER: Yeah, absolutely. I think actually the problem is even rooted much, much deeper than... than the question suggests because right now, the market in Toronto is where the units are sold or designed for preconstruction investors, not for the end-user who will eventually rent it. So once you differentiate and no one is there to speak for the needs of the end-user, that's how the market ends up looking like.

MATT GALLOWAY: Tell me more about that. I mean, we're both in Toronto. I look around this city, and I see cranes and buildings going up in every part of the city. Who are those condos being built for?

NAAMA BLONDER: Absolutely, the type of units that are being built are not, for example, suitable for families. So, yes, that we see increase in the number of, you know, it's not just supply, it's the right type of units. So even the city of Toronto about three years ago introduced a growing up study to ensure that per cent on each development, 25 per cent of the units are a larger units because even larger units that were built weren't a good fit for a family. So what do you do about not just increasing supply, but ensuring that the units that are being built would... would [laughing] serve and be a good fit for our communities.

MATT GALLOWAY: Andy, what does that say to you? I mean, as somebody who is involved in urban planning, when Naama talks about, it's not just about supply, it's about building the right kind of supply, how does that look to you?

ANDY YAN: I think that what it means is that how to engage this real question of how do you house Canadians? It really is a combination of supply-side as well as demand-side and finance-side type of solutions. I think that what... what... what you've identified is actually one of the biggest challenges as you find that in the condominiums that were developed in both Vancouver and Toronto. In Vancouver, nearly half, and in the city of Toronto, almost a third of those units are non-owner occupied, that they were built for in terms of investment. Now, sometimes they're being rented, but then a lot of times they're someone's second home or even sometimes kept empty. And I think that leads to some profound challenges towards who are we building for, and whom are we trying to house?

MATT GALLOWAY: What would a better mix... I mean, if you take a look at your city, Vancouver, what would a better mix of housing look like?

ANDY YAN: Well, it's interesting because, within the city of Vancouver, you actually find that we've been a majority renter city since 1971. That we've... I think the mix is really the idea of stable, affordable rental housing as well as, I think, the ability to have housing much more attached towards what local incomes can support.

MATT GALLOWAY: What about for you, Naama? I mean, if you think that single-family dwellings aren't going to house the people in... in the way that we need to house people not just in the future, but in the present, what is a better mix look like?

NAAMA BLONDER: Here's the thing. So Toronto won't become the city we want it to become with the ratio of one family per one lot. And I always say there aren't any backyards in Paris, and yet it's a very desirable city to raise a family. And don't get me wrong, I'm not saying at any point that we need to take a 1,500 square foot house and just put it on the 11th floor. Of course, there are trade-offs, of course. But that means that instead of a young couple, a young family moving to the suburbs and need to drive anywhere. You... you get the 15-minute neighbourhood concept where you can walk anywhere, walk to school, walk to the grocery market. And this is the trade-off. Yes, you give up space, but you get so much more.

MATT GALLOWAY: For a lot of people, not everybody can afford this, and not everybody is able to do this. But for a number of people, people will leave. And people will leave large cities. We hear about this in the midst of a pandemic. There's an exodus in some ways of families leaving those large cities. What do cities lose, Andy, when families can't stay where they want to be?

ANDY YAN: For no lack of exaggeration, I think they lose their soul. I think that the idea of having cities through which you can set your roots, through with you can grow with your life cycle, that I think that that is really what these cities lose. I think that on another element, it's... it's the fact that you're losing a... and with the patterns that are emerging within the city of Vancouver, you're losing a key proportion of your workforce, some of the most people in the prime of their careers that you are losing to other places. And I mean the good news may be in other places in the region. But the bad news is you can also lose talent to other countries. And I think that this type of housing situation where it's so disconnected to incomes, whether you're owning or renting, I think is a it's a principal economic threat to this country.

MATT GALLOWAY: How acute is that threat in Toronto, Naama? Again, not everybody... not everybody can leave, but there are people who are choosing to leave.

