‘If you believe that Toronto is unaffordable now, just you wait’: Economist says measures to cool housing market won’t work

We’ve been here before: pundits insist that unsustainable home prices will lead to consumer bankruptcies, foreclosures, economic malaise and plagues of swarming locusts, only to see Torontonians blithely continue to pile into real estate. A year ago, amid widespread layoffs and 16 per cent of mortgages facing deferrals, Canada Mortgage and Housing Corporation forecast a price decline of up to 18 per cent for 2020; instead, house prices soared more than 13 per cent in Toronto.We asked Benjamin Tal, deputy chief economist of CIBC World Markets — one of the numerous institutions that predicted a real-estate slump last year — what it will take to calm the frenzy.The economy is struggling, we hear of people fleeing cities, yet Toronto home prices are at all-time highs. What’s going on — is it just low interest rates?This has been by far the most the housing-friendly recession in Canadian history. In March and April, the market essentially froze and since then, it’s been on fire. Yes, interest rates are basically zero, but the reason is more complex. Remember, when the housing market went down in 2008, there was no such thing as a stress test. Now, if the mortgage rate is two per cent, banks will stress-test (whether) you can finance 4.79 per cent, so from a qualification perspective your rate is almost five per cent.Also, for every dollar decline in wages, the government injected seven dollars into the economy. People who lost their jobs used this money to pay for rent and other necessities, but most of the spending decline was among high-income individuals who couldn’t indulge in vacations, movies and other goodies even as their incomes continued to rise. Canadian households are sitting on roughly $100 billion of excess cash. Those people are dying to go to restaurants but they’re not willing to die doing so. Many are well-to-do baby boomers with kids now entering the housing market. This is pent-up demand eager to be released, so more and more households are providing assistance to their children to buy homes. Another ingredient is that we’re borrowing activity from the future. Everybody knows these interest rates won’t last, so there is a sense of urgency to be in the market now even if you planned to wait a year or two.Will the measures Ottawa introduced in the last budget, such as the vacant house tax, have much impact?The reality is we’re fighting supply issues with demand tools, which by definition cannot be successful. Over the past decade, changes to regulations were all on the demand side. The number one issue facing the GTA market is lack of supply. Making stress tests a bit tighter and a tax on vacant houses will help but at the margins. If we don’t deal with the supply issue, if you believe that Toronto is unaffordable now, just you wait.Are realtor practices, such as blind bidding, fuelling the price increases? In Australia, for example, people literally auction houses live and final bids go up by $500 or less.The blind-bid architecture clearly should be removed. It just makes sense, and I think it’s coming. People are talking about it more and even the real-estate industry is not against it. Anything to do with flipping and speculation should be penalized through taxation. But I don’t think those are causes of the problem.What do you think will happen when interest rates do start rising?Everything depends on the speed. The speed is as important as the magnitude. One of the reasons why we interpret the Bank of Canada’s every letter and comma is because the timing matters. Let’s face it: we are printing money. The Government of Canada is issuing bonds to pay for all the programs, which is rapidly increasing the money supply in the system. When people start spending this money, that can be inflationary. Nobody knows what the real risk of inflation is — and I include the Bank of Canada and the U.S. Fed here. But inflation is a lagging indicator. It’s like a brown spot on the banana: by the time you see it, it’s too late.If you wait too long to raise rates, you end up raising them too quickly. Before the 2008 U.S. crisis, Fed chairman Alan Greenspan raised interest rates from one per cent to five per cent basically over the course of breakfast. It shocked the system. The history of recessions is a history of overshooting in monetary policy. Every recession was helped, if not caused, by a monetary-policy error in which central banks raised interest rates too quickly chasing inflation that maybe was not there. This housing market can stabilize with the right policies and interest rate environment, but that must be combined with efforts to increase supply.What kind of housing supply should we be investing in?For the lowrise housing segment, we have to release more land and municipalities have to accelerate the process dramatically. It takes years now for developers get permits. Secondly, we need more purpose-built rentals. And we have to break the stigma associated with renting. I would suggest that if yo

‘If you believe that Toronto is unaffordable now, just you wait’: Economist says measures to cool housing market won’t work

We’ve been here before: pundits insist that unsustainable home prices will lead to consumer bankruptcies, foreclosures, economic malaise and plagues of swarming locusts, only to see Torontonians blithely continue to pile into real estate. A year ago, amid widespread layoffs and 16 per cent of mortgages facing deferrals, Canada Mortgage and Housing Corporation forecast a price decline of up to 18 per cent for 2020; instead, house prices soared more than 13 per cent in Toronto.

