Newcomer Settlement Front Line Worker View on Immigration Flows and Housing Prices

I’m not going to keep enumerating the many cases that we have . I think you get the point. These are individual cases I cite but they represent tendencies, for every one case I cite there are many more. And they represent tendencies because people will do whatever is necessary to be able to have a roof over their head. People can be very creative under conditions that are increasingly difficult and in some cases critical.

Even if the government decided to build a million houses now, they wouldn’t be available for years. Building more is a solution, I agree but it’s a long term solution. We have to do something now. To buttress my point, this from a BMO report from May 2023 which discusses the increasing supply argument :

“ But there are at least three reasons why we simply cannot rely on supply alone to do the job. First, and most obviously, housing supply can only respond gradually, and is essentially fixed in the short run, whereas demand can change in a moment. Second, even over a more extended period of time, there are clearly limits to how quickly supply can respond, given Canada’s existing skilled trade workforce, availability of serviced land, and materials. Third, and perhaps more subtly, any success in improving affordability (i.e., lower prices) will sow the seeds for less building in the future.”
(https://economics.bmo.com/en/publications/detail/34d60afc-5f9d-4110-a19b-ba9b160782f2/)

There are several studies and reports that echo what we frontline workers see on the ground. From the same BMO meta study report cited above :

“ Beyond that, Canada’s strong population growth is no doubt a steady source of support for home price appreciation. Over the short term, the housing market can be swayed by cyclical factors such as interest rates, unemployment and income growth. But over the longer term, demographic trends have the biggest weight on home prices. Evidence from 18 large advanced economies since the start of the century shows that real home prices are closely correlated with population growth over time (Chart 6). For example, New Zealand, Australia, and Canada have seen both the fastest growing populations (aside from Ireland) over that period, and the fastest rise in real home prices, while Japan and Italy have been at the other end of the spectrum on both counts. “

It is a fact that population increase has a relation to housing price increase. I am not saying there aren’t other factors at play. Of course there are. But I am saying that immigration does put pressure on housing prices. It is also a factor. One last report that substantiates the claim that immigration flows affect housing price is from a study by Andrey Pavlov y Tsur Somerville called Immigration, Capital Flows and Housing Prices, the authors discuss effects after the government suspended an immigration investor program in Vancouver:

“ ..we show that immigrants can raise neighborhood house prices, at least in the case of the wealthy immigrants that we study. We exploit a surprise suspension and subsequent closure of a popular investor immigration program in Canada to use a difference‐in‐differences methodology comparing wealthy immigrant destination census tracts to nondestination tracts. We find that the unexpected suspension of the program had a negative impact on house prices of 1.7–2.6% in the neighborhoods and market segments most favored by the investor immigrants.”

So their study shows that 3 months after investor program was cancelled, house prices decreased. This not only shows a relationship between immigration and housing price but points to the fact that when immigration slows down, the effect on housing price is short term (3 months in this case). Another reason to argue for lowering immigration flows since the effect on price is almost immediate as demand decreases. Much better than building housing and waiting 10 years. Although this is not an either or argument. I argue for both polices , one short term , looking at immigration flows, and one longer term, building housing. I also agree the government should get back into building housing on a non profit basis. That would be an ideal solution since the market has not been good at allocating resources here in Canada. As a matter of fact, the market has not been the optimal option when it comes to housing.

We have historical examples of best quality of life city studies throughout the world and one of the cities that always comes up on top is Vienna. The special thing about Vienna is that about 60% of its residents live in government housing. So this is a very doable idea. It works.