NAAMA BLONDER: Well, there are people who are choosing to. [chuckling] Unlike many people, and I heard all these voices during the last year, I don't believe the suburbs can really compete with the city. At the end of the day, the city offers so much more. And if it's been someone's dream their entire life to... to live in the suburbs, go for it. The pandemic really definitely opened the door for that. But I... I just refuse to believe that the city, the core, the urban lifestyle will... will die. I absolutely have no doubt that... that it's not going to happen. Eight years ago, when I moved to Toronto from my home country, that was because I couldn't see a financial future for me and my family. And believe it or not, eight years ago, Toronto was my affordable option. Since then, we... [laughing] we were heading in a very one direction. But that's what's happened, migration. You lose... you lose talent, right? You lose that level in any society that will just pack and leave.

MATT GALLOWAY: The Canada Mortgage and Housing Corporation was set up in many ways to address this. What is it doing or not doing now to answer that question?

ANDY YAN: I think that what it certainly was doing was helping provide mortgages and having government-backed mortgages. And I think that it's important to kind of acknowledge the shift that just occurred I think within the last of three or four years was really the shift back into rental housing and finance of rental housing. But then when it comes to nonmarket housing, that is for populations that the market will not provide, that it hasn't been, I think, really active in that field, nor really have... have have a lot of provincial governments on a scale that really deals with the demand for that type of affordable housing linked to local incomes.

MATT GALLOWAY: All right, so think bold, both of you. I want to hear bold solutions in terms of how we address this because we know that this is a problem. We've been talking about this. We know that people are being priced out, not just of the big cities that they're in, but in many ways the smaller towns where people from those big cities have moved. So Naama think big. How do you go about addressing this issue?

NAAMA BLONDER: My answer might surprise you, but I think it comes down to keeping the public informed because the amount of or level of NIMBYs that we need to deal every time we have a new application. And the... and the really the lack of knowledge, right? The topic, and I always say that they the topics that the community chooses to fight over, which is usually hight. And oftentimes, what it ends up being, it's just, you know, two stories here and there. But let me tell you something, that these two stories won't affect that so much, the pedestrian experience or the things that the community should really fight for, such as community benefits, how the public realm will design, open space, the materials, the quality of urban design. These are the things that will affect the community the most. And that's what I'm hoping to see a shift in the discussion.

MATT GALLOWAY: Andy, how do you take it out of the hands of the market? If you want to create those creative solutions, whether it's a co-op or whether it's, as you mentioned, rent geared to income, who's going to.... who's going to create that housing? Who's going to build that sort of housing?

ANDY YAN: We talk about really bold initiative. Bill 121 over in Montreal, as well as the state of California, provides the right of first refusal for apartments that they be... that they be able to be bought by either a level government or a nonprofit partner. And I think that that is something that ought to be examined is really the offer of right or first refusal, as we've seen in Montreal, but then we've also seen in the state of California that really it's also dealing with the issue of affordability and affordability actually isn't in large scale built. It's actually something that needs to be preserved.

MATT GALLOWAY: The Liberal government has introduced a national housing strategy, 70-billion dollars, to create homes for Canadians. And I've spoken with the prime minister about this, and he's talked about the idea of housing in many ways as a right of Canadians. Is that the kind of political will, Andy, that's needed to say that this is a strategy that we need to figure out how to house Canadians, and we need to treat it like a right?

ANDY YAN: I think it's a start. That it's a... it's really just the beginning that I think that it's not only, I think acknowledging that's a right, but it's the fulfilment of that right. Previous federal governments had really maintained themselves in the in the realm of housing as really largely focussed around homeownership that I think within that shift, I think it has to be connected towards a series of commitments in terms of funding. Of funding not only in the short term but in the long term and in a number of also policies on the on the demand side. And I think that that's going to be really something that where the proof is in the pudding.

MATT GALLOWAY: Naama, in a supercharged market where there is so much money to be made should we look to the government to handle this?

