Not getting it

Lost, but unforgotten in these Trumpian times, is the fact kiddos can’t buy houses.

This week Pierre Poilievre stepped in it by saying 36-year-old women are getting antsy about real estate affordability because “their biological clocks are running out.” Oops. There’s a lot of stuff you can say about the femmes. But not that.

While scads of people have children without also having a mortgage, in PP’s world that’s apparently not possible. So time is of the essence and he’d like the so-called housing crisis to be a bigger issue than fighting the orange guy (a battle Carney’s winning).

So let’s yak about how the two major parties would deal with clocky women and their mates. (The NDP wants the government to start handing our low-rate mortgages. But Jagmeet is irrelevant. His party may end up with fewer seats than your car.)

The Libs propose a new agency – Build Canada Homes – to throw up half a million units a year, “and get the federal government back into the business of home building, by acting as a developer to build affordable housing at scale, including on public lands.” That would be greased with $25 billion and focus on pre-fab housing, “using Canadian technologies and resources like mass timber and softwood lumber, to build faster, smarter, more affordably, and more sustainably.”

Another $10 billion would be available in cheap financing for home builders, and the Carney crew makes the usual vow (like the Cons) to cut red tape, force development charges lower and trash zoning. There’d also be a tax incentive to build new rental units, elimination of the GST for newbie buyers and the conversion of offices into homes.

Maybe that would help. Maybe not. Like all politicians and governments, these guys still cling to the build-build-build solution to a problem that’s all about affordability.

And the Conservatives?

More building fetish, and a promise to punish cities and towns that don’t goose housing starts. But there’s also a new wrinkle – the Canada First Reinvestment Tax Cut. Any person, any business or any corp selling an asset and realizing a profit would pay no tax on that gain if the money were invested in Canada. The deal would stand until the end of next year, but could be made permanent.

It could be “rocket fuel for our economy,” says Poilievre. “It will incentivize investors—from small business owners, to farmers, to homebuilders—to reinvest and build things here in Canada.”

Capital gains tax would not be eliminated, however it could be effectively deferred – maybe forever. But this inventive to reinvest could also have an unintended consequence – like making it even more attractive for people (and corporations) to snatch up investment properties and drive prices. “It risks worsening affordability and further entrenching the financialization of housing,” says broker and property guru John Pasalis (who still hates me).

“While this policy could encourage more rental construction,” he says. “it carries significant downsides when applied to other areas of the housing market – particularly owner-occupied homes and investment properties. By allowing investors to defer capital gains taxes, the policy makes real estate an even more attractive investment vehicle.

“For baby boomers sitting on substantial home equity or corporations with deep pockets, Poilievre’s plan provides an opportunity to roll over their profits into more properties without facing an immediate tax hit. This could lead to more speculative investment in the housing market, driving up prices and making it even harder for young Canadians to enter the market. As a result, homeownership would move further out of reach for younger generations, who are already struggling to save for down payments amid skyrocketing home prices.

“It’s also clear that this policy is aimed at attracting the boomer vote, but it does so at the expense of younger Canadians who are being priced out of homeownership… If Poilievre’s plan moves forward without addressing these unintended consequences, it could deepen generational divides and accelerate the transformation of Canada’s housing market into a vehicle for wealth accumulation – rather than a system that provides secure and affordable homes for Canadians.”

In short, they don’t get it. Years and years after it became evident the Canadian real estate market has choked on speculation and over-investment, due mainly to the cap gains tax exemption for principal residences, making property flips even more profitable ain’t the answer. Nor is spending more billions to encourage the construction of millions of new units when the ones we have available languish unsold.

The tax system needs a reset. What homeowners get, renters should also enjoy. If the PR exemption cannot be eliminated it should be capped, and tenants given an equal chance to avoid having capital gains on other kinds of assets. Make owning less attractive. Make renting more beneficial. Then values will adjust.

And let’s do it soon. Because, you know, the clock…

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Source: https://www.greaterfool.ca/2025/04/02/not-getting-it/