The Right Thing KAREN WENSLEY
The Waning Dream
N
OW THAT THE HOUSING MARKET has started to cool off in Toronto and Vancouver, it’s time to tot up the wins and losses. Of the various necessities of life, shelter arguably
has the greatest impact on our economy (positive and negative) and our personal feeling of prosperity (or not). Canada’s impres- sive GDP growth so far in 2017 has been driven by housing and related consumer spending. We have had the inevitable bad behaviour, such as real estate agents secretly buying properties from unsuspecting sellers at low prices and reselling them at higher amounts before closing and mortgage brokers lending sums to buyers who had no prospect of repaying. As buyers and sellers, our sense of well-being is also tied up in
real estate. Your friend has just traded up to a gorgeous house with media room, spa-like ensuite bathroom and 12-ſt. ceilings in the great room. Your brother-in-law is boasting about the huge profit he pocketed from selling his condo. Your next-door neighbour fears she has lost a lot of money by not listing her house six months ago. This is all fuelled by intense media atten- tion — from the “house porn” shows on HGTV to real estate sections of newspapers detailing houses for sale, what they pre- viously sold for and the offers above asking price they attracted. So you want the same thing. You are afraid to be leſt out. You feel like an incompetent fool if you don’t participate. You suspect everyone is getting rich except you. Some of the social impacts are good. Toronto Life magazine recently ran an article about the movement of young creative Torontonians to Hamilton (the story even made it to the New York Times). This has raised real estate prices in Hamilton, which is bad for lower-middle-class locals trying to get into the market, but has helped rejuvenate an industrial city on the decline. Some of the impacts are bad. If you believe, as I do, that people have a right to live in safe, secure housing, the resulting escala- tion of apartment rent, combined with the failure to build more social housing, is very disturbing. People adapt to the new realities. Families buy houses in faraway suburbs and put up with long commutes. They rent out spare rooms on Airbnb and share living spaces with friends and family to make it work. Adult children move back home. The most important ethical consequence, in my mind, is
the impact that rising housing prices have on the growing gap between the haves and have-nots. As Evan Siddall, president and CEO of Canada Mortgage and Housing Corp., said in a speech on June 1, “Housing has helped the rich get richer, as the poor get poorer.” People on one side of the divide already own real
22 | CPA MAGAZINE | NOVEMBER 2017
estate, which can provide capital for down payments for their kids and help finance their retirement. People on the other side of the divide have given up hope of ever owning property, live with the reality of rent increases that force them to move, and see no prospect of their kids moving up the economic ladder, even if they manage to find the increasingly rare full-time job in their field. The dream of prior generations, that even new immi- grants could work hard, slowly save enough for a down payment and have some capital to help their kids, has faded. This all feels like an inevitable result of supply and demand,
albeit with the government tinkering with taxes and down payment requirements. Toronto and Vancouver are relatively new to the problems of unaffordable big cities, whereas New York, London and Paris have long dealt with the reality that even upper-middle-class couples can’t afford houses anywhere near the city centre. But that shouldn’t make us complacent. We need to talk about social housing, increasing housing density, afford- able rent and other options. The anger of immigrants isolated in the outer suburbs of Paris has had explosive results. We need to do better.
KAREN WENSLEY, MBA, is a lecturer in professional ethics at the University of Waterloo and a retired partner of EY. She can be reached at
karen@wensley.ca
Photo: Jaime Hogge
Gary Waters/Getty Images
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