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A statue of McGill University founder James McGill is seen on the campus in Montreal, October 2, 2009.
Trouble on the northern border
Canadian Immigration Minister Marc Millerwarned Canada on Sunday of an “alarming trend.” Foreign students are making asylum claims – the latest issue to confront his government as it struggles to get the immigration system under control.
In recent years, Canadian universities and colleges have increasingly relied on foreign students, who pay higher tuition than Canadians, to deal with funding shortfalls. But the wave of students – more than a million were admitted in 2023 – is being blamed for everything from a shortage of rental accommodations to security fears. A Pakistani national arrested as he was allegedly en route to New York to conduct a mass shooting at a Jewish centre came to Canada on a student visa.
Miller has twice decreased the number of visas available to foreign students, but more than 70,000 already in Canada are now facing deportation when their visas expire. In the next three years, 396,235 foreign student work permits will expire. If Canada gets tougher on students and other temporary foreign residents, a think tank warns that some could try their luck in the United States, increasing tension on the border.
The Macdonald-Laurier Institute’s Center for North American Prosperity and Security wrote in the Wall Street Journal that a surge of migrants is already starting to enter the United States, crossing into New York, New Hampshire, and Vermont. There were 180,000 interactions with U.S. Customs and Border Protection agents on the northern border between January and August, up from 27,180 in all of 2021.
The Canadian side may want to redouble its efforts to get a handle on the problem. Polling shows immigration is one of Donald Trump’s strongest issues, so any influx along the normally quiet northern border could give him a boost in the swing states where he and Kamala Harris are locked in a razor-close race.
And Canadians may want to avoid that. A report released Thursday from the Peterson Institute for International Economics estimated that Trump’s tariffs would cost the Canadian economy US$60 billion over the first three years.
People inspect a damaged building after the Russian missile attack on the premises of the lyceum of the Interregional Academy of Personnel Management in Poltava, Ukraine.
Hard Numbers: Russian missile strike prompts fresh Kyiv calls for air defenses, Corruption makes African youth look abroad, Migrant boat capsizes in English Channel, Housing woes hit all-time highs in rich countries, US Marines assaulted in Turkey
51: A Russian ballistic missile strike on a military academy and a hospital in eastern Ukraine on Tuesday killed at least 51 people. After the attack, which occurred in the city of Poltava, about 200 miles from the front lines, Ukrainian President Volodymyr Zelensky renewed his call for Western allies to send more air defenses. Separately, the US and Ukraine are close to an agreement on the supply of long-range missiles.
60: How bad is corruption in African countries? Bad enough that 60% of the continent’s young people aged 18 to 24 want to leave because of it, according to a new study by the South Africa-based Ichikowitz Family Foundation. The top destination of choice was North America, followed by Western Europe.
12: At least 12 migrants are dead after their boat capsized in the English Channel en route from France to the UK on Tuesday. Last week, the French and British governments pledged to jointly crack down on the human trafficking networks that bring asylum-seekers across the channel in small boats.
50: The lack of affordable housing is a problem for at least 50% of people in the OECD, a group of nearly 40 wealthy democracies. That’s the highest level of dissatisfaction on record. A combination of high interest rates – which make home loans more expensive – and sluggish construction are to blame. In the US, housing costs are nearly 40% higher than when the Biden administration took office, making housing a key issue in the presidential election. See here for our special report on what Kamala Harris and Donald Trump have pledged to do about it.
2: Two US Marines were assaulted on Monday in Izmir, Turkey, by members of the Turkish Youth Union, a nationalist and anti-American youth organization. Police reportedly detained 15 people over the incident. A video of the altercation showed a group pushing and grabbing two men dressed in civilian clothes, and attempting to put a sack over one of their heads while chanting “Yankee, go home.” Police and other Marines in the area eventually intervened. The two Marines were taken to a hospital to be evaluated but were not injured and have returned to their ship, the USS Wasp.
U.S. Navy guided-missile destroyer USS Chung-Hoon sails alongside the Royal Canadian Navy frigate HMCS Montreal during Surface Action Group operations as a part of exercise “Noble Wolverine" in the South China Sea May 30, 2023.
Hard numbers: Canadian ship passes through Taiwan Strait, Arrests plummet at US southern border, New mortgage rules (keyword: new), EV plant construction stalls
110: A Canadian warship passed through the Taiwan Strait on Wednesday in what Ottawa called a commitment to an open Indo-Pacific – and in what China called an undermining of peace. Beijing claims sovereignty over democratically governed Taiwan and the 110-mile-wide waterway dividing the two. Taiwan and the United States dispute that, saying the Taiwan Strait is an international waterway.
