Hard talk about the housing bubble

The big news in Toronto and the rest of the GTA is the housing bubble and what to do about it. Like many others, I am not optimistic. Understanding the details of the problem shows why.

Houses like these in the GTA now cost well over $1 million

The average price for a detached house in the GTA in February 2017 was $!.21 million, 32.5% more than a year earlier. For all types of residential housing the average price was $875,983, up nearly 28% from the year earlier. (Toronto Star, March 3, 2017)

There is little doubt that this is a price bubble, driven by speculation, and the cost is being paid by first time home buyers. If you own a home in the GTA you can sell into this hot market, pay no capital gains tax if it is your principle residence, and buy a new one. But the high cost to buy a house is almost an impossible barrier for all those not in the market. That means young people just starting out.

Let’s say you want to purchase a home for one million dollars. First you will need 20% down. That is $200,000. Closing costs will range between $15,000 and $40,000. You will still have to raise a mortgage of $800,000. Then there are taxes, heating, repairs and all the rest.  It is estimated that you will need a combined yearly household income of at least $190,000 just to qualify for the mortgage, and even then, paying the monthly costs of owning a house will be a real burden.

Check out this website on the affordability of housing. “Can I afford a million dollar home?” https://www.ratehub.ca/blog/can-i-afford-a-million-dollar-home/ It shows how difficult it will be for people to get into the housing market. Yes, some individuals and couples have yearly incomes in the $200,000 range. Others have access to family money, but on average the price of housing is making home ownership an impossibility for most.

There are strong hints that the provincial government will act to try and deflate the housing bubble as early as next week with the provincial budget. It is likely that it will be a tax on foreign buyers. They can’t vote so they are an easy target. In Vancouver a 15% tax was put on all foreign buyers and that did depress prices by nearly one-fifth. http://www.huffingtonpost.ca/2017/02/15/vancouver-average-house-price-january-2017_n_14775268.html

Similar moves in Ontario will help deflate the bubble, but my guess is that it will not have as dramatic an effect as in Vancouver. The GTA does not have the same proportion of foreign buyers bidding up the price of houses. Ontario needs to do more to reign in the rising prices, but they are reluctant to act too aggressively. The fear is it could lead to a rapid downward spiral that depresses prices across the province. And don’t forget that there are millions of middle class and upper class homeowners in Ontario who have benefited enormously from the price inflation. They will not be happy to see their net worth dramatically decrease.

My prediction is that the Wynne government will tinker a little, but it will do very little to reduce the cost of housing. This is a strategy of dampening demand. If we are ever to going to deal with the problem of housing, it is essential to work on the supply side by providing more affordable housing, especially affordable housing for families.

And that is why I am not very optimistic about controlling the cost of housing. We lack the political will to solve the problem. Our governments, both federal and provincial, are not willing to develop a comprehensive housing policy that controls speculation and provides good homes for people of all incomes. We are a very wealthy country but we are failing those with middle and low incomes who cannot get into the housing market.


Tory’s failed leadership

Just look at John Tory’s record on issues and you can see what a failed political leader he has become. Mayors are expected to provide leadership, and great mayors rise to the occasion to provide inspired leadership on contentious, difficult issues. Tory fails on all accounts.

John Tory likes to show he uses the subway system.

In the 2014 election candidate John Tory presented himself as a successful but cautious businessman, a good administrator, and a savvy politician. He said he would control taxes, always a big issue with property owners, and get Toronto moving on transit.

His most dramatic promise during the campaign was to create what he called “Smart Track,” a 22 stop transit service primarily on GO railway tracks with a minimal cost. To sweeten his appeal to the vote rich residents of Scarborough, he added that he would build a three stop subway line from Kennedy Station to Scarborough Town Centre. This was enough to deliver him a victory at the polls.

That election was over two years ago now, long enough to make a judgement on his leadership. Yes, the chaotic days of the Ford era, thankfully, are at an end. Tory has been able to get the support of the suburban councillors and that has allowed him to dominate council, but looking at his record on issues illustrates that his leadership is in shambles.