NAAMA BLONDER: What we need now more than ever is a partnership between public and private sector. I don't look up to the government and believe they need to be the only housing provider in the country. I do believe that if we want things to happen and happen quickly, there's nothing like the private sector to get involved and get things done. That's why I think it's now more than ever important, especially if we want to see those family-friendly, those affordable, deeply affordable units. And there are some programs currently in the city of Toronto that take place. And this partnership is, I believe, the only solution that... that will lead to... to a better housing market.

MATT GALLOWAY: Tell me about one of those? One thing that you think is working that that's getting this right, one of those programs?

NAAMA BLONDER: Well, there's that. The one by CreateTO that is developing housing. So a third condo, third rental and third affordable that are all of them are a city-owned land near transit. So all of them are steps away from the subway station. They're currently, most of them, by the way, are parking lots. So we have the example from the Wilson subway station that is now a parking lot of 800 parking spots. And as... as we all know, we don't have a parking crisis in the city. We have a housing crisis in the city. And yet, you had, believe it or not, people really coming against these developments.

MATT GALLOWAY: If we don't get this right, Andy, I mean, we've been talking about where are we going to live, what's at stake here? Where are we going to live?

ANDY YAN: Well, I mean, I think where we are going to live is a country, I think, through which really is going to have a real big challenge in terms of economic productivity as well as growth. I think one of the interesting aspects is really how it's going to be a level of suburbanization, but not as we know it. I think that part of this, and I think this is a part of the interesting kind of aspects of what... what's going to come out of this is really the future of what we formerly called the suburbs. How and when it comes from a say, from a planning perspective, really, how other communities outside these central cities, the Mississauga's, the Surreys, the Richmonds, the Etobicokes, are really changing.

MATT GALLOWAY: And if you don't get it right, who falls through the cracks, Andy?

ANDY YAN: Folks on low income, I think that it's folks that are new to the country. I think that it's a lot of young people. Part of this is that it's losing them through the cracks because you see them on the streets on the most extreme level that we've seen some particular, I think, challenges when it comes to homelessness. And I think that that's another element to really talk about, is really that we really see the consequences on the streets of Vancouver and Toronto today.

MATT GALLOWAY: Narama, for you? I mean, what's it what's at stake here?

NAAMA BLONDER: I actually really disagree with Andy's first answer. I don't look up to the suburbs and hope the answer would come from... from there. I actually, I'm optimistic in nature. I believe the market will find its own way. And when I talk to, you know, not in my backyard attitude, I always say where... where your kids are going to live? If we... if... if millennials can no longer afford a house, so and you want your kids to to continue to live in those desirable neighbourhoods, we only have one option. And that's intensifying the neighbourhoods or grow inwards. So I... I think that would be the path. And I believe the market, in one way or another, will take us there.

MATT GALLOWAY: Where will we be in 20 years, Andy, if we don't nail this?

ANDY YAN: I think it's an interesting question. I think where would we be in 20 years? I think that we would be, I think, a country that is diminished. I think that our capacity in terms of finding a workforce would be an adequate workforce to really service an aging community I think would be, I think, greatly challenged that. I think that within 20 years, I think the... and I think it's important to note that I'm not advocating sprawl or the kind of how we've historically done suburbanization. But then, I think where we are in 20 years. I think that if we don't get on top of I think this housing crisis is really a Canada that is for the lesser.

MATT GALLOWAY: It's great to speak with you all about this. This is such a real issue for so many people in this moment. And we're worried about what's happening now and worried about what's happening in the years to come. Thank you both.

NAAMA BLONDER: Thank you.

ANDY YAN: You're welcome.

MATT GALLOWAY: Andy Yan is an urban planner and director of the City Program at Simon Fraser University. Naama Blonder is an architect and urban planner at Smart Density, an architecture firm in Toronto. Ahmed Hussain has been listening in. He's the minister of Families, Children and Social Development and the minister responsible for the Canada Mortgage and Housing Corporation. Minister, good morning to you.