60,000: The number of arrests by border agents of migrants who crossed the southern US border illegally in July is expected to fall under 60,000, a massive drop from a peak of 250,000 in December, after President Joe Biden imposed stricter measures for asylum-seekers in June.
30: In an attempt to alleviate the housing crisis keeping many younger Canadians from buying a home, the federal government has implemented new mortgage rules giving first-time homebuyers with insured mortgages – the type required when a down payment equals less than 20% of the purchase price – up to 30 years to pay them off. Before now, the max was 25 years, and while this move will help lower some monthly payments, there’s a catch: It only applies to newly built homes, so many doubt it will help alleviate the housing crunch.
2.76 billion: After breaking ground in 2023, a company building a plant to produce battery components for electric vehicles near Kingston, Ontario, says it’s delaying construction because of a slowdown in EV sales. The project carried a total price tag of up to CA$2.76 billion, was projected to create 600 jobs, and the federal government was slated to invest up to CA$551.3 million.Will anyone ever be able to afford a home?
Housing mania is gripping the United States and Canada – with millions wanting but unable to find an affordable place to live.
For years, both countries have faced a growing housing crisis. The pandemic exacerbated the struggle, and only now are governments starting to take the problem seriously. Still, securing affordable housing remains a daily struggle for would-be buyers, renters, and a growing number who are either homeless or under-housed.
In February, the median home price in the US actually fell to $400,500, a decline of 7.6% annually, but housing remains unaffordable for the majority of the country. In December, a mere 15.5% of homes were considered affordable (mortgage payment no more than 30% of monthly income). A recent poll found that around half of aspiring buyers said they can’t afford a down payment and closing costs, though a mere 13% of would-be buyers said there was “nothing” keeping them from buying. This suggests that even those who might be able to afford a down payment face other challenges in the market. High mortgage rates, around 7%, “historically” low stock, and a lack of targeted rental and non-market units are keeping homes out of reach for Americans.
With homebuilders waiting on lower interest rates to initiate new builds, pressure on the market may grow in the short term. Housing starts were down in March, nearly 15% below February and 4.3% lower than a year ago.
In Canada, it’s even worse. Last month, the benchmark price was a whopping CA$720,000, up 2% over February with mortgage rates hovering between 5 and 6%. Homeownership now costs nearly 63% of the median household income, up from 35% in 2002.
High housing costs are also driving up inflation – as in the US – and the country also faces a supply shortage. In 2022, the Canada Mortgage and Housing Corporation said the country would need 5.8 million new homes by 2030 to reach affordability. Yet, new builds fell in March, down 7% from February, and the six-month trend is also down, which means the country isn’t building nearly enough housing. There is one exception: British Columbia, with starts up 27% in Vancouver, as the province pushes new builds through a series of measures, including zoning reform to push beyond a focus on building single-family dwellings and pro-density minimum building requirements.
Why are houses so expensive?
Prices are high thanks to high demand and low stock, as usual, but there’s more to it. There’s also a lack of political action to build or encourage the building of housing people need where they need it – for instance, non-market units, purpose-built rentals, multiplex units – which is keeping stock low for segments of the population, including younger buyers and lower-income earners.
Ottawa ceased its involvement in building social housing in the 1980s and 1990s, which hasn’t helped. The US has long been a laggard on social housing, though in recent years some municipalities are starting to build publicly owned units.
Exclusionary zoning – or “not in my backyard” NIMBY-ism – has been another hurdle in both countries, with cities fighting the density necessary to build at scale and homeowners keen to protect their home values by keeping new housing out. A jump in the number of newcomers in Canada, about 471,000 last year, also contributes to market pressure.
Labor shortages are also hampering new builds in both Canada and the US, with the latter still slowed by the legacy of the Great Recession, which did more damage stateside than up north.
And then there’s the elephant in the room: the financialization of housing through which big institutional investors dominate the market looking for returns on their capital. This pernicious problem stems from seeing houses as assets first and foremost, a source of maximized profit, which invites speculation and market dominance by institutional investors who seek to inflate prices. Smaller investors, meanwhile, simply buy and flip properties.
Thinking of housing as an asset also means that individuals may see their homes as investments for retirement. Housing policy expert Carolyn Whtizman says “since the 1970s, the federal government has been treating housing, particularly ownership housing but more recently multifamily apartments, as the primary investment vehicle for retirement.”
“Housing in the US has always been an asset for the middle class,” says Noah Daponte-Smith, an analyst at Eurasia Group. “Your house is your primary retirement savings vehicle.”
Housing investors and those who rely on their homes for retirement planning want, even need,higher prices, which leaves millions priced out of the market or stretched to the brink.
