This article was so incredibly off-base in so many regards it requires a whole blog post to debunk it. It is rife with pro-developer neoliberal ideology, and one of the sources is quite surprising (ie disappointing).
It’s not clear if the author is 1) just reporting what these “experts” have told her completely oblivious to the fact they’re feeding her neoliberal propaganda and that it’s one-sided, or 2) she’s aware of the neoliberal bias because she shares it and is knowingly offering a slanted perspective, or 3) she is just talking to the people she was told to talk to and reporting on the subject she was told to report on and her only option to balance the information was the comment on investors at the end. Here is the article in question:
How Canada’s new immigration targets will help housing recover — and push prices higher long-term
https://www.thestar.com/business/2022/11/03/home-prices-will-benefit-from-record-high-immigration-targets-for-years-to-come-economists-say.html
I will go quote by quote debunking this claptrap…
“A record number of immigrants are slated to arrive in Canada over the next three years, potentially lifting the housing market from its current slump by bolstering home prices long-term and labour shortages in the sector, economists say.”
A record number of immigrants… only because the feds are opening that gate as wide as possible in a misguided attempt to feed the destructive and unsustainable growth economy. And anyone who’s done any deeper reading on economics knows it’s all just made up, economists live in a fantasy world of their own devising, with formulas that never match up to reality and teachings that are no more than neoliberal ideology in service to the wealthy elite. There was not one heterodox voice in the article.
Lifting the housing market from its current slump… a slump that is both natural and unable to be controlled. It is natural because of “secular stagnation“, a natural plateauing of the economy. This has happened before in the early 70s, right before our last inflationary storm triggered by the OPEC oil crisis. The slump is unable to be controlled because it’s less about a lack of housing demand than it is about the skyrocketing costs of labour (low supply) and inflation and supply chain issues of materials (high costs and low supply). These cost-raising variables make new builds a non-starter for developers, and no amount of new immigrants will change those issues.
Bolstering home prices in the long term… is desirable WHY? It’s desirable to existing homeowners worried about their equity, especially those foolish enough to have taken a new mortgage in an incredibly over-priced market the last couple years, but does nothing to counter the previously mentioned reality: THAT WE HAVE AN INCREDIBLY OVER-PRICED HOUSING MARKET. It’s quite the irony when you have politicians lamenting how unaffordable housing is yet they wish to maintain high housing prices.
Labour shortages… so we’re depending on new Canadians to build our new housing? We’ve got all kinds labour shortages in far more crucial areas (like healthcare) but the hope is that new Canadians can fill the gap in house building? Considering we don’t recognize most education from abroad I guess it’s fitting we expect new Canadians to take lower skill harder labour jobs upon arriving here. The irony is these new Canadians will be building the very rent traps that will ensure the immigrants that follow may never own property.
“But Canada’s already strained housing stock will struggle to keep pace with swelling demand.”
Um, yeah, BECAUSE THE FEDS ARE CONSCIOUSLY CRANKING UP IMMIGRATION TO FEED THAT DEMAND. It kills me how they make immigration seem like some kind of inevitable unstoppable wave of people we must prepare for, instead of acknowledging the reality that immigration is a POLICY CHOICE, and if it’s moving faster than we can absorb then the feds can just turn down the taps and let us catch up a little.
But they won’t do that because of the aforementioned secular stagnation, policymakers keep sticking to the inherently unsustainable growth economy model to which secular stagnation is kryptonite, and rather than transition into a non-growth economy that could handle the so-called stagnation, they keep doubling down on growth. The question is, is that because of a total lack of imagination, or because only the growth economy feeds the profits of the elite?
“A revamped skilled-immigration system will help target candidates with the required skills and qualifications in sectors facing acute labour shortages — such as health care, manufacturing, building trades and STEM (science, technology, engineering and math).”
So, rather than train or retrain under/unemployed Canadians, we’ll rely on people coming from afar to fill these gaps. I’m not anti-immigration, but I do have qualms with not expanding our native supply of skilled labour in favour of importing it.
