Battleground Toronto voters split on hopes for housing market –

rpjHomeConstruction004 Homes under construction in the Toronto suburb of Markham in January 2020 (Rene Johnston/Toronto Star)

Residents of battleground ridings in the Greater Toronto Area agree that housing prices are sky-high — and polling shows many hope for a market crash.

But as housing affordability becomes a key theme in this federal campaign, the same polling suggests that any politician seeking to court those votes needs to tread very carefully.

A spring survey by the Angus Reid Institute found 61 per cent of GTA residents think housing prices are “unreasonably high,” while another 27 per cent described them as high, but understandably so, given where they are.

Only eight per cent described prices as “reasonable,” and one per cent — there’s always someone — said they might be a bit low.

And yet, these coveted voters are split on what to do about it, the pollster said. It found that 45 per cent of GTA residents want prices to fall significantly, or even slightly, and 39 per cent actually want them to keep going up slightly or significantly — with “significantly” defined as a 30 per cent change in prices.

According to the polling, the division breaks down along lines of self-interest: whether or not the voter is currently invested in the market.

“I would point out that 45 per cent of people in the GTA wanting housing prices to fall is actually massive, especially the 28 per cent who want prices to fall by 30 per cent or more,” said Shachi Kurl, president of the Angus Reid Institute. “That would amount to a crash.”

“But indeed, for newer owners, those who purchased in recent years, and given the debt burden they’re now carrying, the thought of seeing their asset depreciate would be terrifying.”

And yet, some Canadian politicians are having surprisingly adult conversations about housing affordability, says Mike Moffatt, an economist with the Ivey School of Business and Smart Prosperity Institute who’s studied the GTA housing market extensively.

“It’s not trying to engineer a price drop,” he said, “but trying to create the conditions again, where, if you want to live in Toronto or the GTA, you can, and there’s a place for you.”

And that’s where Erin O’Toole is succeeding, said Moffatt.

“It’s time to face the facts: We have a housing crisis in Canada,” the Conservative leader said, announcing his housing plan to reporters on Thursday. “The supply of homes to own, as well as to rent, is not keeping up with our growing population.”

That’s in line with Moffatt’s research, which has found that Ontario has gone from adding 120,000 people to its population a year to more than 200,000, due to changes in immigration patterns and an influx of international students. That’s doing wonderful things for the economy, but it’s pushing up the already-hot demand for housing in the GTA, and causing it to spill out across southern Ontario. As a result, he’s found there are fewer households in the province — meaning there are more people living with relatives or roommates — than there would be in a less expensive market.

O’Toole is promising to build one million homes over three years by freeing up government-owned land, and by pushing municipalities to increase density near public transit by making it a condition of transit funding.

Promising to build and densify could be seen as politically courageous, according to Moffatt, and housing politics are hyper-local: Any attempt to build housing will have its opponents — and all parties have local candidates who’ll be vying for their votes.

At the provincial level, Ontario’s Progressive Conservative premier has run into this kind of pushback, Moffatt noted. Having made a similar promise to build, Doug Ford has come under fire for trying to expedite projects by overriding local planning authorities, consultations, and environmental processes by minister’s fiat.

On the other hand, O’Toole has also made promises that are politically popular.

He’s promising to make mortgages more affordable for first-time homeowners — encouraging seven- to 10-year terms, easing stress-test requirements, and expanding eligibility for mortgage insurance — and while that might win him votes, he risks worsening the affordability problem by encouraging higher participation in bidding wars, said Moffatt.

“I understand the politics of it,” he said, “but at a macro level, it tends to make the problem worse, not better.”

But policies that target first-time homebuyers have been adopted by all major parties, all seeming to promise access to the market without threatening the value of homes, he noted. For instance, the NDP wants to reintroduce 30-year mortgages insured by the Canada Mortgage and Housing Corporation for first-timers.

All parties are promising to reduce speculation in the market, as well.

“One of the big things we want to do … is (get) the big money out of housing,” said NDP Leader Jagmeet Singh at his news conference on housing affordability on Wednesday.

The NDP is proposing a 20 per cent foreign buyer’s tax on the sale of homes to individuals who aren’t Canadian citizens or permanent residents, something Singh says will prevent foreign speculators from competing with Canadians in bidding wars. The Conservative party says it would ban foreign investors from buying homes if they don’t plan to live in Canada. Both parties are promising to crack down on the laundering of money through the real estate market. And while the Liberals haven’t released their housing platform yet, they promised a tax on foreign owners of underused residential real estate in the last budget.

Moffatt said they’re all good ideas, but they’re not nearly as effective as dramatically expanding supply.

“Ultimately, (it won’t) address the core (problem), which is that … too many families are chasing too few homes,” he said. “And unless you address that, you’re just tinkering at the margins.”