Why the housing shortage is hard to solve
Ask your grandmother
TLDR: Older people vote. Older people vote in municipal elections. Older people own their homes. Politicians respond to voters who have (mostly) benefitted from housing shortage through higher prices.
The housing shortage is Canada’s biggest medium-term problem. We’re growing a lot, but not building enough. Many folks talk about housing with despair, that the challenges seem too big, the roots too far deep, that we will never fix it.
Other folks, like a partner who doesn’t listen your feelings but immediately tries to give solutions, think that we just need to find some sort of technological innovation for homebuilding. Pre-fabricated homes, stackable units, automated concrete pouring machines or 3D printed homes are common culprits.
But the reality is that we choose to not build. Politicians are elected again and again, decades pass and we continue to tell them to them to:
Not change already built up areas
When bigger projects are allowed, to scaled them (down) to the aesthetic preferences of neighbors
Keep property taxes low, and push costs onto new buildings
If that doesn’t sound like your politics, it’s probably because you aren’t representative of “we”.
Politicians respond to voters. And in particular the Median Voter (the one who is most likely to win them the election). Voters and the population are not the same.
In Nova Scotia, about 25% of the adult population is between 18 and 34. But in Nova Scotia’s 2021 election, only 15% of the voters were between the ages of 18 and 34. The youngest adults (18-24), and those most hurt by high rents, have half the electoral influence they should based on demographics.
Older voters turn out at 2.5x the rate of young voters.
It’s no surprise that Nova Scotia Premier Tim Houston strode to victory on a platform to Fix Healthcare, and not Fix Housing. That’s where the votes are. These statistics are for the province, (which legally hold all housing authority), but most housing decisions are delegated to municipalities.
Municipal turn out is much lower1, so giving city councils most of the authority on housing regulation weakens young people’s voice even more.
Finally, the underrepresentation of young people is evident in many policy areas, but in housing, what’s special is that homeowners get paid (through higher prices) to ignore the housing shortage.
Homeowners Rule Everything Around Me
Most Canadians own their home. Nationally, the homeownership rate was 66% in 2021. Not surprisingly, older folks are more likely to own, up to about ~75% by age 50.
And when you own, you don’t need to care about rental rates. You can make “the look” and “preserving neighborhood character” the most important factor in new housing. You can vote for politicians who prioritize keeping property taxes low2.
There are no political “feedback loops” here, because housing shortages work themselves out, either with people moving far away (less traffic!) or by increasing house prices (of which you own one!).
One last thing. With the rapid rise in interest rates, there will be a short political opportunity in the next 3 years. It won’t affect seniors (who should have no or very small mortgages), but tens of millions of homeowning Canadians will go renew their mortgages, and go from a 2.5% interest rate to something like 5%3. Payments will spike. The pain felt by young renters and non-voting immigrants will be felt by middle aged homeowners (who carry big mortgages). They’re gonna be pissed, and someone should channel that anger into change.
Halifax’s municipal election in 2020 saw 40% turnout, compared to 55% in Nova Scotia’s 2021 election
In Nova Scotia, residential property tax increases cannot increase more than inflation, as long as you don’t move, because of the capped assessment program. Halifax regularly cuts its tax rate, just to make the deal even sweeter
Who knows, but as of writing that’s what it looks like.