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A Phil Hall Op-Ed: I am sure you are familiar with a quote that says: “Insanity is doing the same thing over and over again and expecting different results.” I was reminded of that quote this week when learning that Canadian voters opted to continue the 10-year reign of Liberal Party, with party leader Mark Carney remaining in the job he took over from Justin Trudeau last month. While I am not a Canadian, as an outsider I am baffled at why voters would continue to support a party that created some of the worst socioeconomic problems in the nation’s history.

Under Liberal Party leadership, Canada’s housing market turned into a mess. Thanks to Trudeau and his party, Canada absorbed an excessively large number of immigrants in a short period of time – but they failed to ensure that there would be adequate housing for these newcomers. At the same time, affordable housing opportunities for Canadian citizens evaporated. Government bureaucracy designed to make things better for the housing market had the opposite effect. As a result, Canadians who wanted to pursue homeownership found themselves stymied.

In February, RE/MAX Canada’s Nation of Renters Report stated the erosion in housing affordability has been exacerbated by the Office of the Superintendent of Financial Institutions’ stress test, down payment requirements, municipal and provincial taxes, and high closing costs. The report warned that “an obvious disconnect” between homebuilders, buyers and municipalities has created a housing crisis.

“Affordability remains, by far, the greatest barrier to homeownership from coast to coast,” said Christopher Alexander, who was RE/MAX Canada’s president when the report was published. “With the average price of a home in most Canadian markets more than doubling between 2006 and 2021, first-time buyers are falling through the cracks. Rental rates that remain above historic levels, the high cost of living, and wages that have not kept pace with price growth pose a serious challenge to buyers hoping to amass a downpayment. It’s near impossible for some buyers, even with steady, well-paying jobs. The dream of homeownership is eroding further and faster than their ability to save.”

So, what is the newly minted Prime Minister Mark Carney going to do to fix this problem? Well, Carney is the former head of both the Bank of Canada and the Bank of England, so his background is in bureaucracy. Not surprisingly, his antidote to Canada’s housing crisis is more bureaucracy.

During the election campaign, Carney proposed launching Build Canada Homes (BCH), a new government agency that will build affordable housing. Under his plan, BCH will allocate $25 billion in debt financing, $10 billion in financing to affordable homebuilders and $1 billion in equity financing to Canadian prefabricated home builders. And guess who pays for all of this? Yup, the Canadians who are unable to obtain affordable homeownership.

In his victory speech after the election concluded, Carney spoke about housing by declaring: “We will need to think big and act bigger. We will need to do things previously thought impossible at speeds we haven’t seen in generations. It’s time to build twice as many homes every year with an entirely new housing industry using Canadian technology, Canadian skilled workers, Canadian lumber.”

Well, yes, Canada has plenty of lumber, and the country has technology that is both locally created and imported from other countries. But where is the skilled labor pool to build the housing? Not unlike the US construction market, Canada relies heavily on those born outside of its borders to build homes.

But as the CBC noted early this month: “Many construction organizations across the country say they don’t have enough laborers doing jobs that don’t require specialized training and the federal immigration system isn’t bringing them in. Considering the number of people expected to retire in the next few years, along with an ambitious housing target to address affordability, homes will get a lot more expensive and out of reach for Canadians.”

During the election campaign, Carney committed to building five million homes over the next decade, or 500,000 per year. In my opinion, this will not happen – not by a long shot. Carney will succeed at nothing unless he seriously addressed the core problems that drove Canada’s housing market to its current state of woe.

I’d would like to be gracious and wish Carney luck, but what’s the point? He’s the wrong man for the job and his Liberal Party’s victory in the federal election will only result in more of the same calamitous policies that hobbled Canada for too long.

Phil Hall is editor of Weekly Real Estate News. He can be reached at [email protected].

Photo courtesy of Mark Carney’s Facebook page