“Adding newcomers skilled in building and construction will help boost housing supply, said Robert Hogue, a senior economist with the Royal Bank of Canada.
“Right now we don’t have nearly enough construction workers in the market to build the amount of housing we need, so this could be a significant help in the market,” he said.”
The amount of housing WE need? “We” meaning developers, investors, and banks, Canada has more vacant units than homeless people, the housing we existing Canadians need already exists, it’s just controlled by parasites. And even with housing every homeless person, we have ample vacant supply left, it’s just being sat on by investors and speculators.
“Ricardo Tranjan, senior researcher at the Canadian Centre for Policy Alternatives, agreed that immigration is necessary to generate economic growth, which can be done by building more homes.”
This was the disappointment, I guess the CCPA has gone full neoliberal now if they’re blindly supporting the environmental destructiveness of the growth economy and development. The irony is that they’re supposed to the the Centre for Policy ALTERNATIVES, not parroting neoliberal ideology. This reminds me a bit of the co-opting of the NDP and Greens to neoliberal interests, they had to in order to get more donations from deeper pockets. Being “progressive” in the developed world really only means being nice about things, it does not mean challenging neoliberalism and the growth economy, that’s heresy!
“Long-term, population growth also boosts home prices and values, which may help to bring the real estate market out of its slump”
I won’t bother repeating what I said above about home prices in an inflated market and secular stagnation, but I will add that we have come to rely too heavily on development for economic growth. The last few years housing’s share of GDP has grown 5 times faster than the rest of GDP. That’s a warning sign, a risk factor that we’re putting too many of our economic eggs in the housing basket.
And if we keep relying too heavily on housing to buoy up the economy eventually those chickens will come home to roost and the economy will crash simply because we couldn’t just keep adding people and housing forever. What happens to all those companies and workers that sprang up to build homes when there simply isn’t any more demand? Policymakers seem willfully oblivious to the fact that population growth the world ’round is slowing, the secular stagnation is a result of this.
“With the cost of borrowing spiking, most newcomers will likely rent upon arrival and try to purchase a home later on. (Skyrocketing rent prices could also make it difficult for newcomers to save to buy a home, Tranjan added.)”
That’s the whole plan, investors buy the housing and rent to new Canadians. It’s not at all about new Canadians ever owning, it’s about investors making permanent renters out of them. They even state the irony right there, that high rents (unreasonably high, primarily from our almost complete lack of rent controls) will prevent home ownership.
“The housing market is expected to crash — with home prices forecast to drop by at least 30 per cent by spring of 2023 — offering some relief for newcomers who are able to purchase upon arrival. “
This is wishful thinking at best, and at worst, either naivete or just plain propaganda. What we’ve seen so far with housing sales dipping is not so much a lowering of prices but rather a delisting of units. People are not going to sell at a loss, or even at a lower price than the peak, they are going to wait it out, we’re already seeing this. And with competition high, whether from existing or new Canadians, and distorting things like blind bidding still in place, there is little reason to believe house prices will really lower that much.
““Hopefully, cooler inflation will allow mortgage rates to ease in 2024, and open up a window that allows some now waiting on the sidelines to jump in,” he said.”
The only ones waiting on the sidelines who will get their chance are investors, because they have the collateral of existing homes to ensure the best buying price and the easiest-to-obtain mortgage. Banks will always be eager to give new mortgages to existing owners over new ones because the risk is less. It’s not potential homeowners competing with other potential homeowners, it’s investors competing with potential homeowners and other investors.
“While it’s unlikely the GTA and Vancouver will see prices drop drastically enough to ensure home ownership is affordable, it may force newcomers to locate to other parts of Canada that have historically seen less settlement, alleviating pressure from the country’s core urban centres, said RBC’s Hogue.”