Smart Track has gone from a 22 station transit plan to an addition of six new stations. Recently a Metrolinx study concluded that all but one of the new stations may discourage ridership. (Globe and Mail, March 17, 2017) It is now obvious the plan was designed on the back of an envelope in the midst of an election campaign. No transit experts were consulted before it was rolled out to the public.

It was an election gimmick, No more. An experienced politician like Tory would have known that it is very dangerous to make promises on technically complicated, expensive projects like transit without careful study, but he did it anyway to win votes. He promised an unworkable transit plan and he must take responsibility for its failure.

The Scarbough subway has now been revealed as an even greater failure. The difference is that it can be stopped before it becomes yet another failed project, but don’t count on it. The mayor has put his reputation on the line with this project and Toronto residents will have to pay for it, and live with it, just so John Tory can claim a victory.

After detailed studies, the subway line now has been reduced from three stops to one stop. The cost has ballooned to $3.35 billion. Ridership projections have been reduced to 7,400 per hour, well below the 15,000 riders per hour experts say is needed to make a subway successful. The city will have to pay for all of this except $1.48 billion promised by the Ontario government.

This one stop subway replaces a seven stop LRT line originally promised by David Miller’s Transit City plan. It would have gone from Kennedy Station to the Scarborough Town Centre and terminated at the Centennial Campus on Sheppard. Another LRT line would have gone from Kennedy, along Eglinton and Kingston Road to Morningside. It would have had 18 stations.

All of this could have been built for less than the one stop subway and would have provided good transit for many more riders. But no. To save John Tory’s reputation the people of Scarborough will get a one stop subway and all the people of Toronto will pay for it. This is not leadership; it’s a disaster.

Add the Scarborough subway and Smart Track to other important failures since Tory has been mayor.

  • The proposal to take down a small part of the Gardiner Expressway to open more land for development on the Waterfront, was rejected for a more costly hybrid solution that would reward some developers.
  • Tory’s idea of improving traffic was to take parked cars off major streets at rush hour. There has been no effort to reduce speeds, calm traffic, or discourage vehicles in the downtown. The number of pedestrian fatalities have increased.
  • Tory has shown no leadership on cycling. Toronto is far behind other major North American cities. It is not expensive to modify city streets and make them safe for cycling, but this issue is ignored in Toronto.
  • The proposal to transform Yonge Street is little more than a promise to widen sidewalks. Other cities are creating pedestrian malls, but not Toronto.
  • There is a crisis in hostels for both men and women in the city and nothing is done.
  • Tory’s efforts to keep taxes at the rate of inflation has led to a cut of services. That particularly harms those with low incomes.

We don’t have a new urban agenda in the City of Toronto. We are locked in the old agenda of the post war era of cars and suburbs. The once proud reputation of Toronto as a progressive city has been lost because political leaders, like John Tory, lack the imagination to think of anything other than their own personal reputations.


Housing crisis is now in Vancouver and Toronto

Gary Mason, the insightful Vancouver correspondent for the Globe and Mail, has an opinion piece in today’s paper about the housing crisis in his city that has important implications for Toronto. This is the core of his argument.

   “Politicians, realtors and developers have continued to insist it’s simply a lack of supply (of housing). But that’s not entirely true. The thousands of new condo units built in the past few years have not been the answer to Vancouver’s affordability issue and the mayor (Gregor Robertson) has the guts to admit it. Most of the new ones are sold at luxury rates, which don’t serve the purposes of young, first – or second – time home buyers.

Meanwhile, neighbourhoods of single-detached homes on the expensive west side, in particular, have been hollowing out of young people and people generally. (Many of the homes are held as investments by offshore buyers.) The latest census showed fewer and fewer people living there. Hundreds of properties sit vacant.

(The mayor says) “We need to stop fixating on density because that’s not what this is about,” he said. “Density for density’s sake might just give us more empty homes. What we’re talking about is people.

“Schools filled with students, neighbourhood streets filled with shoppers, parks filled with kids. A neighbourhood made of perfect $5-million homes with no children is not healthy. That’s the sign of a failing city.”

That is a remarkable thing for a mayor to admit, but it’s true. A lot of Vancouver’s neighbourhoods have lost their soul, have lost their pulse of life. There are no young adults anywhere to be seen in a lot of them. How can that be a good thing?

