Douglas Todd: 'Get real' estate! Five reasons to doubt Trudeau’s housing promises
Opinion: In light of the prime minister showing no previous intent to protect the young from soaring prices, it is stunning to see him now act like a white knight taking on an unjust real-estate systemPHOTO BY COLE BURSTON /The Canadian Press files
Justin Trudeau has abruptly switched into the role of housing-affordability radical.
But it remains to be seen how many Canadians will buy the Liberals’ brazen new wave of promises — including a ban on foreign purchases, a tax on property flipping and restrictions on exploitive real-estate agents — since there is much cause for skepticism.
Weighing the party’s credibility is crucial since polls are suddenly showing housing affordability (not COVID) is one of the electorates’ top concerns. That’s like the B.C. election in 2017, which saw provincial Liberal leader Christy Clark, who relied heavily on developer donations, turfed in favour of the NDP.
All federal parties’ housing platforms require scrutiny, but here are five reasons voters are justified in feeling suspicious about the prime minister’s sudden conversion to housing activist, a persona he adopted last week to profess: “You shouldn’t lose a bidding war on your home to speculators. It’s time for things to change.”
1. Trudeau has done remarkably little to address an expanding housing crisis
Housing prices across the country have jumped more than 50 per cent cent on average under Trudeau’s watch.
This glaring reality was captured in a recent devastating sound bite, when a heckler at a Trudeau rally in Ontario bellowed: “You had six years to do something. You’ve done nothing. These houses are worth $1.5 million. Are you going to help us pay $1.5 million? Are you, buddy?”
While in power, Liberal promises to address soaring prices have added up to zero. Take, for instance, the commitment Trudeau made in B.C. during the 2019 campaign, to bring in a one-per-cent tax on purchases by “non-resident, non-Canadians.” Nothing happened.
Similar vacuous pledges came to mind last week when the Trudeau stole the Conservatives’ idea to place a two-year ban on all foreign property purchases. Only two months earlier, the Liberals had voted against a Conservative opposition-day motion to do just that.
Many Liberals, federal and provincial, have long claimed it’s xenophobic to restrict foreign buyers in Canada. They’re only now toning down their race-baiting.
The Liberals have long failed to address foreign capital flooding into real estate — as revealed, yet again, this week. A South China Morning Post article by Ian Young showed Ottawa spent five years covering up an old Canada Revenue report detailing how “rich migrants made more than 90 per cent of luxury purchases” in Burnaby and Coquitlam “while declaring refugee-level incomes.”
It also became even harder in the past few days to accept Trudeau’s authenticity on taxing house flipping when it was uncovered the Liberals’ star candidate in Vancouver-Granville had flipped 21 properties. Liberals’ coziness with real-estate insiders runs deep (as it does for many politicians).
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2. The Liberals have purposely increased ‘demand’ for housing
It was more than odd when Trudeau came to Vancouver in August and said “you’ll forgive me if I don’t think about monetary policy … You’ll understand that I think about families.”
It’s impossible to believe the prime minister doesn’t comprehend that monetary policy — in the form of extremely low interest rates and his government’s rapid printing of money in response to the pandemic — have helped jack up prices.
While the Liberals are joining the Conservatives and NDP in making big pledges to increase the construction of housing, many analysts are shocked that some promises Trudeau is making will further inflate prices.
Trudeau’s talk about tax-free housing accounts for first-time buyers, along with other credits, will super-charge demand even more, particularly among young people who can’t afford to stretch further. The size of new mortgages in Canada are soaring far into the danger zone.
It looks, however, like many millennials aren’t buying the new Liberal rhetoric; Leger polling has found the party has been losing support among young adults.
3. Ottawa has done little to combat money laundering via real estate
Prominent housing analyst Stephen Punwasi says former Vancouver Sun reporter Sam Cooper’s book, Wilful Blindness: How A Network of Narcos, Tycoons and CCP Agents Infiltrated The West, is “the most important book on Canadian real estate you’ll read this year.”
Wilful Blindness describes how transnational multi-millionaires and criminals, rooted in China, Mexico and elsewhere, have exploited the country’s real estate, which is “Canada’s soft spot for economic infiltration.” Cooper’s book describes many egregious examples of how “dirty” offshore money has been transformed into “clean” money through Canadian housing, especially via property flipping.
What have the Liberals done to crack down on money laundering in urban real estate? Though the Liberals said they would gradually direct $69 million into strengthening RCMP investigation of money laundering, B.C. Attorney General David Eby and others have urged Ottawa to go much further — and institute U.S.-style racketeering laws, which are credited with dismantling Mafia families.
4. The Liberals keep hiking immigration levels
Economists — from banks, universities and developers’ organizations — have in recent years acknowledged one of the biggest factors affecting Canadian housing and prices is population growth through immigration.
Despite, or because of, this, Trudeau has steadily increased Canada’s immigration target since being elected in 2015, hiking it from 250,000 to 400,000 a year, with B.C. an especially popular destination.
UBC geographer Dan Hiebert has found the typical value of a detached Metro Vancouver home owned by a new immigrant in 2017 was $2.3 million, $800,000 higher than a dwelling owned by a Canadian-born person.
An SFU study found “hidden foreign ownership,” particularly through satellite families in which breadwinners make their money offshore, is a significant reason prices have no connection to local wages. It all adds up to help cut into the hopes of both domestic Canadians and newcomers with modest resources.
5. It’s worse than ironic Trudeau now says, ‘The deck is stacked against you’
In light of the prime minister showing almost no interest in protecting the young from soaring prices, it was more than perplexing to last week see him act like a white knight taking on an out-of-control real-estate system.
Who knows if the identity switch will get votes? But Trudeau’s latest self-image echoes that of the Liberals’ talkative housing secretary, Adam Vaughan, who in April let slip that Canada is “a very safe market for foreign investment, but not a great market for Canadians looking for choices around housing.”
While Vaughan revealed the Liberals’ strategy has been to support “a very good system of foreign investment creating a lot of new housing in Canada as we add immigrants and grow the population,” he cautioned it would be terrible to bring in any policy that could cause homeowners to see “10 per cent of the equity in their home suddenly disappear overnight.”
There it is. Two months ago the Liberals were firmly on the side of homeowners wanting to profit. Last week Trudeau suddenly became a champion of those frozen out of ownership.
You’re forgiven for thinking you are witnessing pure electoral posturing.
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