In Canada, the share of investors and repeat buyers in the market has risen precipitously compared to first-time buyers, with investors accounting for 30% of purchases last fall. In the US, first-time buyers make up a similar share of the market at 32%, and recent data suggests institutional investors could make up as much as 40% of the single-family detached home rental market in the next five years or so, which means higher prices for renters and buyers alike.
What’s going to make housing affordable?
Solving the housing crisis will take years of commitment to a number of measures. Whitzman says Canada needs a period of stable house prices and rising incomes to produce an affordable market, but it also needs government involvement in building or incentivizing stock that matches the needs of buyers and renters at various price points. The same is true in the US.
The other side of the equation is income – namely, people need higher salaries. Half of Canadians now live paycheck-to-paycheck, and a whopping 78% percent of Americans are in the same boat, which leaves no room for saving for a down payment.
Stabilizing requires efforts and cooperation by governments at the national, state/province, and local levels. One approach could be ending the capital gains exemption on the sale of a principal residence to dampen demand, just as, according to Paul Kershaw of Generation Squeeze, taxing home wealth and using the cash to build affordable housing would have a similar effect while increasing stock.
What’s being done now?
In recent years, and especially in the last few months, the Trudeau government has awoken to the need to go all-in on housing. Its 2023 Housing Accelerator Fund helps municipalities build homes, trading federal cash for national building goals, including upzoning, transit accessibility, and affordability. The fund is expected to generate 750,000 new builds in the next 10 years, and so far the feds have greenlit 179 local applications.
In Canada’s federal budget, tabled on Tuesday, the government committed to several measures focused on housing affordability to build what it says will be 4 million homes by 2031. Those include longer mortgage amortization periods, $15 billion for construction loan programs, $6 billion in infrastructure funding, and buyer tax breaks. It also promised to “restrict the purchase and acquisition of existing single-family homes by very large, corporate investors,” but those details are to be determined in the fall after consultations, and the promise itself is full of asterisks, such as “existing” and “very large.”
Stateside, Daponte-Smith points out that while there is a housing crisis, “especially in major metro areas,” no national housing strategy exists. Instead, housing policies are “determined at the state and really even at the local level,” which means that every builder has to deal with a different set of local laws and zoning codes that control what they can build and how expensive it will be.
The Biden administration is increasingly aware that it needs a housing strategy. In March, the White House announced the latest in its housing affordability plan, which includes pressuring Congress “to pass a mortgage relief credit” worth $5,000 a year over two years along with $25,000 as a cash grant for down payment assistance for first-time buyers. On the supply side, the administration is also calling on Congress to boost new builds with builder tax credits and announced grants for new builds of affordable units for buyers and renters.
Electoral consequences?
Both governments are under pressure to deliver affordable housing but are hampered by long timelines, limits on labor and capital, the need to cooperate and coordinate across levels of government, and views that housing is an asset rather than a human need.
Voters expect the Biden administration, Trudeau government, and their state/provincial and local governments to deliver, and they’re increasingly impatient – meaning they may punish those that don’t at the ballot box.
With both Joe Biden and Justin Trudeau facing voters in November and by the fall of 2025 respectively, you can expect both men to continue working on housing affordability – to get first-time buyers into the market and rents down for those unable or uninterested in buying. But they’ll be battling an intransigent market that serves investors and incumbents, and the fact that even in the best-case scenario there will be a lead time between better housing policy and good outcomes at scale.
President Joe Biden speaks as he announces a new plan for federal student loan relief during a visit to Madison Area Technical College Truax Campus, in Madison, Wisconsin, on April 8, 2024.
The battle for Gen Z
With President Joe Biden and Prime Minister Justin Trudeau facing upcoming elections, the battle is on to capture young voters. Biden will face former President Donald Trump next November, and the next Canadian election is due by the fall of 2025, but both contests are already underway. Younger folks in both countries are turning increasingly sour on the status quo as they face affordability challenges and feel left behind.
Trudeau has expressly said his government was focusing on Gen Z and millennials, “restoring fairness for them.” And on Tuesday, his government unveiled its “Gen Z budget,” going all in on measures for parents with younger children (new cash for childcare and a school food program), students (interest-free student loans), and housing policy aimed at opening space in the market for younger buyers who’ve been shut out in recent years (with a first-time buyer, 30-year mortgage amortization period and tax breaks for home purchases).
In the US, young voters are focused on affordability, abortion rights, the environment, and student debt, and Democrats will need those folks to turn out on Election Day if they hope to retain the White House and make gains in Congress. Those 43 and under are frustrated with the housing market. Democrats are working to get on abortion rights on the ballot in key states, and the Biden administration is touting the impact of its Inflation Reduction Act on the environment. The president also hopes efforts to eliminate student debt will help alleviate some cost-of-living concerns for young voters.