We asked Benjamin Tal, deputy chief economist of CIBC World Markets — one of the numerous institutions that predicted a real-estate slump last year — what it will take to calm the frenzy.

The economy is struggling, we hear of people fleeing cities, yet Toronto home prices are at all-time highs. What’s going on — is it just low interest rates?

This has been by far the most the housing-friendly recession in Canadian history. In March and April, the market essentially froze and since then, it’s been on fire. Yes, interest rates are basically zero, but the reason is more complex. Remember, when the housing market went down in 2008, there was no such thing as a stress test. Now, if the mortgage rate is two per cent, banks will stress-test (whether) you can finance 4.79 per cent, so from a qualification perspective your rate is almost five per cent.

Also, for every dollar decline in wages, the government injected seven dollars into the economy. People who lost their jobs used this money to pay for rent and other necessities, but most of the spending decline was among high-income individuals who couldn’t indulge in vacations, movies and other goodies even as their incomes continued to rise. Canadian households are sitting on roughly $100 billion of excess cash. Those people are dying to go to restaurants but they’re not willing to die doing so. Many are well-to-do baby boomers with kids now entering the housing market. This is pent-up demand eager to be released, so more and more households are providing assistance to their children to buy homes.

Another ingredient is that we’re borrowing activity from the future. Everybody knows these interest rates won’t last, so there is a sense of urgency to be in the market now even if you planned to wait a year or two.

Will the measures Ottawa introduced in the last budget, such as the vacant house tax, have much impact?

The reality is we’re fighting supply issues with demand tools, which by definition cannot be successful. Over the past decade, changes to regulations were all on the demand side. The number one issue facing the GTA market is lack of supply. Making stress tests a bit tighter and a tax on vacant houses will help but at the margins. If we don’t deal with the supply issue, if you believe that Toronto is unaffordable now, just you wait.

Are realtor practices, such as blind bidding, fuelling the price increases? In Australia, for example, people literally auction houses live and final bids go up by $500 or less.

The blind-bid architecture clearly should be removed. It just makes sense, and I think it’s coming. People are talking about it more and even the real-estate industry is not against it. Anything to do with flipping and speculation should be penalized through taxation. But I don’t think those are causes of the problem.

What do you think will happen when interest rates do start rising?

Everything depends on the speed. The speed is as important as the magnitude. One of the reasons why we interpret the Bank of Canada’s every letter and comma is because the timing matters. Let’s face it: we are printing money. The Government of Canada is issuing bonds to pay for all the programs, which is rapidly increasing the money supply in the system. When people start spending this money, that can be inflationary. Nobody knows what the real risk of inflation is — and I include the Bank of Canada and the U.S. Fed here. But inflation is a lagging indicator. It’s like a brown spot on the banana: by the time you see it, it’s too late.

If you wait too long to raise rates, you end up raising them too quickly. Before the 2008 U.S. crisis, Fed chairman Alan Greenspan raised interest rates from one per cent to five per cent basically over the course of breakfast. It shocked the system. The history of recessions is a history of overshooting in monetary policy. Every recession was helped, if not caused, by a monetary-policy error in which central banks raised interest rates too quickly chasing inflation that maybe was not there.

This housing market can stabilize with the right policies and interest rate environment, but that must be combined with efforts to increase supply.

What kind of housing supply should we be investing in?

For the lowrise housing segment, we have to release more land and municipalities have to accelerate the process dramatically. It takes years now for developers get permits. Secondly, we need more purpose-built rentals. And we have to break the stigma associated with renting. I would suggest that if you’re 35 years old, married with two kids and you’re renting, there is nothing wrong with you.

Yeah. In much of Europe, people rent all their lives and there’s absolutely no stigma attached to that. Do we need more high-end apartments to make renting more appealing?

Absolutely. Families who can’t afford to buy a house and older people downsizing will dominate the rental market in the future, and they don’t want to deal with a landlord who suddenly tells them their daughter is coming back from university and needs the condo unit. They want the stability of dealing with a company that owns purpose-built apartments.

In your recent report, you said the rental market declined 13 per cent in mid-2020. Has it recovered?

It’s still down 10 per cent, mostly in condos. There were few foreign students coming in. Also, it just happened that 2020 was a record year in supply of new condos and purpose-built apartment buildings after a few years of nothing, plus Airbnb began doing long-term rentals, so you had reduced demand and elevated supply. But I expect the rental market in mid- to late 2022 to be much like 2019, when it was very tight.