So if I argue about revisiting immigration flows, what do I suggest we should lower them to? There are some studies that show that for every 1 % of immigration increase there is a concomitant 3% rise in price of housing. See this excerpt from an article in the Canadian press of Augunst 2023:

“ BMO published an analysis in May that estimated that for every one per cent of population growth, housing prices rise by three per cent. The rebound of the Canadian real estate market this year also shows how immigration is helping to maintain demand for housing, despite decades-high interest rates. “Strong population growth from immigration is adding both demand and supply to the economy: newcomers are helping to ease the shortage of workers while also boosting consumer spending and adding to demand for housing”

So there we have one guide to look at. Another idea would be to allow in as many students as we can house. For example, I mentioned the university issue and lack of housing for their international students. Well, one idea would be they can only accept as many as they can house. That is not done today. Another suggestion out there would be to lower intakes to 100 thousand a year and monitor pricing levels. And adjust up or down accordingly to absorptive capacity of infrastructure. There are many more suggestions but the main idea is whether we are willing to even consider looking at immigration flows, if there is a will, there will be a way. This issue has become a sacred cow and just mentioning lowering immigration makes one a persona non grata. I don’t think why this should be the case given our critical housing urban environment.

Particularly after most serious studies on housing identify immigration as a factor in rise of housing price. I have cited a couple above. But we also have the caseload evidence I cited as well as anecdotal evidence

increasingly becoming more evident to more people. Horror stories of people living in cramped unhealthy conditions. You have heard about these also I’m sure. And what is even more worrisome to me, this situation does not seem to be improving or stabilizing but it is getting worse by the day.

The situation of international students ( Int’l) and housing is critical in the area I work in . Over the past few years (especially 2022), students have had a difficult time finding accommodation. In fact, for the first time the University of Guelph announced that they no longer guarantee residence space! The going rate in Guelph for a room is anywhere between $700-1100 per month. For one room! There are horror stories also, recently about 25 international students at Canadore College in North Bay are living in tents on the side of the road. ( https://torontosun.com/news/provincial/international-students-living-in-tent-on-side-of-road-in-north-bay)

Surrounding university cities are also suffering lack of housing for INT’l students. In some university cities ( Cape Breton, read article here : https://www.saltwire.com/atlantic-canada/news/frustrated-residents-ask-cape-breton-university-to-stop-intake-of-international-students-amid-housing-crisis-100848256/ ) , people are calling for a moratorium on the influx of INT’s students. I think these calls to stop the flows of these students will grow to other university towns. Some argue it is not the fault of the students but of long standing government policies that have led to this , ( read article here: https://rabble.ca/politics/canadian-politics/punishing-international-students-wont-solve-strained-rental-market/) . Although I agree it is not the students’ fault, I nevertheless think a moratorium is reasonable until we can find a more permanent housing solution for the students. There are several initiatives that are promising, some using the private sector , some non for profit construction. In 2012, the city of Waterloo launched a special urban development plan for the Northdale neighbourhood, which sits between Waterloo and Wilfrid Laurier university. This plan uses private developers and rentals can be expensive. Another initiative is the Concordia Student Union’s partnership with UTILE (L’unité de travail pour l’implantation de logement étudiant), a non-profit developer in Quebec. The student union collected a fee from its members, and leveraged other financial partnerships, in order to raise funds to develop accessible student housing with UTILE. These initiatives are worth pursuing but they take years to implement. In the meantime if we keep increasing number of INT’l students, the problem becomes critical for the communities involved. As previously mentioned, I think a reasonable short term solution would be for Universities to bring in only as many students as they can house on residence until such time other housing options have been made available .

University administrators argue that their government funding has been decreased considerably and INT’l students are a source of funding that partially make up for the funding they have lost. This is true. But it is part of a whole other issue and the solutions involve much broader political implications. If students are being used as sources of funding without regard to their global needs, surely this is wrong. A student is a fee payer and pays for education but a student also needs housing. This latter need is not a priority for the University. And this is wrong. A student is also a tenant. A university cant have the cake and eat it too. They can’t just download the housing issue of the student to the surrounding community which is already at a limit. The University has to be responsible for housing their INT’s students. It is only common sense.

When it comes the other two classes of immigrants, residents and temporary workers, I talk to local employers and they tell me they need workers. Which in some cases is true. I see local fast food places staffed mainly by temporary foreign workers right now, most of them from a single source country.