But Biden is also facing a backlash from Gen Z voters over Gaza and US funding for Israel. The president had hoped tougher talk on Israel would boost his reelection bid, but that’s been complicated by Iran’s attack – although the administration has told Israeli Prime Minister Benjamin Netanyahu that it won’t support reprisals against Iran.
Both Biden and Trudeau need younger voters to turn out to vote for them. In 2016, Biden dominated the Millennial and Gen Z vote by about 20 points over Trump. And while Canada’s Liberals managed a minority government in 2021 with a youth vote that was likely a near-split with the Conservatives, younger voters played a crucial role in Trudeau’s 2015 majority government victory.
This means the coming months will see increasing efforts focused on wooing younger generations.
Houses are seen under construction in a neighbourhood of Ottawa, Ontario, Canada.
Betting big on housing
Justin Trudeau’s Liberal government is going all-in on housing. The government has been rolling out announcements ahead of the official budget drop on April 16, a departure from the tradition of politicos trying to keep a tight lid on plans.
This week, as the country grapples with a housing affordability crisis, the government announced CA$6 billion in funding for home building and municipal infrastructure. But a few provinces, including Alberta and Ontario, pushed back, complaining about the strings attached to some of the cash, which would require provincial governments to permit builders to put up fourplexes without needing special approval.
Alberta is complaining the feds want to “nationalize” housing, which is a provincial constitutional responsibility, but a policy area in which the national government has been involved for decades.
On Thursday, Trudeau announced another $1.5 billion to protect and extend affordable rental stock, which is desperately needed in a country, where the average one-bedroom apartment goes for nearly $2,200 a month.
Stateside, the General Accounting Office said last year that the country was facing a shortage of affordable housing that’s been a growing supply since the early 2000s – and a broader supply shortage that isn’t helping matters.The average rent in the US is now just under $2,100 a month. But Congressional fights over funding have led to limited cash for making affordable housing more prevalent.
The dog, Bobi, that broke the record for oldest dog ever at 30 years-old, is pictured at Conqueiros, in Leiria, Portugal, February 4, 2023.
Hard Numbers: Dog title temporarily revoked, Young Irish adults live with parents, Russian air travelers live in fear, Houthi strikes crush cargo
⅔: Ireland is suffering from a serious housing crisis. Rents are so high that some two-thirds of Irish young adults live with their parents, which is nearly 20 points higher than the EU average. Experts blame a failure to invest in social housing and an overreliance on market solutions, which created incentives for developers to build luxury or short-term rental properties rather than lower or middle-income housing.
8: Russia’s commercial airline industry is hitting some serious turbulence. In the first eight days of December, according to a new report, Russian civilian airliners suffered at least eight separate serious mechanical failures. The rash of incidents is part of a wider problem: Western sanctions preventing the delivery of parts and service to Western-made aircraft in Russia are causing Russia’s commercial fleets to fall apart,
65: Houthi airstrikes on commercial ships navigating the Red Sea have caused cargo volumes through that waterway to fall 65% from normal levels. On Tuesday, even after two rounds of US-led airstrikes on Houthi targets, a Houthi missile struck a Greek-owned ship off the Yemeni coast. The Houthis say they’ll stop when there’s a cease-fire in Gaza, a call echoed by Qatar’s prime minister on Tuesday at Davos. (See our explainer on why Qatar is a small country with big influence these days.)Up up and away: Will skiers see more or less snow at Whistler this year?
Hard Numbers: El Niño messes with snow, US shutdown looms again, Toronto developers pause condos, climate report calls out Canada
8: It’s that time again … for shutdown roulette! The US Congress has just 8 days to pass a fresh stopgap measure to fund the federal government beyond Nov. 17, when the current money runs out. Mike Johnson, the newly elected speaker of the GOP-controlled House, said Wednesday that he would decide by the end of this week what he will seek to do. Johnson’s predecessor, Kevin McCarthy, was ousted last month by far-right GOP members who objected to the spending compromises that he’d reached with President Joe Biden.
14,000: Even as Toronto suffers the broader Canadian housing crisis, developers in the city have delayed launching almost 14,000 units as high-interest rates continue to depress demand among pre-construction buyers. At the same time, the national government pledged this week to build close to 30,000 new units on federal lands by the end of the decade.
110: A new UN report says that major energy-producing countries are on track to produce 110% more fossil fuels in 2030 than they are supposed to if the world intends to limit global warming to 1.5 degrees Celsius above pre-industrial averages. Canada is a big part of the problem: It shows the fourth-largest production increase in the world during that time period. The US came in second behind only Brazil among the climate policy scofflaws.