And it’s going against what people want.
Canada is the world’s second largest country.
We have a larger land mass than the United States, China, India, and Brazil.
The only country bigger than ours is Russia, with a population of 144 million people.
By contrast, Canada has a population of 37.5 million.
In short, of all the big landmass countries on Earth, we have the smallest population.
Canada is – literally – almost all empty space.
And while much of the country is indeed quite cold, there are huge swaths even in the ‘denser’ southern regions where there is lots of empty space.
Just consider the span from Winnipeg to Brandon.
In the US, a ‘major’ city and a smaller city would have a large amount of population in between, whereas in Manitoba there is very little.
And in colder parts of the country, we still have the ability to build and expand towns and cities.
All of this is to say there is no excuse for Canada to have any housing market problems.
And yet, a new Bloomberg article talks about Canada’s insane housing market, and says we are ‘running out of land.’:
“Canada’s housing market is running hotter than just about anywhere else in the world.
But despite the anxiety about irrational bidding wars and fears of the bubble bursting, what’s fundamentally driving it is a worsening imbalance between supply and demand: Buyers want large homes but increasingly can’t have them because there isn’t enough space in and around the major cities where people work.
The world’s second biggest country by landmass is effectively running out of space, and that has Canada on course for a reckoning. The dream of a detached home and a piece of land, which generations of Canadians have taken for granted, and which continues to entice new immigrants, may soon be out of reach in the places where people want to live. That could force an expansion of the idea of home to include condos and rentals, potentially transforming how the middle class does everything from raising families to saving for retirement.
“Running out of land in Canada is a relatively recent phenomenon compared to Europe, or Japan, or other parts of the world,” said Robert Hogue, an economist at Royal Bank of Canada. “I think that for future generations, homeownership is going to look a lot more European, for example, than it does today.””
Of course, the idea of Canada ‘running out of land’ is absurd.
What is instead happening is political choices, made by politicians and interest groups that want to pack people into dense cities, are denying people what they want.
In a reasonable market, an increase in demand leads to an increase in supply.
But as Canadians continue to want to live in single detached houses, developers are instead building condos and apartments:
“Nearly 60 per cent of home sales last year in 18 communities in and around Toronto, Montreal, Vancouver and Ottawa were for single-family detached houses, according to data compiled from local real estate boards by Bloomberg News. Only about a quarter of the sales in these places were for apartments.
But when you look at what has been built in these same cities and their nearby bedroom communities over the last decade, the percentages are exactly reversed: 60 per cent of new housing stock is apartments, and just 25 per cent detached houses, according to government data compiled by Bloomberg. That mismatch has forced desperate bidders to vie for an increasingly constrained supply of single-family homes. In 2020, Canada’s benchmark home prices gained almost 15 per cent, with only Luxemburg posting a bigger increase, according to a data from the Dallas Fed.”
An economist points out that it’s an issue of what is being built, and what isn’t:
““If there is a problem it’s in the composition of the new supply,” said Robert Kavcic, an economist with the Bank of Montreal. “We don’t build single detached homes anymore. And it just so happens from a demographic perspective that’s what the market demands. So we’re kind of stuck on that front.””
As if that’s not enough, Canada’s immigration surge will make things even tougher for those trying to get a home:
“Canada is going to need more apartments too, especially as Prime Minister Justin Trudeau moves to boost immigration to historic records to make up for the pandemic lull. The country has a shortage of homes generally, posting the lowest number of housing units per 1,000 people among Group of Seven countries, according to a recent report from the Bank of Nova Scotia.”
The article also points out how restrictions on development have turned cities into islands:
“City-specific factors have constrained land use even more. Vancouver is squeezed between the Pacific Ocean and the mountains; provincial regulations against urban sprawl have effectively turned Toronto and Ottawa into islands for the purposes of development; and Montreal actually is an island.”
It’s important to note that even if you live in a part of the country where there aren’t huge restrictions on development, you are still impacted by it.
If the housing market in a city like Toronto or Ottawa is artificially inflated, people will seek to move elsewhere, driving up the price of housing across the entire nation.
A completely artificial crisis
In a sane world, the government would seek to help Canadian Citizens.
We would reduce immigration levels, provide incentives for the construction of detached houses, and rescind many of the development restrictions that are artificially constraining supply.
We would also stop printing an insane amount of money and return to ‘Sound Money,’ getting ending the absurd distortion that is wrecking the economy.
The fact is, the housing affordability crisis in Canada is 100% artificial.
An entire generation is being denied the simple Canadian dream of owning a home, all because a bunch of politicians (the vast majority who are themselves homeowners), have decided to impose their vision of densely packed cities on all of us.
If this is not reversed, Canada will increasingly become an absurdity:
A nation full of empty space, with a bunch of densely packed cities that resemble the teeming metropolises of developing nations.
Again, as we saw above, Canadians clearly don’t want that future.
People want space for themselves and their families – a very natural human desire.
The Canadian government should be serving the people of this nation and making the dream of home ownership possible, rather than packing us all together against our will.