Earlier today, the Conservative Party of Canada made the following housing policy announcement. If elected this fall, they would (copied verbatim from here):
Fix the mortgage stress test to ensure that first-time homebuyers aren't unnecessarily prevented from accessing mortgages and work with OFSI to remove the stress test from mortgage renewals to give homeowners more options.
Increase amortization periods on insured mortgages to 30 years for first-time homebuyers to lower monthly payments.
Launch an inquiry into money laundering in the real estate sector and work with our industry partners to root out corrupt practices that inflate housing prices.
Make surplus federal real estate available for development to increase the supply of housing.
There aren't a lot of details here, but Andrew Scheer did say that his party would eliminate the financing "stress test" for all mortgage renewals. Currently, you're only exempt if you renew with your existing lender.
As Rob Carrick points out, this is a pretty sensible move. (Though he doesn't agree with "fixing" the stress test.) The current situation gives the incumbent lender almost monopolistic power if the borrower can't meet the stress test and is unable to shop around for a better rate.
At the same time, we know that the price of a highly levered asset tends to correlate with financing ability. So depending on what serves you better, you may be either concerned or delighted that this increased buying power could spur further housing consumption/appreciation.
Housing policy is a complex and curious thing.
Joel Kotkin and Wendell Cox recently published a piece in the Orange County Register called, “California’s housing crisis and the density delusion.” I’m sure you can guess where this is going, even if you don’t follow the work of Joel Kotkin. But if you do, you will know that he is an ardent supporter of suburbia and the single-family home.
Here is an excerpt from the article:
In reality, the YIMBY’s suggestion that new, dense housing will improve affordability for all is patently absurd. Decades of densification in Los Angeles has seen ever higher rents, displacing low-income, especially minority households. Many former transit customers have been driven to lower-rent areas with less transit service, precipitating a massive decline in ridership, even as billions continue to be spent building new rail lines. The Wiener Bill [my link, not theirs] could exacerbate this trend, and likely increase the need for low-income housing, already well beyond the capability of public coffers.
I fully appreciate the argument that high-density housing isn’t for everyone and that we shouldn’t be “forcing everyone back to the ‘glory’ days of the city of tenements.” But I disagree with many of their points, including the argument that density doesn’t encourage transit ridership. Density isn’t everything, but it’s an important something.
The article is definitely worth a read, particularly if you disagree with their positions. That’s how you avoid confirmation bias. I was trying to keep that in mind as I read it. Maybe it worked.
California State Senator, Scott Wiener, introduced 3 new bills at the beginning of this year intended to address the statewide housing shortage and continue the pivot from a housing-last agenda to a housing-first agenda.
Here is a summary of the 3 bills:
These three bills (1) mandate denser and taller zoning near transit; (2) create a more data-driven and less political Regional Housing Needs Assessment process (RHNA provides local communities with numerical housing goals) and require communities to address past RHNA shortfalls; and (3) make it easier to build farmworker housing while maintaining strong worker protections.
And here is a bit more information about the first one:
SB 827 creates density and height zoning minimums near transit. Under SB 827, parcels within a half-mile of high-connectivity transit hub — like BART, Muni, Caltrain, and LA Metro stations — will be required to have no density maximums (such as single family home mandates), no parking minimums, and a minimum height limit of between 45 and 85 feet, depending on various factors, such as whether the parcel is on a larger corridor and whether it is immediately adjacent to the station. A local ordinance can increase that height but not go below it. SB 827 allows for many more smaller apartment buildings, described as the “missing middle” between high-rise steel construction and single family homes.
The belief is that transit-oriented sites in the state of California have the potential to accommodate up to 3 million additional housing units.
Fewer barriers to creating new housing. More data. And less politics. You can read more about Wiener’s 2018 housing package over on Medium.