Spend long enough discussing housing policy — not even that long, really — and someone will inevitably raise the spectre of vacant homes. For at least a decade, despite a booming population and the growth of the ranks of millennials and zoomers aging into their homebuying years, skeptics have insisted that we don’t actually need to build more homes in Canada or the GTA — you see, what’s actually happening is that speculators are buying up all the housing and keeping it vacant. If we could just force the speculators to put their homes on the market where they belong, the housing crisis would be solved.
This is a form of delusion based, usually, on some extremely bad-faith reading of the census definition of homes “not occupied by the usual resident,” which includes any number of non-nefarious use cases — most notably, rentals that happen to be between tenancies, which is something we want more of, not less, because it means slower rent growth and more bargaining power for tenants.
What is certainly true is that, if there are homes being held off the market by speculators, we want our government to have a clear idea of how big an issue that really is and how seriously it’s distorting prices. The problem is that basically no level of government is able to answer those questions accurately right now.
In theory, the Canada Mortgage and Housing Corporation is the perfect agency to collect this kind of data. As Mike Moffatt noted on X this week, the Crown corporation has actually started paring back its data collection in some areas. This isn’t a new story: through much of the 2010s, as policymakers were getting increasingly panicked about the alleged problem of foreign buyers snapping up Canadian properties, they were similarly in the dark about the scope of the problem. More recently, there’s a dispute between some municipalities and the CMHC over how it counts housing starts, with municipalities saying they’re losing out on provincial funding.
Ontario eventually brought in a surtax to discourage foreign buyers under then-premier Kathleen Wynne. Under Premier Doug Ford, that tax has since been expanded in geographical scope and increased to 25 per cent. The feds have gone even further, outright prohibiting the purchase of residential property by non-Canadians. What’s notably absent is any evidence that these measures have actually improved affordability.
When it comes to so-called vacant homes, we see a similar pattern: both the province and now the federal government have announced measures to urge vacant homes onto the market (the feds have what they call the underused housing tax). Earlier this year, Ontario expanded the power of levying a vacant home tax to all single- and lower-tier municipalities.
So will these vacant-home taxes do anything meaningful on the affordability file? Recent evidence suggests they won’t. A new report published by the CD Howe Institute found that Vancouver’s vacant-house tax brought a whopping 226 new homes onto the market. The authors, unsurprisingly, find that it had zero effect on affordability, though they don’t opt for the simplest explanation at hand: that this was a trivial number of units to add to the market of a major metro area, and you’d need an electron microscope to find the actual effect on rents.
The common thread between these stories — vacant homes and non-resident buyers — is that, in the absence of solid data, policymakers are addressing what are almost certainly made-up problems instead of tackling the roots of our housing shortage. After all, getting serious would be difficult and unpopular. They’re also managing to cause themselves periodic headaches while they swing at shadows: in Toronto, city staff created a “fiasco” due to foreseeable errors in the implementation of the vacant-home tax.
Maybe it’s simply a political reality that governments have to tackle the knuckleheaded ideas before they can get serious. British Columbia, having already gone through the cycle of addressing vacant homes and foreign buyers, currently has one of the more aggressive governments when it comes to pro-housing planning reforms. But it’s hard to believe we couldn’t get through these phases faster if our governments had more and better data about the housing market.
“More accurate statistical data collection” is nobody’s idea of a flashy slogan (there’s a reason nobody pays me for political consulting), but this is the kind of thing that governments need to do well if they’re going to make good policy. In the absence of correct information, leaders are filling the vacuum with ineffective stunts.
Donate