Canada is challenged when it comes to housing, says Lavelle Lindo, vice-president, national and strategic relationships, at Equiton Capital. He told the Private Capital Markets Association ‘Getting Real With Canadian Real Estate’ session that 2.8 million people have arrived in the country in the last five years, yet only 880,000 homes were built over that time.
Canada is challenged when it comes to housing, says Lavelle Lindo, vice-president, national and strategic relationships, at Equiton Capital. He told the Private Capital Markets Association ‘Getting Real With Canadian Real Estate’ session that 2.8 million people have arrived in the country in the last five years, yet only 880,000 homes were built over that time. At the same time, said Greg Romundt, president and CEO of Centurion Asset Management, the banks have not responded because the central bank realizes it faces a cataclysmic catastrophe. One third of mortgages are in default and “it’s not a healthy situation,” he said. While interest rates will come down, they won’t return to zero which is going to make it difficult for people to qualify or renew their mortgages under the higher rates and those who want to sell won’t be able to, he said. Complicating things is when the banks sell these foreclosed homes, price wars result because they come onto the market at lower prices. At the end of the day, it comes down to supply and demand, said Lindo, and this will be compounded as 700,000 construction workers are set to retire in next few years. There is also a shortage of 236,000 skilled labour workers and no-one goes to school for these jobs. Romundt said government intervention is needed, but it’s not happening. One-third of the cost to build a home is because of taxes. However, requests for breaks on development fees or phased taxes are rejected because every level of government has its hands in the pockets of developers. “Government is going to do what it is going to do, it’s political,” he said, and if it is not profitable to build houses, “we won’t.”
