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New report highlights housing affordability challenges across Canada

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From the Frontier Centre for Public Policy

By Wendell Cox

The year 2022 marked a concerning increase in “severely unaffordable” housing markets, extending beyond the scope of the six major markets.

The Frontier Centre for Public Policy’s Demographia Housing Affordability in Canada report, released today, cast a spotlight on the pressing issue of housing affordability in Canada. This comprehensive report offers a detailed analysis of middle-income housing affordability during the third quarter of 2022, focusing on 46 housing markets referred to as census metropolitan areas.

The report goes beyond the conventional analysis of property prices, delving into the intricate interplay between house prices and income. Price-to-income ratios, a crucial metric for assessing housing affordability, have gained global recognition. Esteemed institutions, including the World Bank, United Nations, OECD, and IMF, have endorsed this measurement. The Frontier Centre for Public Policy’s housing affordability index adopts a similar approach, utilizing the “median multiple” calculation. This calculation involves dividing the median house price by pre-tax median household income.

The report sheds light on the historical context of housing affordability within Canada’s six major markets – Vancouver, Calgary, Edmonton, Toronto, Montreal, and Ottawa – each with populations surpassing one million. The period from 1970 to the mid-2000s witnessed relative stability in the housing affordability landscape. However, by 2005, Vancouver’s market initiated a significant shift towards unaffordability, a trend that has only intensified since the mid-2000s.

The year 2022 marked a concerning increase in “severely unaffordable” housing markets, extending beyond the scope of the six major markets. The number of severely unaffordable markets surged from 18 in 2019 to 24 among the surveyed 46 markets. In contrast, the count of “affordable” markets dwindled from eight in 2019 to a mere three.

The advent of remote work, or “telecommuting” during the pandemic led to a surge in households seeking more spacious living spaces. This surge in demand outpaced supply, resulting in a “demand shock” that further exacerbated the challenges of housing affordability.

The epicentre of unaffordable housing primarily lies in British Columbia and Ontario. Notably, Vancouver and Toronto emerged as the most severely unaffordable major markets, ranking third and 10th least affordable among 94 markets in Demographia’s International Housing Affordability Report 2022. This phenomenon extended beyond Vancouver, impacting other markets in British Columbia. Similarly, the trend reached markets beyond Toronto, prompting a net interprovincial migration as households pursued more affordable housing options.

Amidst these challenges, four markets – Moose Jaw (SK), Fort McMurray (AB), Saguenay (QC), and Fredericton (NB) – have managed to uphold their affordability. The Canadian housing market faces intensified scrutiny, with analyses highlighting the formidable task of addressing the nation’s housing crisis. This includes restoring affordability and enabling home ownership amidst obstacles such as the scale of the issue and the capacity of the home-building sector.

At the heart of the crisis lies urban containment regulation, which has driven land prices to unsustainable levels, constraining housing supply for middle income households. This scenario arises from the deliberate intent of urban containment policies to inflate land prices. Disparities in land costs across markets play a pivotal role in housing affordability disparities. Government policies, like urban containment, unintentionally contribute to government-induced inequality by inflating land prices. Practical alternatives exist to revitalize housing affordability.

Migration to more affordable housing markets has become a priority for many, as evidenced by an unprecedented population shift away from major metropolitan areas towards regions with more affordable housing options. Ensuring affordability remains in these markets is pivotal. Neglecting this could lead to replicating the ongoing affordability crisis in regions that are currently more affordable, which could limit opportunities for future generations and impact Canada’s attractiveness as an international migration destination.

About the Frontier Centre for Public Policy The Frontier Centre for Public Policy is an independent, non-partisan think tank that conducts research and analysis on a wide range of public policy issues. Committed to promoting economic freedom, individual liberty, and responsible governance, the Centre aims to contribute to informed public debates and shape effective policies that benefit Canadians.

Wendell Cox is a Senior Fellow at the Frontier Centre for Public Policy. He is principal of Demographia.com, author of Demographia World Urban Areas and an author of Demographia International Housing Affordability (19 annual editions) and Demographia World Urban Areas. He earned a BA in Government from California State University, Los Angeles and an MBA from Pepperdine University. He served as a visiting professor at the Conservatoire des Arts et Metiers in Paris, a national university.

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Top Brass Is On The Run Ahead Of Trump’s Return

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From the Daily Caller News Foundation

By Morgan Murphy

With less than a month to go before President-elect Donald Trump takes office, the top brass are already running for cover. This week the Army’s chief of staff, Gen. Randy George, pledged to cut approximately a dozen general officers from the U.S. Army.

It is a start.

But given the Army is authorized 219 general officers, cutting just 12 is using a scalpel when a machete is in order. At present, the ratio of officers to enlisted personnel stands at an all-time high. During World War II, we had one general for every 6,000 troops. Today, we have one for every 1,600.

Right now, the United States has 1.3 million active-duty service members according to the Defense Manpower Data Center. Of those, 885 are flag officers (fun fact: you get your own flag when you make general or admiral, hence the term “flag officer” and “flagship”). In the reserve world, the ratio is even worse. There are 925 general and flag officers and a total reserve force of just 760,499 personnel. That is a flag for every 674 enlisted troops.