Do you expect the soaring housing prices in smaller towns to last?

Even with all the noise about prices in Barrie and London rising, the GTA and 300 kilometres around it still represent 95 per cent of the activity. I believe the demand in smaller cities will slow or even reverse because the office will remain an important part of our job-market experience.

Is foreign investor interest in Toronto real estate diminishing?

I think it will accelerate and I’ll tell you why: There are half a million Canadians residing in Hong Kong. Since COVID-19, about 60,000 to 70,000 moved back to Canada. When I talk with developers in Vancouver and Toronto, they see Hong Kong money coming in at a rate we haven’t seen in a long time. You can tax investors but they will come, regardless, because they have different agendas and enough money.

Has Toronto’s affordability changed vis-à-vis other major cities?

The prices in other cities went up as well, so Toronto’s position hasn’t changed much. Relative to other global cities and even Vancouver, Toronto is still affordable. But if we don’t seriously deal with the supply issues, it will become unaffordable. Demand tools can only buy us time.

This has been edited for length and clarity.

Joanna Pachner is a business writer and a freelance contributor for the Star.

Source : Toronto Star More   

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How a workplace investigation at York University has left this Black professor and his supporters crying foul

A five-year saga between a Black York University professor and administration is reaching a boiling point.After a litany of allegations, multiple human rights tribunal filings and an external investigation, the university is now working to terminate tenured professor Aimé Avolonto based on the results of the investigation so far. At the same time, supporters are igniting a global outcry, questioning the way the investigation has been handled, and calling attention to something many feel is familiar — how difficult it is for Black workers to get due process when they speak up about racism.In a statement to the Star, York University said “following a thorough, independent external investigation, multiple reports have concluded that allegations against Professor Avolonto of workplace harassment, including gender-based and sexual harassment, were founded,” and the university is “acting accordingly.”But Avolonto, who has been an associate professor in French studies at York’s Glendon Campus since 2004 and was elected twice as department chair, says he was the one who requested the investigation in the first place. He was concerned that the scrutiny from administrators was influenced by anti-Black racism, and as the investigation wore on, his suspicions grew.Over the past five years, a long list of events have signalled differential treatment to the professor — who is one of two Black full-time professors in the department. To name a few: a speech he gave on racial profiling to the school’s senate in 2017 being characterized as harassment, scrutiny of his interactions with students that seemed different from his colleagues and assuming he supported the hiring of a professor because she is Black, when the decision was made by five professors.“Anti-Black racism is often much more subtle than someone saying the N-word, making racist jokes, or openly insulting a Black person,” Avolonto wrote in a blog post about his experience the last few years. “It is mainly about treating Black people differently from non-Black people: showing suspicion of them, not giving them the benefit of the doubt, not acknowledging or valuing their experiences, holding them to a higher standard than others, applying more scrutiny to their work, insisting on a stricter interpretation of the rules despite normal practices, or treating them as troublemakers if they ever make a complaint about anything.” Now, Avolonto, his former union rep, students and faculty around the world are publicly questioning how fair the investigation into his claims has been.Last month, students and community members created a website and social media accounts on Twitter and Instagram demanding justice for Avolonto.A Change.org petition is nearing it’s goal of 50,000 signatures. And at the end of April, more than 200 professors from across Canada and around the world signed a letter of support for Avolonto, condemning the alleged way the case had been handled and demanding due process.Co-author Kiké Roach said that in cases like this, it’s in the interest of everyone involved that the investigation be seen as fair by all parties. “Justice often lies in the investigation itself,” said Roach, a lawyer and social justice and democracy chair at Ryerson University. “We’re not coming into this situation, prejudging the situation. We’re saying there is a breakdown in the system.“We’re concerned because we know that there’s a history, a long and sordid history of Black people in particular, not being given due process,” Roach said.So far, the external investigator has submitted four reports between Avolonto and colleagues who accused him of harassment. There have yet to be reports dedicated to Avolonto’s initial complaints against the former principal and associate principal of Glendon College, Donald Ipperciel and Ian Roberge. Since last year when the situation was first made public in the media by the Star’s Shree Paradkar, Avolonto participated in a CBC Fifth Estate episode on anti-Black racism on university campuses and spoke publicly in a press conference this April. He’s also filed a total of four complaints at the Human Rights Tribunal of Ontario, which name the university, 11 employees including president Rhonda Lenton, and the external investigator hired by York.The investigation, to now“This is one of the most egregious cases I’ve ever witnessed,” James Clark, Avolonto’s former union representative, told the Star. Clark was a representative for members at York University Faculty Association (YUFA) from 2016 until he resigned in December 2020 — mainly over the way Avolonto’s case was handled.He said he handled dozens of disputes between the university and faculty members, but Avolonto’s dispute is the most striking to him and the only others that came close were with members who were also Black. “Over that four-and-a-half-year period, I was able to see how their attitude shifted in terms of how they were treating him,” said Clark, who is white. In summary, he said A

