three myths about the real estate landscape in the country – The initiative

Certain myths that tend to overshadow the full extent of the housing crisis in public discourse persist. Although the Legault government itself has added its voice to the consensus that this crisis does indeed exist in Quebec, a new study published today shows that governments must change their approach to measuring and ensuring accessibility in housing material. Entitled Three myths about the real estate crisis, the socioeconomic fact sheet is made public by the Institute for Socioeconomic Research and Information (IRIS). “In the real estate market, it is clear that there is an affordability crisis that prevents households to respond adequately to their need for housing,” says Marie-Sophie Banville, associate researcher at IRIS and author of the socio-economic sheet. However, the persistence of certain myths concerning the real estate market and access to property is hindering the resolution of this crisis.

A recognized crisis
• Myth #1 — Montreal is more affordable than Vancouver and Toronto
• Myth #2 — We need to increase the supply of housing
• Myth #3 — Young people dream of owning a home

When we compare Montreal to last class
“We often console ourselves by saying that in terms of affordability, Montreal does much better than Vancouver and Toronto. This is without taking into account that these two towns are at the bottom of the class,” explains Ms. Banville. According to Oxford Economics, Vancouver is the most unaffordable city in North America, followed closely by Toronto. For its part, Demographia positions Vancouver and Toronto as the third and tenth most unaffordable cities internationally. “Too often, we forget that the Quebec metropolis is evolving in the Canadian real estate market, which is one of the most unaffordable in the world,” emphasizes Marie-Sophie Banville.
Montreal, more affordable than the others?
Among the myths, we find the idea that Montreal is an affordable city. However, the new housing price index there rose by 314% between 2000 and 2022. This is a faster upward trajectory than that of other major North American cities such as Los Angeles (+296%), San Francisco (+267%) or New York (+158%). This dazzling increase in house prices over resales is now harming both aspiring owners and tenants, whose rents are under pressure in the face of soaring real estate prices.

More construction starts to solve the problem?
To solve this problem, many argue that we simply need to build more housing. However, this idea hides the fact that governments, starting at the federal level, stimulate demand more fervently than they support housing supply. In fact, the support measures for access to property and public participation in mortgage financing have contributed in recent years to causing demand to grow faster than supply, a situation that is causing real estate prices to the rise. “The housing shortage is doomed to remain chronic if Ottawa’s approach, which focuses on stimulating and supporting demand, is not thoroughly reviewed and corrected,” analyzes Ms. Banville.

The federal government must stop stimulating demand
Measures aimed at “building blocks” can generate a sustainable supply of affordable housing (cooperatives, land trusts, social housing, etc.) in response to the various housing needs of the Canadian population. But in order to better protect the right to housing, public policies must also stop fueling demand by focusing on measures of the “personal assistance” type, both in terms of rental housing and access to the property. Mrs. Banville concludes that “this government will not be able to achieve its own objectives of improving the housing supply (for example the construction of 160,000 new units within the framework of the National Housing Strategy) if it does not weigh on the brake of a demand that he stimulates himself”.