AHMED HUSSAIN: Good morning, Matt.

MATT GALLOWAY: The head of the Canada Mortgage and Housing Corporation has said the dream of homeownership may be over for many Canadians. Is it?

AHMED HUSSAIN: Well, I think he's specifically referring to... to the rising... the rising cost of outright owning a home in the major urban centres, which are... which have seen dramatic increases in price. But I believe it's still within reach for many Canadians and in the majority parts of the country, in addition to the fact that the government has introduced the First-Time Home Buyer Incentive, which will enable more and more Canadians to access that dream of homeownership. However, it is also important to recognize, as you said earlier in your program, that it is also fine to... to live in a rental unit. And... and that's that's OK as well. There's nothing wrong with that.

MATT GALLOWAY: One of the reasons why CMHC and others would say that that dream of homeownership is... is... is because it's impossible for many people to even put together the down payment, think about putting together the down payment for owning a home, let alone taking that step beyond that and buying the home. Because of that, you know, bodies like the IMF, for example, have said that this is an issue of inequality. Is the government looking at intervening in the market to try and address that inequality within the housing market?

AHMED HUSSAIN: Yes, by... by helping those folks who... who do want to access the dream of homeownership. That's what the First-Time Homebuyer Incentive is all about. It is enabling people to be able to get into the market by having the government of Canada essentially get into a shared equity mortgage with individuals. So, putting the government providing five to 10 per cent of the of the value of the home in the form of a down payment. So that those folks can have not only access to the market but also lower mortgage payments going forward.

MATT GALLOWAY: What about actions beyond that? I mean, there are many people, including some economists at the big banks who say that now is the time for bold action. They'll look at a country like New Zealand, which has seen a similar eruption in housing prices. New Zealand took very strong action. There are people who are calling, for example, for the government to remove primary dwellings from the capital gains tax exemption. Is that something that your government would look at doing to take some of the steam out of this market and make it less tilted towards investors?

AHMED HUSSAIN: No, we are not doing that. We're not considering that. We are certainly doing other things. And that's what really the National Housing Strategy is all about. Matt, if you remember, the National Housing Strategy was introduced in 2017. It was 40-billion dollars at the time. It is now up to 70-billion dollars. And it it really does address a lot of housing issues right across the spectrum.

MATT GALLOWAY: What differences... what difference has it made in addressing the housing crisis?

AHMED HUSSAIN: It has made a huge difference. If you look at, for example, the Rental Construction Financing Initiative, it's about building more mixed-housing and more rental units right across the country, especially in the... in the large urban centres where there is a lot of pressure on... on a lot of upward pressure on on rental rates. And so, you know, I'll give you an example. There's a huge project that the government of Canada financed on the corner of Bathurst and Bloor, the old Mirvish Village.

MATT GALLOWAY: In Toronto?

AHMED HUSSAIN: Yeah, and that's an example of the kind of model that we're... we're... we're helping make a reality. So it includes mixed housing. It includes portions of those units are deeply affordable, some are somewhat affordable, and the rest are market rate. And then it's being... you know, obviously that project is right next to transit. You know, there's community services, there's daycares and so on. It's energy-efficient. It's accessible. That's... That's the model. And the rental construction financing should have used to be about thirteen-point-seven-five-billion dollars. In the last fall economic statement, it was increased to twenty-five-point-seven-five.

MATT GALLOWAY: But I guess going back to the question, does that cool the market at all? I mean, the market is... Is one that, as we were saying earlier, it's as though you've won the lottery. If you happen to be lucky enough to buy a house earlier on, you're now sitting on millions of dollars in many parts of this country. So are those moves going to cool the market and create the opportunities for other people to get into it?