How a workplace investigation at York University has left this Black professor and his supporters crying foul

A five-year saga between a Black York University professor and administration is reaching a boiling point.

After a litany of allegations, multiple human rights tribunal filings and an external investigation, the university is now working to terminate tenured professor Aimé Avolonto based on the results of the investigation so far. At the same time, supporters are igniting a global outcry, questioning the way the investigation has been handled, and calling attention to something many feel is familiar — how difficult it is for Black workers to get due process when they speak up about racism.

In a statement to the Star, York University said “following a thorough, independent external investigation, multiple reports have concluded that allegations against Professor Avolonto of workplace harassment, including gender-based and sexual harassment, were founded,” and the university is “acting accordingly.”

But Avolonto, who has been an associate professor in French studies at York’s Glendon Campus since 2004 and was elected twice as department chair, says he was the one who requested the investigation in the first place. He was concerned that the scrutiny from administrators was influenced by anti-Black racism, and as the investigation wore on, his suspicions grew.

Over the past five years, a long list of events have signalled differential treatment to the professor — who is one of two Black full-time professors in the department. To name a few: a speech he gave on racial profiling to the school’s senate in 2017 being characterized as harassment, scrutiny of his interactions with students that seemed different from his colleagues and assuming he supported the hiring of a professor because she is Black, when the decision was made by five professors.

“Anti-Black racism is often much more subtle than someone saying the N-word, making racist jokes, or openly insulting a Black person,” Avolonto wrote in a blog post about his experience the last few years. “It is mainly about treating Black people differently from non-Black people: showing suspicion of them, not giving them the benefit of the doubt, not acknowledging or valuing their experiences, holding them to a higher standard than others, applying more scrutiny to their work, insisting on a stricter interpretation of the rules despite normal practices, or treating them as troublemakers if they ever make a complaint about anything.”

Now, Avolonto, his former union rep, students and faculty around the world are publicly questioning how fair the investigation into his claims has been.

Last month, students and community members created a website and social media accounts on Twitter and Instagram demanding justice for Avolonto.

A Change.org petition is nearing it’s goal of 50,000 signatures.

And at the end of April, more than 200 professors from across Canada and around the world signed a letter of support for Avolonto, condemning the alleged way the case had been handled and demanding due process.

Co-author Kiké Roach said that in cases like this, it’s in the interest of everyone involved that the investigation be seen as fair by all parties.

“Justice often lies in the investigation itself,” said Roach, a lawyer and social justice and democracy chair at Ryerson University. “We’re not coming into this situation, prejudging the situation. We’re saying there is a breakdown in the system.

“We’re concerned because we know that there’s a history, a long and sordid history of Black people in particular, not being given due process,” Roach said.

So far, the external investigator has submitted four reports between Avolonto and colleagues who accused him of harassment. There have yet to be reports dedicated to Avolonto’s initial complaints against the former principal and associate principal of Glendon College, Donald Ipperciel and Ian Roberge.

Since last year when the situation was first made public in the media by the Star’s Shree Paradkar, Avolonto participated in a CBC Fifth Estate episode on anti-Black racism on university campuses and spoke publicly in a press conference this April. He’s also filed a total of four complaints at the Human Rights Tribunal of Ontario, which name the university, 11 employees including president Rhonda Lenton, and the external investigator hired by York.

The investigation, to now

“This is one of the most egregious cases I’ve ever witnessed,” James Clark, Avolonto’s former union representative, told the Star.

Clark was a representative for members at York University Faculty Association (YUFA) from 2016 until he resigned in December 2020 — mainly over the way Avolonto’s case was handled.

He said he handled dozens of disputes between the university and faculty members, but Avolonto’s dispute is the most striking to him and the only others that came close were with members who were also Black.

“Over that four-and-a-half-year period, I was able to see how their attitude shifted in terms of how they were treating him,” said Clark, who is white.

In summary, he said Avolonto’s treatment was “completely differential to other participants in the investigation who were white or non-Black.”