Consider this stat: Ten years ago, if you had a household income of $97,000, you could afford to own a townhouse on the less expensive east side of Vancouver. Today, that house-hold income would need to be $175,000.”

Admittedly the housing crisis is not as bad in Toronto. We don’t have the problem of offshore buyers leaving their houses vacant, but high prices are making housing unaffordable for young families. In the expensive areas of the city like North Toronto, Rosedale, Forest Hill and the west end around High Park are becoming neighbourhoods of affluent, middle aged people with no children. The houses are much too expensive for young couples with children unless they come from families with significant wealth.

Vancouver condos in the False Creek neighbourhood

Even in suburbs like Mississauga, Vaughan and York Region house prices are too high for couples with families. Studies in the U.S. have shown that two-thirds of the suburban houses have no children living in them. The same is likely to be the case in Canada and the more expensive the houses the less likely there will be children. The irony is that these houses were built for families.

Those who believe in classical economics say that older couples will sell their houses and move into less expensive places, but things have changed. The demand for housing remains high. At least 100,000 immigrants are settling into the GTHA every year. That helps to drive our economy, but it also drives house and condos prices upwards into the unaffordable stratosphere.

There are answers to this. In Vancouver Mayor Gregor Robertson is finding ways to stimulate affordable housing projects by selling city owned land at low cost for affordable housing. In Toronto we haven’t had a public discussion of the issue let alone practical solutions. If we don’t get moving with a realistic action plan, things are going to get miserable for many, many people. Housing is a fundamental for a good quality of life.

Where is Mayor Tory on this issue? Liberals were elected across Toronto and most of the GTHA but nothing is happing to create affordable housing for middle and low income families. If we wait five years, there will be a lost generation. Only governments have the resources to solve this problem and we must hold them responsible.

This is the link to Gary Mason’s article. It is worth reading in full.



The Bulletin, a community newspaper distributed in downtown Toronto, has a piece on my new book, Democracy Rising: Politics and Participation in Canada. The book will be released at the end of March. The book launch will be held at Ben McNally’s bookstore on Bay Street, on March 28 from 6 to 8. Everyone is welcome.

Bill Freeman

Local author Bill Freeman calls for participatory democracy

Citizen engagement is breathing new life into our democracy

In the midst of political upheaval and the uncertainty that arises from Brexit and Donald Trump’s presidency, local author Bill Freeman calls for participatory democracy in Democracy Rising.
Freeman argues for a nationwide movement where citizens challenge elite control of the political process by participating actively on political issues. His experience as an activist, sociologist and writer has led to his insights on how we can create a more democratic Canada through the engagement and participation of ordinary people.
Freeman has already earned endorsements from MPs and activists for Democracy Rising, with MP Adam Vaughan stating: “Bill Freeman champions the idea that it is possible to achieve social justice democratically through organizing from the ground up.”
Bill Freeman is an award-winning Canadian urban issues writer. He has written 21 books, including The New Urban Agenda. He is a winner of the Canada Council Award for Juvenile Literature (now the Governor General’s Literary Award) and a past chair of The Writers’ Union of Canada. He lives on Toronto Island.

“Yonge Love” and Politics

Last night I went to the Ryerson City Building Institute meeting called “Yonge Love” on the redesign of Yonge street. It was hosted in the large atrium of the new Ryerson Student Centre and the room was packed.

Reconfigured Yonge Street: Yonge and Gerrard

Most of the people there looked like recent grads and young professionals in their late 20s and 30s, but there were quite a few my age, past the time when people are expected to stop work altogether. Torontonians are passionate about their city.

The panel was led by Councillor Kristyn Wong Tam and Toronto’s Chief Planner Jennifer Keesmaat. Others included the head of the local BIA, a developer, an expert on retail, the new president of Ryerson University, and planners from both Vancouver and Montreal.

The discussion was around converting downtown Yonge Street, from Queen’s Quay to Davenport, into a pedestrian dominated artery. The street is currently occupied primarily by vehicles and pedestrians are squished onto narrow sidewalks, and yet, 40% of the people using the street come there on foot and 49% arrive by transit.

The other major thing that is going on along the Yonge street corridor is the construction of new condos. The length of the street in the downtown is intensifying at a dizzying speed. Major high-rise towers being build and more are in the planning stages.

