First of all, let me start with this:

There’s nothing that the Canadian government can do to “make housing more affordable to all.”

Hard stop.

But that’s because of the word “all,” in that all Canadians were not meant to, or should not expect to, own a home.

As I have said many times before, there is no country in the world with a 100% home ownership rate and there never will be.

But if you read comments on online newspapers (which I do simply to see how crazy people are), it seems that many Canadians feel that the government “needs to make the housing market decline by 50-80% to make housing more affordable.”

As I get older, I get much more cynical.

I think I get wiser, but you tell me…

The problem when it comes to “housing affordability” is that most people don’t define “affordability” on a relative basis.  That is, relative to wages, relative to supply and demand, relative to where this housing is located, etc.

For example, and I don’t want to sound like a broken record here, but nobody living in London, England would talk about “housing affordability” in the same way as they do in Toronto.  Your proverbial 29-year-old couple in London, England aren’t complaining that they can’t afford a single-family home in the same way as they do in Toronto.

The online comments section associated with every newspaper article would have you believe that it’s the inherent right of any two miscellaneous income earners to be able to afford a detached home in the central core of Toronto, and for that to happen, apparently, it’s the government of Canada’s job to tank the real estate market.

Of course, these folks don’t realize that if the average price of a Canadian home declined by 50-80%, the entire economy would implode, the banking system would fail, and it would be chaos never experienced before.

But these folks don’t know and don’t care.

They have their $20,000 in savings and they want to own a home in the largest city in Canada; in a world-class city.

I never expected that the much-talked-about foreign buyer’s ban would have any effect on the Canadian real estate market.

The idea, in theory, along with so many others like it, is that if we took demand out of the market, then real estate would become “more affordable.”

But “more affordable” means lower prices, and for houses to be “affordable to all,” we would have to see that 80% drop that’s never coming, and which would cripple the country.  The government knows this, of course, but all governments and all political parties pander to the uneducated for votes, and the foreign buyer’s ban was a great piece of election candy that voters wanted to think would help them.

Perhaps the desire to ban foreign buyers is rooted in xenophobia.  Perhaps it’s rooted in nationalism.  Or perhaps it’s rooted in a misguided belief that foreign buyers are secretly snapping up all of our real estate in offshore companies, rooted in the Cayman Islands, thereby making it “unaffordable” to lowly Canadians.

If you read as much as I do, you’ll see some crazy theories out there!

And while the foreign buyer ban isn’t going to have an effect on the housing market such that housing may be “affordable to all,” there are going to be people who might have bought in Canada, but didn’t.

I had one such experience last month.  It’s the first person I’ve seen actually affected by the foreign buyer ban.

Clients of mine who had lived in Canada for twenty years, who run a business here in Canada, but who live in the United States full time, had previously owned a condo in downtown Toronto.

They used the condo as a pied-a-terre for family, friends, and themselves for both business trips to Toronto and pleasure.

They sold that condo years ago but were considering buying another one this year as business in the city was ramping up.

I showed them a few places in February and we were contemplating an offer one, but before we could take the next step, I asked them, “Are you guys able to buy here, based on the foreign buyer’s ban?”

They figured that they could.  There were ways to make it work within the family, many of whom are Canadians, living in Toronto.

But when push came to shove, they decided not to purchase, as they were indifferent to whether they owned a condo downtown or whether they stayed at the Royal York when they came into the city.

So there you have it.

That’s one property in Toronto that would have been bought buy a so-called “foreign buyer” if not for the ban.

If all we need is a sample size of one to tell us that the ban is working as planned, then I think we have it.

Earlier this week, the Minister of Housing and Diversity and Inclusion announced amendments to the foreign buyer ban, known as the Prohibition on the Purchase Of Residential Property By Non-Canadians Act.

The amendments were seen by many as “loosening” the restrictions or even “undoing” the ban.

Was that an overreaction?  Or was it fair?

Here’s the press release from the CMHC:

“Amendments To The Prohibition On The Purchase Of Residential Property By Non-Canadians Act’s Accompanying Regulations”
March 27th, 2023

From the release:

Today, the Honourable Ahmed Hussen, Minister of Housing and Diversity and Inclusion, announced amendments to the Prohibition on the Purchase of Residential Property by Non-Canadians Act’s accompanying Regulations.

The Act was passed by Parliament on June 23, 2022, and the Act and Regulations came into force on January 1, 2023, as part of the Government of Canada’s strategy to make housing more affordable for Canadians. The accompanying regulations were developed for the Act to set out specific exceptions, definitions, and clarifications necessary to implement the prohibition.

To enhance the flexibility of newcomers and businesses looking to add to Canada’s housing supply, the Government of Canada is making amendments to the Regulations, to expand exceptions to allow Non-Canadians to purchase a residential property in certain circumstances. These amendments will further support individuals and families seeking to build a life in Canada by pursuing home ownership in their communities sooner and address housing supply issues. These amendments come into force on March 27, 2023.

Again, note the words “….Canada’s strategy to make housing more affordable to Canadians,” which I loathe.  But I think I’ve already beaten that horse to death and beyond.

Then we get the words “to enhance the flexibility.”