For example, Avolonto had to step down as chair of the French department and forgo his second term, while others named in the investigation stepped back, but mostly maintained their positions.

Things that Clark said were common practice at the school, seemed to be characterized as inappropriate when Avolonto did them — such as requesting a fourth-year student write in French via email and contacting colleagues on cellphones rather than office phones.

“There was more and more gap between the kinds of public statements the university was making with respect to its perspective in anti-Black racism on the one hand, and what it was doing to Black employees on the other,” Clark said.

Clark resigned in December 2020 after he was removed from Avolonto’s case.

In his resignation letter, Clark writes that he started to see similarities in other disputes YUFA was handling between Black faculty and the university and said, “I can no longer be part of any practices that further normalize the employer’s behaviour.”

Clark says that from his, Avolonto’s and the union’s point of view, there were problems throughout the investigation, but they initially wanted to give the process the benefit of the doubt.

Requests for a new investigator

One big problem that went unresolved, Clark says, was that as the investigation progressed, Avolonto’s mental health declined.

The impact was so great that in February 2020 and again in September 2020, Avolonto attempted to take his own life.

But leading up to that, Avolonto and Clark sought accomodation, starting in Februray 2019.

Three medical professionals — the third evaluation being one York requested in October 2019 — confirmed that Avolonto experienced “severe anxiety” when interacting with Roger Beaudry, the external investigator from Aptus Conflict Solutions. The third opinion recommended that a new investigator be appointed so Avolonto could participate in the process.

In an emailed statement, spokesperson for York University Barbara Joy said the university offered for Avolonto to participate via a written response or interviewing with “someone other than Mr. Beaudry” — according to Beaudry, this would have been someone else at his firm, and he would remain the investigator — but the offers “were all declined.”

Clark tells the Star that these options were already available and the issue of Beaudry’s involvement as the lead investigator would still not be solved.

In an email to the Star, Beaudry emphasized that doctors agreed Avolonto was disabled from participating in the investigation “if it was being conducted in a way that was unsafe, untrustworthy and biased,” which Beaudry insists was not the case.

“It was at all times conducted normally and appropriately,” Beaudry said in an email to the Star, adding that in email exchanges and their last interview Avolonto behaved with him in “problematic ways.”

Beaudry said he collected over 250 pages of evidence from Avolonto in the times that they did meet — twice over five days total before the request for a new investigator. The four reports Beaudry delivered so far amount to over 4,000 pages.

As the investigation pressed on with Avolonto unable to participate, he received reports finding the allegations of his colleagues founded and his responses unfounded. And so far, no reports for his stand-alone claims of racism.

He also received the first of three letters from York in August 2020, and two more in February and March 2021 saying the provost would reccommend he be dismissed for cause.

Support blooms worldwide

While the investigation wraps up, termination attempts get underway and Human Rights Tribunal of Ontario complaints slog through the court, a campaign of support for the professor has grown from many branches.

Originally when administration said students had complained about Avolonto and 28 had signed a petition in early 2017, 29 students sent a letter of support to administration and some sent glowing video testimonials to “The Fifth Estate” as it produced this year’s episode.

Separately, more than 200 professors have signed and sent a letter to York president Rhonda Lenton calling for due process, but have not heard back. Organizers of the effort say that there have been so many signatures, in part because Black professors relate to the kind of systemic racism in academic institutions.

Caroline Shenaz Hossein, a professor at York who co-authored the letter, said she has had her own challenges with racism while at the school. But beyond that, Hossein has seen other similar instances play out when people in her life have dealt with systemic racism.

“The only reason why I understand that is because I have my own lived experience. Someone in my family nearly killed themselves because of systemic racism,” she said.

“It’s not surprising why I would gravitate (to) and understand Aimé’s story, because I understand the politics of discrediting people when they start to bring up issues about systemic racism, and particularly anti-Black racism,” Hossein continued.

Co-author and lawyer Kiké Roach recalls that throughout the letter, the ask is for a due process.

“The right to a proper investigation and adjudication of this matter,” she said. “Those are things that should concern, all fair-minded people, but they particularly concern racialized workers and Black workers because of the long history of systems failing to recognize our full humanity, and deal with us with respect and dignity.”

Angelyn Francis is a Toronto-based reporter for the Star covering equity and inequality. Her reporting is funded by the Canadian government through its Local Journalism Initiative. Reach her via email: afrancis@thestar.ca

Source : Toronto Star More   

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