At the moment there is an environmental assessment being conducted by the city planning department. The proposal that was talked about at the meeting is to widen the sidewalks, and reduce the traffic lanes to two, one in each direction. There is no plan to increase transit. After all the Yonge Street subway is just underground.

Cycling is bound to be controversial. The proposal is that there will be no bike lanes on the reconfigured Yonge Street. Priority is for pedestrians. Keesmaat explained we don’t need bike lanes on all streets and Yonge Street should be primarily reserved for walking.

Sound familiar? It should. The plan is to widen the sidewalks and narrow traffic lanes. Revolutionary? Hardly. This is not a proposal to convert downtown Yonge Street into a pedestrian mall. It is a project to widen sidewalks and calm traffic. Great, but hardly radical.

Toronto has only one pedestrian mall in the entire city, two blocks of Gould Street. Every other major city in North America is implementing plans for pedestrian malls. Montreal has scores of them, Vancouver the same. New York, Chicago are away ahead of Toronto. European cities are rapidly turning their downtown cores into walking areas, and across South America cities are giving priority to pedestrians.

So what is the problem with Toronto? In a word – politics. Toronto City Council, who make the major decisions on all planning decisions, is controlled by suburban councillors and most of them are devoted to keeping streets open to car traffic.

I found it frustrating to listen to the discussion last night about planning principles and how the pedestrianization of Yonge Street will begin to transform the downtown. Is it a first step? I hope so, and I wish it well. We must do something to calm the traffic beast in the downtown, but it is very modest.

The reality is that the real audience for this proposal is not the people who crowded the room last night. They are already convinced. The audience is Toronto City Council, including the Mayor. They have to be convinced that this proposal has strong support from those who live downtown, and the only way to do that is to show the plan has strong public support.

Governance remains the real problem in Toronto. The Mike Harris imposed amalgamation of Toronto in 1998 into a one tier municipal government is what has led to the domination of the suburbs because that is where the most votes are. As John Sewell once told me, people who live in the downtown and those who live in the suburbs have two very different visions of the city.

The suburbanites have the majority of votes on council and their vision dominates. The vision of suburbanites and Conservatives will continue to be the chief influence on Toronto until a new city governance structure is established.

If this minor redesign of Yonge Street is not accepted by city council then lord help the urban visionaries of this city.

Land Trusts and Affordable Housing

Below is a link to an article in today’s Globe and Mail’s real estate section called “A speculation-free zone.”

The article shows how land trusts in Vancouver are combining the equity of co-ops and non-profits, along with land from municipalities at low-cost, to create the financing needed for new affordable housing.

As I show in my book, The New Urban Agenda, the lack of affordable housing in the GTHA has developed into a serious crisis. Thousands of families and individuals are suffering because they cannot afford good housing.

Government is reluctant to provide the needed funds. Maybe land trusts, equity from co-ops and some help from municipalities is the way to do it.


Power and politics — electric power that is

The cost of electric power has become a major issue in Ontario. This is particularly true outside urban areas where people are required to pay high transmission costs. The real problem is decades of provincial political decisions.

Pickering nuclear power plant

Below is a link to an article published in the Torontoist, by Angela Bischoff, the outreach co-ordinator for the Clean Air Alliance. She dissects the problems surrounding Ontario Hydro and the disastrous consequences of provincial decision making.

The major problem, of course, is Ontario’s reliance on nuclear power generation. This has led to the massive debt of Ontario Hydro. In turn this has led to an over supply of electricity and a rejection of importing hydro from Quebec where it is produced by non-polluting water power.

A more long term result will be the decline of Ontario’s alternative energy program. The province has cancelled large alternative wind and solar projects and has ended the Feed and Tariff program, which encouraged thousands of people to install solar panels.


My new book, Democracy Rising: Politics and Participatory in Canada, is at the printer and will be released in mid March.

The book advocates that we need much higher levels of participation if we are to strengthen and complete our democracy. It is called participatory democracy, rather than representative democracy, that is now the accepted form of politics practiced in Canada and other countries.

George Monbiot, the journalist and social critic, who publishes in the Guardian, is a leading advocate of participatory democracy. This is a link to his latest article on the issue.

All Together Now