Employers tell me they can t find local workers because of the pandemic benefits the government gave out. They also mention that people are lazy and don’t want to work. When I ask that another way to attract workers is to raise the wages, they say they can’t do that. That their business model wouldn’t support it. I think if the business model doesn’t support an increase in wages, we need to review that business model. Because in the long term it doesn’t build community. These businesses, large and small, are dependent on a flow of cheap labor to carry on with their business. I see this in my area but reflects a problem Canada wide and at another wider economic level. We know Canada has very low productivity growth rates. One of the reasons for this is our dependence on cheap labour. Instead of investing on machinery and R &D that would make us more competitive and allows us to pay better wages, we rely a lot on low wage labour. This reliance has the same problem as I mentioned above with the INT’s students. The incoming foreign worker is treated only as a worker. But in reality, he is also a tenant for he can’ t sleep on the street outside the fast food place where he works. Several workers in our area commute an hour or more to other cities and come back here for work. Because we simple don’t have the vacancies. Our rental market is at a limit and places are very expensive and increasingly so. Im not going to list the rental prices in our area because the reader already knows rents are ridiculous. Some places have increased rent by 50 % in the last couple of years. This trend is not slowing down. There is a disconnect between incoming workers and available spaces for them to live. Businesses don’t want to be made responsible for housing their employees and pass the buck to government. Different levels of government pass the buck to each other. No one does anything significantly impactful about housing and at the same time government keeps increasing the immigration inflows citing lack of workers. What about the lack of housing for those workers? A worker is a worker but she is also always a tenant /housing consumer. We are looking at immigrants as workers only. This is wrong. We have to have a wholistic view of the worker and also accommodate his housing needs. People don’t just need a job but a place to live.

The government is addressing the issue now and made some announcements. But I think it s too little too late. These announcements are focusing on the supply side and that as I mentioned above, will take years. In the meantime, immigration flows will increase to historic highs raising housing demand pressures and housing price inflation. We must lower demand in the short term . Why? because it is an easier policy to implement by the federal government and because its effects on housing price kick in faster than building housing in the long term (which should also be implemented). One thing doesn’t exclude the other. I am arguing for a two pronged approach to the critical housing price issue: in the short term focus on solutions to decrease demand pressures and in the long term build more multiple purpose housing, including deeply affordable units. I am arguing for urgent measures to decrease demand and price because the newcomers I am working with are at a limit. Their situation is critical. I also see the local citizens are going through the same thing. Too many people chasing too little housing. Its all fine and dandy to talk about building more housing. But to me it is a matter of utmost urgency. We have to do something now, in the short term because the situation has been critical for some time now. We have much evidence to confirm this, some of it cited above , some of it we can see with our own eyes everyday , things such as encampments growing throughout Southern Ontario Cities. How much worse does it have to be? When will our governments realize we have to do something now? Not in 5 years or 10? What will it take? People freezing in the winter due to exposure?

I am a frontline worker working with immigrants everyday. I see what they are going through. I see our housing system has collapsed. I see they spending more than 60% of their income on housing. Having

little money left for other expenses. They don’t even talk about saving anymore. That ship has sailed a long time ago. They are lucky if they are able to pay for their rent or mortgage and food. My clients transmit to me a sense of doom and dread about their situation. To the extent we don’t put in place emergency measures focusing on demand now, we run a risk of alienating and excluding a lot of people. We know that if more people become homeless, it is more expensive for the taxpayer. As it is now, to house a homeless person in a motel in Guelph today costs the taxpayer 200 dollars per day!

Continuing with the same policies is not only dumb politically but also financially inefficient .

I hope I am able to convey to the reader the sense of urgency my newcomer clients are living through everyday. Let us reduce future immigration for the sake of the immigrants already here. It is already late.

Eduardo Queiruga,
Working with newcomers in Southern Ontario.