Homeownership in Canada is in retreat. Historically, our nation had one of the highest homeownership rates in the Western world, peaking in 2011 at 69 per cent of Canadian households, as Statistics Canada reports. But, thanks to the housing affordability crisis, the number of owner-occupied homes in Canada is declining — and fast.
The result? Canada’s real estate industry is facing two major public policy challenges: the erosion of the national public policy consensus on homeownership and the regulatory targeting of real estate professionals by elected officials. Rather than shying away from these challenges, real estate leaders in Canada should tackle them head-on.
How bad is Canada’s housing affordability crisis?
According to a December 2023 report from RBC, it’s “at or near worst-ever affordability levels in many markets.” Middle-class families today must set aside 63 per cent of their household income to cover the costs of owning a home in Canada. This is over double what the Canada Mortgage and Housing Corporation (CMHC) recommends households spend on housing.
Sadly, Canada’s housing affordability crisis is not going anywhere in 2024. Higher-than-average interest rates and record levels of immigration mean housing costs will very likely stay stubbornly expensive for young Canadians.
Public perception
The level of public frustration and anger on housing is high. Poll after poll ranks housing and affordability as the most important issues to Canadians right now, especially among millennials. That means elected officials will continue to be under immense pressure to not only solve the housing crisis but also to be seen to be solving the crisis.
Renting becoming more common
With ownership rates in decline, cracks in the national public policy consensus that has historically favoured home ownership over renting have started to appear. Influential groups like Generation Squeeze are actively lobbying the federal government to roll back the Principal Residence Exemption through a surtax that homeowners would pay on the value of their property over $1 million. While some argue that a home equity tax would be political suicide, the calculus on the issue is changing as more and more Canadians turn to renting.
More industry regulations
The affordability crisis has also forced many governments to turn their attention to piling new regulations on real estate professionals and transactions. During the 2022 federal election, the Liberal Party made commitments to introduce a Home Buyers’ Bill (HBB) of rights that, among other things, would ban blind bidding, establish a legal right to home inspections and mandate the public disclosure of home prices. Thankfully, the misguided and harmful HBB has not come to fruition thanks in large part to strong advocacy from the Canadian Real Estate Association, provincial associations and pushback from provincial governments.
Provincial governments are also getting in on the action in British Columbia, Ontario and Quebec. B.C. has ended practices like dual agency and introduced cooling-off periods for buyers of resale home properties. Ontario has introduced a system of open real estate offers and Quebec, just this year, significantly increased fines for real estate brokers not complying with rules in that province.
Alongside a stubborn housing affordability crisis, the trend towards more regulation of the Canadian real estate industry will likely continue. Building new homes, especially at the scale we need to be building at, will take years. Regulating real estate provides elected officials with quick policy wins and talking points aimed at millennials who have grown frustrated navigating the housing market.
What new real estate policies will decision-makers target? Given the gravity of the crisis and the upcoming federal elections in 2025, it’s safe to say that nothing is off the table.
How to turn these challenges into strategic opportunities
While these trends present major challenges, they are also strategic opportunities for associations and major brands to fight for the dream of homeownership and improve professional standards in real estate.
Advocacy
To start, 2024 should be a year where every real estate association in Canada doubles down on advocacy as a core member service. There will likely never be another moment in history when housing will be higher on public and elected officials’ priority lists.
Public office holders need the advice of Canadian real estate leaders. Real estate associations should leverage this high-profile seat at the table to invest more in their advocacy programs, strengthen relationships with decision-makers and advance pro-homeownership policy solutions to Canada’s housing crisis.
Fight for higher licensing and practice standards
Second, the real estate industry should prioritize professionalism by fighting for higher licensing and practice standards. Buying or selling a home is the most important financial decision most Canadians will ever make. Yet, in many provinces, someone can get a real estate license with only a high school diploma, online self-guided courses and multiple-choice exams. Continuing education requirements to maintain a license are similarly lacking.
Rather than waiting for solutions to be pushed forward by misinformed public office holders, the real estate industry should become a vocal champion for strengthening real estate education and practice standards to advance reform as part of government’s approach to improving the consumer experience when buying or selling homes.
Remind decision-makers of non-financial homeownership benefits
Finally, the real estate industry should step up and remind elected office holders and others of the importance of homeownership to people, communities and the country. Homeownership is far from just a financial decision that drives economic activity. Owning a home creates spinoff benefits in the form of higher educational achievements, lower rates of crime and higher levels of civic engagement.