AHMED HUSSAIN: It'll certainly... it'll do a couple of things at the same simultaneously. One is just by the folks who, and I'm talking here about, specifically, the folks who who operate our cities and make our major urban centres great places to live, paramedics, firefighters, teachers, construction workers, they're being priced out of the rental markets. And so the Rental Construction Finance Initiative is about enabling them to stay. We've also introduced something called the Canada Housing Benefit, which is about as we're building more affordable housing, as we're building more rental units, as we're building more mixed-housing, we are also not waiting for that because that also takes time. We're putting money directly in the pockets of those who can pay some amount of rent, but not enough. And so that's what the Canada Housing Benefit is. And it is the biggest chunk of that is going to Ontario at one-point-four-six-billion dollars. And it is a deep benefit in Ontario because Ontario said that, I mean, it's a cost-shared Canada-Ontario Housing Benefit. And what Ontario has highlighted and prioritized is populations that... that can't even access that that high rental rate in the major urban centres. And these are the folks that we need them to stay in the cities. We don't need them to go further and further away. And so we've introduced the Canada-Ontario Housing benefit. We're rapidly building the rental construction units. So... and it has a number of multilayered impacts.

MATT GALLOWAY: But in the... and while those impacts are important, in the meantime, what we're seeing right now across this country are renovictions, we're seeing a limited supply of low-income housing in every city. You're seeing tent cities pop up in many parts of this country in the midst of a pandemic where people are sleeping in parks because they can't find anywhere adequate to live. Just finally, if the government says that housing is a human right, how do you square that with what we're seeing right now in the housing sector, in the housing crisis in this country?

ANDY YAN: Well, first of all, let me... let me... I'm really glad you asked that question because the national housing strategy, as I said, addresses different parts of the huge spectrum of housing. So when it comes to homelessness, when it comes to folks who are either on the street or who are at risk of being homeless, women and children fleeing domestic violence, especially doing this pandemic, we brought in the one-billion dollar Rapid Housing Initiative. That is precisely targeting the building of rapid affordable housing units. Our target was 3,000 affordable housing units across the country. We will actually hit the target of... we will hit the end result of 4,777. The majority of those units are going to the most vulnerable of the vulnerable, people who are, you know, in encampments, Indigenous communities who have severe housing need. And, you know, the first 500-million of that one-billion went to the top 15 municipalities in Canada that have the highest populations of homeless individuals. So we're using evidence-based approach. When it comes to renovictions and others, as I said, the National Housing Strategy, we can't meet the targets alone. We need provincial and municipal actions. Rent control and and those kinds of pieces are obviously provincial jurisdiction. But we, again, we're doing our part with the Canada Housing Benefit. We're rapidly building. You know, the Rapid Housing Initiative, no project was considered unless they could demonstrate that they could build housing in 12 months or less, meaning people move into those units. And the folks who have successfully been picked have to commit to spending those dollars, at least commit them before the end of this month. So we're moving really rapidly. If you look at the co-investment fund, We are continuing to build, you know, deeply affordable units across the country, apart from the RCFI. Every other day, we're making announcements in major, major, you know, urban centres, but also in rural and northern communities as well.

MATT GALLOWAY: We'll hear from Canadians, I'm sure, in the wake of this conversation about whether those announcements are meeting the crisis that they're seeing at their doorstep. In the meantime --

AHMED HUSSAIN: There's always more to be done. Thank you.

MATT GALLOWAY: It's great to talk to you about this. Thank you very much. Important to have you as part of this conversation.

AHMED HUSSAIN: I appreciate it.

Ahmed Hassain is the minister of Families, Children and Social Development, and the minister responsible for the Canada Mortgage and Housing Corporation. Over to you. We want to hear about your living conditions. That's what we've called this program. What's your home buying victory or your horror story? Do you love or hate renting? Where are we going to live in the future? These are questions that we are asking you and we'd love to hear from you. You can email us: thecurrent@cbc.ca. I'm Matt Galloway. Thanks for listening to The Current. Get in touch, and we'll talk to you tomorrow.

March 30, 2021 Episode Transcript

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