The Housing Crisis: A Ticking Time Bomb for Businesses

Credits: Business leaders say housing biggest risk to economy: KPMG survey

Tackling the Biggest Economic Risk Through Collaboration

Businesses across Canada are sounding the alarm bell – the housing crisis is the biggest risk facing the economy, and urgent action is needed. According to a recent survey by KPMG Canada, an overwhelming 94% of business leaders agree that high housing costs and a lack of supply pose the top risk, and they believe addressing this issue should be a main focus in the upcoming federal budget.

The housing crisis is not just a societal concern; it's having a direct impact on businesses' bottom lines. A staggering 87% of the 534 businesses surveyed revealed that they are being forced to boost pay and budget for higher labour costs to attract and retain talent in the face of soaring living expenses.

"What we're seeing in the survey is that businesses are needing to pay more to enable their workers to absorb these higher costs of living," said Caroline Charest, an economist and Montreal-based partner at KPMG.

The ripple effects of the housing crisis extend far beyond the immediate financial strain on businesses. As Charest explains, "The need to pay more not only directly affects business finances but is also making it harder to tamp down the inflation that is keeping interest rates high."

High housing costs and interest rates are compounding the challenges faced by households already grappling with high debt levels. "It leaves household balance sheets more vulnerable, in particular, in a period of economic slowdown. So it creates areas of vulnerability in the economy," Charest warns.

Moreover, higher housing costs are themselves a significant contributor to inflation, making it even harder to bring inflation under control and pave the way for lower interest rates.

The business community has been raising the alarm for some time. A report from the Ontario Chamber of Commerce last year emphasized how the housing crisis is hampering businesses' ability to attract and retain talent.

As the KPMG survey findings highlight, nearly 90% of businesses want to see increased public-private collaboration to address the housing crisis. "How can we work by bringing all stakeholders – governments, not-for-profit organizations, the community, and the private sector together – to find solutions and develop new models to deliver housing?" Charest poses.

While the federal government has introduced measures such as a GST rebate for rental housing construction and funding support for other levels of government, its direct control over the file is limited. Part of the federal funding has been tied to measures provinces and municipalities adopt to boost housing supply.

The vast majority of respondents in the KPMG survey supported tax measures to make housing payments more affordable, such as making mortgage interest tax-deductible while also maintaining the capital gains tax exemption for primary residences.

With the housing crisis posing an existential threat to businesses and the economy, the time for action is now. Collaboration between the public and private sectors, innovative solutions, and a concerted effort from all stakeholders is crucial to addressing this ticking time bomb.

Embrace Multifamily Investing to Achieve Homeownership

Navigating the path to owning a home has become increasingly daunting in the face of skyrocketing housing prices and a nationwide affordability crisis. However, astute investors are uncovering a compelling solution in multifamily rental properties, opening doors to a realm of opportunities for wealth accumulation.

Throughout North America, the demand for affordable housing continues to swell, fueled by factors like population expansion, urban migration, and the escalating costs of single-family residences. This relentless demand has cultivated an ideal landscape for multifamily investments, providing investors with avenues to generate consistent cash flow and reap the rewards of long-term appreciation.

By harnessing the potential of multifamily investing, aspiring homeowners can actively pursue their dreams while simultaneously building financial prosperity and security. Multifamily investing presents a strategic avenue to homeownership, empowering individuals to seize control of their financial destinies and surmount the obstacles presented by an increasingly inaccessible housing market.

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