The hallways at the Pentagon are filled with a constellation of stars and the legions of staffers who support them. I’ve worked in both the Office of the Secretary of Defense and the Joint Chiefs of Staff. Starting around 2011, the Joint Staff began to surge in scope and power. Though the chairman of the Joint Chiefs is not in the chain of command and simply serves as an advisor to the president, there are a staggering 4,409 people working for the Joint Staff, including 1,400 civilians with an average salary of $196,800 (yes, you read that correctly). The Joint Staff budget for 2025 is estimated by the Department of Defense’s comptroller to be $1.3 billion.

In contrast, the Secretary of Defense — the civilian in charge of running our nation’s military — has a staff of 2,646 civilians and uniformed personnel. The disparity between the two staffs threatens the longstanding American principle of civilian control of the military.

Just look at what happens when civilians in the White House or the Senate dare question the ranks of America’s general class. “Politicizing the military!” critics cry, as if the Commander-in-Chief has no right to question the judgement of generals who botched the withdrawal from Afghanistan, bought into the woke ideology of diversity, equity and inclusion (DEI) or oversaw over-budget and behind-schedule weapons systems. Introducing accountability to the general class is not politicizing our nation’s military — it is called leadership.

What most Americans don’t understand is that our top brass is already very political. On any given day in our nation’s Capitol, a casual visitor is likely to run into multiple generals and admirals visiting our elected representatives and their staff. Ostensibly, these “briefs” are about various strategic threats and weapons systems — but everyone on the Hill knows our military leaders are also jockeying for their next assignment or promotion. It’s classic politics

The country witnessed this firsthand with now-retired Gen. Mark Milley. Most Americans were put off by what they saw. Milley brazenly played the Washington spin game, bragging in a Senate Armed Services hearing that he had interviewed with Bob Woodward and a host of other Washington, D.C. reporters.

Woodward later admitted in an interview with CNN that he was flabbergasted by Milley, recalling the chairman hadn’t just said “[Trump] is a problem or we can’t trust him,” but took it to the point of saying, “he is a danger to the country. He is the most dangerous person I know.” Woodward said that Milley’s attitude felt like an assignment editor ordering him, “Do something about this.”

Think on that a moment — an active-duty four star general spoke on the record, disparaging the Commander-in-Chief. Not only did it show rank insubordination and a breach of Uniform Code of Military Justice Article 88, but Milley’s actions represented a grave threat against the Constitution and civilian oversight of the military.

How will it play out now that Trump has returned? Old political hands know that what goes around comes around. Milley’s ham-handed political meddling may very well pave the way for a massive reorganization of flag officers similar to Gen. George C. Marshall’s “plucking board” of 1940. Marshall forced 500 colonels into retirement saying, “You give a good leader very little and he will succeed; you give mediocrity a great deal and they will fail.”

Marshall’s efforts to reorient the War Department to a meritocracy proved prescient when the United States entered World War II less than two years later.

Perhaps it’s time for another plucking board to remind the military brass that it is their civilian bosses who sit at the top of the U.S. chain of command.

Morgan Murphy is military thought leader, former press secretary to the Secretary of Defense and national security advisor in the U.S. Senate.

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For the record—former finance minister did not keep Canada’s ‘fiscal powder dry’

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From the Fraser Institute

By Ben Eisen

In case you haven’t heard, Chrystia Freeland resigned from cabinet on Monday. Reportedly, the straw that broke the camel’s back was Prime Minister Trudeau’s plan to send all Canadians earning up to $150,000 a onetime $250 tax “rebate.” In her resignation letter, Freeland seemingly took aim at this ill-advised waste of money by noting “costly political gimmicks.” She could not have been more right, as my colleagues and I have written herehere and elsewhere.

Indeed, Freeland was right to excoriate the government for a onetime rebate cheque that would do nothing to help Canada’s long-term economic growth prospects, but her reasoning was curious given her record in office. She wrote that such gimmicks were unwise because Canada must keep its “fiscal powder dry” given the possibility of trade disputes with the United States.

Again, to a large extent Freeland’s logic is sound. Emergencies come up from time to time, and governments should be particularly frugal with public dollars during non-emergency periods so money is available when hard times come.

For example, the federal government’s generally restrained approach to spending during the 1990s and 2000s was an important reason Canada went into the pandemic with its books in better shape than most other countries. This is an example of how keeping “fiscal powder dry” can help a government be ready when emergencies strike.

However, much of the sentiment in Freeland’s resignation letter does not match her record as finance minister.

Of course, during the pandemic and its immediate aftermath, it’s understandable that the federal government ran large deficits. However, several years have now past and the Trudeau government has run large continuous deficits. This year, the government forecasts a $48.3 billion deficit, which is larger than the $40 billion target the government had previously set.

A finance minister committed to keeping Canada’s fiscal powder dry would have pushed for balanced budgets so Ottawa could start shrinking the massive debt burden accumulated during COVID. Instead, deficits persisted and debt has continued to climb. As a result, federal debt may spike beyond levels reached during the pandemic if another emergency strikes.

Minister Freeland’s reported decision to oppose the planned $250 onetime tax rebates is commendable. But we should be cautious not to rewrite history. Despite Freeland’s stated desire to keep Canada’s “fiscal powder dry,” this was not the story of her tenure as finance minister. Instead, the story is one of continuous deficits and growing debt, which have hurt Canada’s capacity to withstand the next fiscal emergency whenever it does arrive.

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