The slump in new housing construction in the GTA, which is the worst observed in the past 15 years, can be addressed if one were to understand the fundamental axioms of urban economics. The land is a heterogeneous good whose fertility (profitability) varies widely over space. The provision of low productivity land in undesirable remote places does not qualify as land supply.
The objective of that policy is to reduce mortgage lending. It means that a potential home buyer who can comfortably afford the costs of buying a home (based on their actual mortgage interest rate, which will usually be less than three per cent) might not be able to get financing, because of a new, very high "stress-test" hurdle (using an interest rate that is currently 4.64 per cent, and far above actual market rates).
Housing costs continue to soar in Canada's priciest real estate markets -- in spite of provincial and federal action to slow housing activity in Toronto and Vancouver. This has left many hopeful home buyers priced out of the average detached home market. Even larger condo units are picking up speed in price.
But the biggest barrier to ending poverty is the political orthodoxy we have lived by for the past 40 or more years, grounded in austerity: That good government is small government, that social programs must shrink and that taxes are evil. It is over this period that we have seen the most dramatic rise in poverty rates and income inequality, with a concentration of wealth in the top 1 per cent. It's time for a rethink.
How long does it take the Ontario Government from the time they decide a program is needed until they actually finalize implementation? It sounds like a joke but it isn't and it is one issue raised in the 2016 Ontario Auditor General's report. The answer is close to three decades provided there are no further missteps and/or delays.
If you're lucky enough to own a small slice of the GTA's pricey property pie, you could find yourself among those vehemently opposed to any new development in their neighbourhood. After all, established Toronto hot spots like The Annex, Bloor West Village and Mount Pleasant are full, right? But here's the problem.
While the federal government is trying to rein in some of the borrowing that's taking place by making it more difficult to borrow, every one of us should take heed -- interest rates will rise. I believe the most important thing individuals should be doing is locking in their mortgages (ideally for five years).
One of the biggest factors that determines whether people will stay healthy or wind up needing emergency or chronic medical care is where they live. People without access to stable housing are at higher risk of illness, and their likelihood of recovering well from that illness is greatly diminished.
Under new mortgage rules just announced by Finance Minister Bill Morneau, all insured mortgage borrowers must now pass a "stress test" proving that they can carry a mortgage at a realistic rate (the Bank of Canada's conventional five-year fixed posted rate), and not simply the "teaser" rate offered for a short period by the mortgage lender.
Getting a first-time mortgage from a Canadian bank is like getting security clearance to work at NORAD. Income, credit history, source of down payment funds... are all key measurements to qualifying. These rules, of course, only apply to Canadians. Foreign buyers, some have speculated this week, may be receiving preferential treatment.