Canada’s False Housing Crisis
By Ryan Goldsman, CFP®, PAIP®
Don’t let the headline fool you, Canada does have a housing crisis, but it was 100% preventable and still is. The housing crisis has not resulted from a failure to act, but instead has resulted from action taken by the Federal government.
As we know, Canada has close to 40 million people, some of which bring new children into the world each year, while others unfortunately leave the world each year. When considering these two factors together (the birth rate minus the death rate), we arrive at the rate of natural increase.
Over the past decade, the total number of births have typically ranged between 360,000 and 385,000 per year, while at the other end of the spectrum, deaths have ranged between 250,000 to 320,000 per year (and is showing an upward trajectory). Much of this information is available on statista.com and is taken from Statistics Canada.
When considering the birth rate and the death rate in any country, there is a certain continuity to the needs of the population – they can more easily be anticipated since the numbers are known in advance. If there’s a large influx of students in grade school, then in five to ten years, there will probably be a large influx of students in middle school and high school. It’s kind of obvious.
Dovetailing with this is the need for housing. As this large influx of students become adults, they will obtain full-time employment and need a home to live; their own home that is.
Getting back to the country’s shortage of housing, we left out a very important factor: net migration.
On an annual basis, Canada is expected to lose between 35,000 to 50,000 people to other countries, but are expected to welcome more than 400,000 people from abroad. As a result of positive net migration, the country needs additional housing. Each person that comes to Canada (or is already living in Canada) needs a place to live, if not, they’re homeless.
At the current time, Canada has a clear imbalance between the supply of housing and the demand for housing.
To alleviate this imbalance, the federal government has the option of reducing the total number of new immigrants coming into the country, at least temporarily, until the imbalance is corrected.
But that’s not what they’ve done! Instead, they are increasing the number of new immigrants coming into the country.
From a social perspective, there are many good reasons to encourage immigration, and I’m all for it. From an economic perspective however, our governments need to take care of those inside the country before welcoming newcomers from elsewhere, even if it means a greater challenge for our politicians.
What many individual Canadians may not be aware of is that new construction is one of the most favorable economic indicators available. For each new home build, it can translate to close to five full-time jobs. What government wouldn’t want to encourage immigration? It’s a positive economic driver and gets more Canadians to work, both directly and indirectly. The economy does well, the government looks good, and the budget gets balanced. On the voting side, many new voters will be reunited with their loved ones, often translating to a vote for the party that welcomed them and their loved ones. What politician doesn’t want more votes?
Let’s not assume that running a country is easy. Difficult decisions must be made, but the “housing crisis” is not one of them. In order to take care of existing Canadians first, immigration must be reduced or at least slowed down, at least temporarily. Once we’ve taken care of business at home, then we can welcome new friends.