EVERYONE knows this is a load of hooey, that’s why they keep pushing for ultra-density in urban centers, because they KNOW the vast majority of immigrants all move to the city. No new Canadian is going to realize the big city is all full up and then take the risk and move to some white-bread podunk small town where they know no one and no one speaks their language, follows their religion, or has the same colour skin as them. Not gonna happen, sadly they will sooner just all pile into the same cramped apartments as they historically always have been. That inequitable dynamic is precisely why COVID hit low income immigrants harder than every demographic except the elderly.
“Record-levels of immigration will strain the limited housing stock in Canada — forcing all levels of government to push harder on building more housing supply.”
To reiterate, this sounds like immigration is inevitable and unpreventable, instead of the reality it is a POLICY CHOICE BY THE FEDS. The only reason this is being forced is because of their desperation to keep afloat the growth economy and their inability (or unwillingness) to accept that the growth economy couldn’t last forever and we desperately need to transition into a sustainable circular economy. If record levels of immigration are going to cause strain then just TURN IT DOWN A NOTCH.
“Toronto will be expected to build 285,000 additional units by 2032. It’s a lofty goal to build on average 150,000 houses a year, since the largest number of annual housing starts since 1987 has been 100,000.”
So, is this policy aspirational… or completely irrational? If in our best times of ideal conditions we could only build about 100K, how in this inflationary environment of high interest rates and labour shortages will we ever manage 50% more than that? I’d like to know who ultimately is pushing this insanity? Is it a small collection of powerful players, or is there some collective neoliberal delusion going on here?
““Having so many immigrants come puts pressure on all three levels of government to continue to remove obstacles to help housing construction and to prioritize supply,” Hogue said.”
And by extension worsen all the emissions and environmental impacts of development. But the government doesn’t like to talk about that. And, again, the feds are putting that pressure on themselves, it’s endogenous not exogenous, these aren’t floods of refugees uncontrollably spilling across our borders, the feds control the taps.
“In the GTA, a record number of condo units were build in the third quarter of 2022 and new condos that started construction were up 45 per cent year-over-year, a new Urbanation report found. This provides more rental units and opportunity for those looking to enter the real estate market.
“In fact, lack of supply isn’t only to blame, he added. There has been outsized demand in the pandemic due to historically low interest rates, resulting in ballooning investor demand.”
And therein lies the rub, they have inadvertently revealed the neoliberal truth: new condos are NOT about owners, they are meant to be bought by investors to rent out. This is NOT what condos were originally intended for, if the intent is to supply renters with housing then we should be building RENTALS, not condos for investors to build equity on the backs of renters.
“Now that interest rates have risen quickly, investor demand has dampened, hopefully opening the doors for first-time home buyers and newcomers.“
As previously mentioned, this is more wishful thinking/naivete/propaganda. Investors have more collateral than first-time homebuyers and newcomers, who will be paying the same rates as investors. Banks will ALWAYS favour investors.
““Once the froth is taken out of the market from investors it will offer relief to those who need housing the most,” Porter said.”
Ironically, or possibly a conscious decision by the author, it ends on a note of truth, that the real problem in the housing market, the “froth” so to speak, is the actions of parasitic investors.
This disappointing and highly biased article is nothing more than neoliberal propaganda, and a textbook example of how Big Media indoctrinates the public into neoliberal ideology. People read this, and read all those quotes from “experts” (many of whom I’m sure are oblivious to the fact they are experts in an invented false reality catering to the interests of corporations and wealthy elite), and they believe it, mainly because no alternative perspective is EVER given in mainstream media. And the few publications that do offer an alternative explanation do not have the clout, reach, and air of respectability that Big Media does, and so do not resonate with the public.
Unless and until the public starts searching for truth beyond the propaganda of Big Media, we will collectively be beholden to the unsustainable destructiveness of neoliberal ideology until it is the ruin of us all. And by then there will be no websites or social media left for me to say, “I told you so.”
Adam Smith, 21st Century