This could be used in so many examples of political rhetoric.  It’s what a government says when they want to spit-polish whatever idea they’re about to put forth.

But it’s the contradiction that follows that really irks me:

“These amendments will further support individuals and families seeking to build a life in Canada by pursuing home ownership in their communities sooner and address housing supply issues.”

You can’t have it both ways.

Right?

This is crazy talk.

Either the foreign buyer’s ban will work and housing will become more affordable, or, allowing more people to “build a life in Canada by pursuing home ownership in their communities sooner” will undo whatever supposed affordability would have been created.

And what is this at the end – this “….and address housing supply issues”?

What is that?

The entire press release was written in a way that contradicts the contradictions.

As for the amendments, there they are:

Enable more work permit holders to purchase a home to live in while working in Canada.

The amendments will allow those who hold a work permit or are authorized to work in Canada under the Immigration and Refugee Protection Regulations to purchase residential property. Work permit holders are eligible if they have 183 days or more of validity remaining on their work permit or work authorization at time of purchase, and they have not purchased more than one residential property. The current provisions on tax filings and previous work experience in Canada are being repealed.

Are a lot of refugees purchasing residential property?

I must have missed that.

Are so many refugees purchasing property that it necessitated an amendment to legislation that, apparently, would help with “housing affordability?”

Or maybe this was just included so it takes the eyes off the next three sections…

Repealing existing provision so the prohibition doesn’t apply to vacant land.

We are repealing section 3(2) of the regulations, so the prohibition does not apply to all lands zoned for residential and mixed use.  Vacant land zoned for residential and mixed use can now be purchased by non-Canadians and used for any purpose by the purchaser, including residential development.

This actually makes sense.

We have a housing affordability problem.

Which is because we have a housing supply problem.

Which is because we have a housing building problem.

Ergo, if somebody, somewhere steps up to the plate and says, “I’ll build housing for you,” we should allow them to.

Right?

In a perfect world, that person would be John J. Canadian, but beggars can’t be choosers, and given our housing supply problem in this country, we are certainly now in the “beggar” category.

As though this section isn’t clear enough so that we may connect the dots and see that the government is paving a way for housing to get built, it most certainly is spelled out in the next section:

Exception for development purposes.

This exception allows non-Canadians to purchase residential property for the purpose of development. The amendments also extend the exception currently applicable to publicly traded corporations under the Act, to publicly traded entities formed under the laws of Canada or a province and controlled by a non-Canadian.

Holy Cow.  I never thought I’d see the day.

It seems as though the federal government has finally clued in.

The federal government wants housing to be built.

So what should the federal government not do?

Ban people from buying property to develop it.

I know, I know.  In a perfect world, John J. Canadian would be doing all the development in our country, but what if we can’t create our perfect scenario and have to allow others to do it for us?

It’s like the people who clamour, “We shouldn’t buy everything from China.  We should only buy goods produced here!”

That’s very noble, but when the cost of every-day goods goes up by 600%, I urge you to remain noble.

Then there’s this:

Increasing the corporation foreign control threshold from 3% to 10%.

For the purposes of the prohibition, with regards to privately held corporations or privately held entities formed under the laws of Canada or a province and controlled by a non-Canadian, the control threshold has increased from 3% to 10%. This aligns with the definition of ‘specified Canadian Corporation’ in the Underused Housing Tax Act.

This is either completely reactive or it’s simply a way for the government to pat themselves on the back with reference to their Underused Housing Tax Act.

Sidebar: the underused housing tax seems to be a way for the government to collect and database just an absolutely astounding amount of information on individuals and corporations across the country, but maybe that’s a topic for another day.

All in all, these amendments can be viewed in many different ways.

Here’s the federal minister’s view:

“To provide greater flexibility to newcomers and businesses seeking to contribute to Canada, the Government of Canada is making important amendments to the Act’s Regulations. These amendments will allow newcomers to put down roots in Canada through home ownership and businesses to create jobs and build homes by adding to the housing supply in Canadian cities. These amendments strike the right balance in ensuring that housing is used to house those living in Canada, rather than a speculative investment by foreign investors.”

This is silly, right?

“…to create jobs and build homes by adding to the housing supply in Canadian cities.”

At first, the Act was intent on banning foreigners from buying homes.

Now, the Act is intent on helping refugees buy homes and foreign corporations build them?

There’s so much nonsense in all this, it makes my head spin.

Do you want my cynical view?

Okay, you can have it.

Housing is not affordable in Canada, according to the definition of “affordable” that society has created, and that the federal government has perpetrated.

In order to gain any relief from price escalation, we need an increase in supply, a decrease in demand, or both.  Likely, both.

The “foreign buyer ban” was included within a much larger act that would have stopped many existing or future housing developments in their tracks.

The government realized this and they acted, albeit reactively, as they always do, but kudos to them for reacting.

In the end, nobody is really watching.

The election is long over and the promises to “make housing affordable” and to “ban foreign buyers” aren’t in the news cycle anymore.  So when the government realizes that their “ban,” via their Act, is going to actually decrease the number of homes built, they simply undo the damage while nobody is paying attention.

This is bittersweet.

The amendments make sense.

The amendments are great!

But only because they’re going to undo some really poorly-thought-out, really misguided, really bad public policy…