Housing crisis

These 3 Myths About Montreal’s Housing Crisis Could Be Making It Worse — Have You Fallen In Love With Them?

The housing situation in Montreal is so bad that the city has been firmly ejected from its once-respectable place on global real estate affordability lists. But the Institute for Socio-Economic Information and Research (IRIS) says there are three myths – about how we compare to other cities, the current housing supply and the role of governments in the situation – that overshadow the full extent of the local housing crisis.

A new IRIS study not only contradicts misconceptions about Montreal’s size relative to other cities, whether more homes should be built and whether the government should be seen as a housing ‘saviour’, but also highlights how these beliefs could harm the future of the housing market.

The claim that Montreal is more affordable than Vancouver or Toronto, for example, is the first myth that the IRIS report aims to deconstruct.

“Too often, we forget that Montreal operates within the Canadian real estate market, which is one of the most unaffordable in the world, said Marie-Sophie Banville, associate researcher at IRIS who conducted the study.

“We often take comfort in saying that in terms of affordability, Montreal is better off than Vancouver and Toronto, but that doesn’t mean that these two cities are at the bottom of the list,” Banville said.

Vancouver is the most unaffordable city in North America, followed by Toronto, according to this year’s Demographia International Housing Affordability (DIHA) list. The cities rank as the third and tenth most unaffordable cities in the world, respectively.

Any city with a median cost of housing above 5.1 is considered “extremely unaffordable”. Toronto came in with a median of 10.5, while Vancouver hit 13.3. Montreal, while not as bad, is still in the severe zone, ranked at 6.1.

Additionally, the IRIS report revealed that the price index for new homes in Montreal has increased by 314% between 2000 and 2022. This is a more dramatic price change than that experienced by some of the largest North American cities, including Los Angeles (+296%), San Francisco (+267%) and New York (+158%).

But Banville warns of the risk of falling into the trap of calling for more housing to be built. Federal initiatives to make housing more affordable fuel demand at an unattainable rate, she said.

Support measures, such as public mortgage financing, have caused demand to grow faster than supply, causing house prices to escalate at an unprecedented rate in recent years.

“The housing shortage is bound to remain chronic unless Ottawa’s approach of focusing on stimulating and supporting demand is reviewed and corrected,” Banville said.

Measures that generate a sustainable supply of affordable housing, such as co-ops, land trusts and social housing, are more effective in meeting Montreal’s housing needs, Banville argues. Public policies must also stop fueling demand by favoring “personal assistance” in terms of rental housing and access to property.

“The government will not be able to meet its own targets for improving housing supply, even if it continues to build 160,000 new homes per year. National Housing Strategyif he ignores the demand he is driving,” Banville said.

The researcher also called for seeing governments as “saviors”, especially when it comes to helping young aspiring homeowners. This kind of talk allows elected officials to maintain a position of innocence by presenting themselves as “salvific intermediaries who grant dreams, instead of being in fact the architects of Canada’s housing crisis“, she said. declared.

But while the provincial and federal governments have contributed to the current crisis, Banville said they also have the power to make a difference.

Measures such as taxation of real estate speculation and rapid resales, 100% taxation of capital gains on secondary properties, publication of purchase offers would respond more effectively to the housing crisis.

“If those genuinely looking to buy a home received a non-speculative, affordable offer in perpetuity (i.e. co-ops, land trusts, social housing, etc.) backed by governments, we could actually see a way out of this crisis,” she said.