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Should the Government Put Housing First?

8 October 2013

If you were to ask most Canadians, they’d probably say that the federal government has already put housing and the concerns that go along with it first on their agenda. After all, everyone seemed good and fed up last year when Finance Minister Jim Flaherty instated new mortgage rules – the fourth time in just as many years that he made such a move. But there are a number of municipal governments that are speaking up and writing letters to Prime Minister Harper, urging him to put housing first on the national agenda, and to perhaps step in and make it more affordable for both home buyers, and renters. But, are they right?

A number of cities have written to the Prime Minister emphasizing that mortgage debt is putting “our national economy at risk,” and asking him urgently to do something about it. The letter was written by the Federation of Canadian Municipalities, which consists of a number of members from different cities around the country. It’s said that this organization represents 90 per cent of Canada’s population.

In their letter they pointed to the $1.1 trillion worth of mortgage debt currently held in the nation, despite steps “rightly taken” by the government over the past four years.

“Housing costs and, as the Bank of Canada notes, household debt, are undermining Canadians’ personal financial security while putting our national economy at risk,” the letter stated. They also stated that this meant that 1 in 4 Canadians could not afford the home they were currently sitting in. But is that even right? And is it the government’s problem that people continued to take on too much debt despite all the warnings the Prime Minister’s office has issued not to do so? Maybe not, but they do bring up some good points when it comes to those that haven’t even purchased a home.

“As it stands, for those who cannot afford to purchase a home, the short supply of rental units is driving up rental costs and making it hard to house workers in regions experiencing strong economic activity,” the letter stated.

The letter also went on to say that a lack of subsidized housing was putting many of the country’s most vulnerable individuals and families out on the street. And as for those mortgages that people can’t afford? The federation also claimed that the government should look into offering support through CMHC for low-interest mortgage renewals on older buildings. This, they say, would help pay for the maintenance these older buildings need, as well as other costs.

But is offering CMHC insurance on even more mortgages the right move? The Crown corporation has already come under a lot of heat for offering too much insurance, as well as coming too near to their ceiling where they will no longer be able to offer insurance to anyone. And in fact, many think this corporation should be privatized so that the burden no longer rests on the federal government, which inevitably means that it lies with the taxpayers.

What do you think? Should the federal government do something about the affordability of housing for Canadians? Or does the responsibility actually lie with the population within the country, who should be able to manage their own debt – mortgage or otherwise – and stop taking it on faster than they can pay it off?

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