While the economic benefits of homeownership are well understood, these secondary benefits are not. The real estate sector should prioritize research, thought leadership and public relations campaigns that tell this story. A strong pro-homeownership public relations effort will also reinforce to Canadians that real estate professionals are advocating for their hopes and dreams.
This year will be a challenging one for Canada’s housing market and real estate industry. The housing affordability crisis will continue to put pressure on the national public policy consensus on homeownership and the business of real estate.
But, with significant challenges also come important strategic opportunities. This year, real estate leaders across Canada should meet these challenges head-on through making new investments in advocacy, fighting for higher professional standards and championing the dream of homeownership for all Canadians.
Matthew Thornton founded Real North Strategies in 2023 after working over 16 years at Queen’s Park and as a public relations executive at Canada’s largest provincial association. He is on a mission to build a better Canada by helping associations, not-for-profits, and organizations solve the biggest public policy challenges of our time by providing world-class advocacy and communication services. From multi-million-dollar campaigns to working with volunteer committees & boards, he has a track record of innovation, creativity, and success when it comes to public affairs, media relations and government relations. Matthew is a proud University of Western alumni, having graduated with an Ivey Business School Executive MBA (’22), Master of Arts (’07) and Bachelor of Arts Honors (’05). He also achieved the CAE designation from the Canadian Society of Association Executives in 2012.
Over 50 years ago New Zealand built tens of thousands of state homes to compliment privately built homes, yet magically in today’s world we have lost the ability to do so, or perhaps more accurately, the desire.
So much real estate is locked in by the Baby Boomer generation, with subsequent generations locked out of housing – mostly due to decades and decades of no capital gains tax until recently.
I have a special fondness for Canada and Canadians and I sincerely hope you find solutions to your housing crisis and provide an example for other countries like New Zealand (and Ireland et al.) to follow – unfortunately, we lack the creativity, the know-how, and perhaps more importantly, the will to do so.
OREA now being referred to as ‘Canada’s largest provincial association’ on his profile.
I’m ashamed of it too.
Let me hide my OREA employment history because I know how few OREA members even knew my name.
Gaslighting his old employers members using the old raise professionalism narrative?
The only way to improve our industry is to reduce memberships by 60% or more. Ontario had just over one home traded per registrant in 2023 and will do the same this year. I know how many deals I will write this year so I know just from my own results a dozen or more OREA members will do zero.
Associations that grow their membership to grow their paid association staff numbers is an association headed for obscurity.
I have been in this business since the early 70″s and have seen the ups and downs of all the different markets. This down turn is part over heated market, but the biggest problem is our immigration policy. We either limit the number of immigrants or we build way more homes. The industry still is lanquished in building 225000 homes and has been for years. The gov’t needs to be there to make sure the building standards are high but otherwise get out of the way.
I’d like Michael to inform us of the Ontario government’s Supervisory or Regulatory or Disciplinary body that oversees/administers Not-For-Profit organizations.
I wish to know who to turn to if/when our industry’s Not-For-Profit associations/Boards start veering off the course their membership wants or away from their original mandates.
I agree with the main points of the article. Unfortunately, I believe the root of the housing access and affordability problem is rooted in decisions made in the 1990s to discontinue federal funding for social housing. We are now decades behind in building social housing units which will take years to catch up. I believe there is also a problem/opportunity with the growing compliance burden being placed on brokerages.
Yet there are a large number of brokerages who have only a few agents and who cannot possibly comply with the growing burden. It would make sense to weed out those brokerages that are not large enough to be viable and compliant with the professional standards required.
What I don’t understand is why nobody is willing to tackle the investment real estate nut! Investors, including politicians, are snapping up condos (and other properties) as fast as they’re built, driving prices (and rents) up drastically. The divide between the haves and have nots just keeps on widening!
So where is the comparative statistic for today, or latest census? Is it a lower number as you say, or a lower percentage, and by how much? — Quote: “… peaking in 2011 at 69 per cent of Canadian households, as Statistics Canada reports. But, thanks to the housing affordability crisis, the number of owner-occupied homes in Canada is declining — and fast.”
Raising education requirements is something I have lobbied for for 25 years. Ontario is leading the way in this department.
Regarding the housing crisis. This is government created. All level of governments should have been building rental units the past 50 years. It all stopped in the 1970’s. As long as housing is “For Profit” it will never be affordable. Housing is now used as an investment tool purchased by groups for profit. This includes high rise rental apartments where long term tenants are subject to renovictions so owners can raise rents. It is an evil circle as these types of properties are purchased by investment corporations that invest money that goes back into the pension fund in many cases. There is no solution to that. Governments have to step up and fix the problems they have caused.