International Students And The Path Forward For Affordable Housing

Real Estate

Welcome to my blog on housing, culture, and design! I’m Steve Fudge and I’m celebrating over 3 decades as a realtor and property consultant in Toronto, Ontario, Canada.

As a first-generation Canadian of working-class immigrants who moved to Canada in 1957, I’m extremely grateful to call ‘The Great White North’ my home on native land. This country gave my parents a monthly baby boom bonus to help make ends meet and provided me with health care, a multi-disciplinary education, and a foundation for the future when I would become the best version of myself. For all the gripping complaining people do about our high taxation rates in Canada (a 2022 study published by the Fraser Institute found that in total the average Canadian family paid 45 percent of its income in taxes), I have no issue with this. In fact, the beneficial byproduct of growing up supported by Canada is that I have the ability to pay this annual fee. Taxes are simply the price of admission to live from coast to coast to coast surrounded by other progressive, liberated, multicultural humans who, like me, are grateful.

I’m fortunate my parents immigrated to Canada, and I’m glad our large country with a small population is open to people coming here to further their education while getting their foot in the door to relocate here as permanent residents. In fact, Canada, as part of its foreign affairs policies going as far back as WWII, has encouraged students to study here as part of a longer-term strategy of helping to train future workers to fill substantial gaps in the workforce. And, in the early 200s, a series of changes in immigration policy reflected the federal government’s interest in getting international students to stay and work here after graduation, including the introduction of off-campus work permits and the creation of a new permanent residence stream that factored in Canadian education and work experience.

Fast forward to this year, and Canada is on track to welcome 900,000 international students – the most ever, and almost triple the yearly rate a decade ago, according to this CBC article: “Integrity Of Immigration System At Risk As International Student Numbers Balloon, Minister Says“. And, according to this Globe and Mail article, Ottawa forecasts record-breaking amounts of international student applications to Canadian institutions – about 1.4 million international applications a year by 2027!

This is part of an overall strategy to accommodate aggressive immigration targets over the coming years, and the need is certainly urgent; nearly a fifth of current workers, across sectors, are nearing retirement, according to Stats Can. Meanwhile, the fertility rate in Canada is hovering at all-time lows. (The latest Statistics Canada data from 2021 reported a fertility rate of 1.44 children per woman that year).

Plus, there’s another reason. As Tracy Smith-Carrier wrote in The Conversation “Government funding of Canadian universities in 1982 comprised 82.7 percent of university operating revenues; by 2012, that percentage went down to 54.9 percent. By 2019, in Ontario, universities’ receipt of government grants represented a paltry 24 percent of total university revenues.” Yup, in order to balance their budgets, institutions of higher learning have had to focus on attracting international students to come to Canada for their education. According to Statistics Canada, in 2022/2023 international undergraduate students paid 429.0% more for tuition fees than Canadian students, while international graduate students paid 184.0% more.




Coming To Canada Has Its Challenges For International Students

The plight of international students has been in the headlines a great deal lately, including a situation where 700 international students from India were facing deportation after falling victim to a fake college enrolment scam, and were admitted to Canada with fraudulent college admission letters. A year ago, The Fifth Estate produced a troubling segment that shared How Recruiters In India Use False Promises To Lure Students To Canada.

Other challenges include the reality that the cost of living here requires many international students to find employment. While Canadian university fees are relatively cheap compared to American schools, the continuously increasing tuition fees and hikes in the overall cost of living have made it extremely challenging for international students to continue their education. This is being exacerbated during the current economic slowdown when inflation is at its new high and the value of the rupee is dropping quickly against the Canadian dollar.

Until a year ago, the Canadian Study Permit restricted international students from working more than 20 hours per week, but a pilot project lifted the 20-hour-per-week cap on the number of off-campus work hours international students could be employed. By and large, I applaud allowing anyone to work as much as they think necessary because I could not have completed my university undergraduate and graduate education (which took me until the age of 30) had I not worked as a server in a restaurant. However, it’s disconcerting to read in The Conversation how “International Students Face Exploitation In Canada And Abroad“.

Furthermore, many international students are arriving and are challenged to find affordable rental housing, let alone any place at all, with stories about this trend popping up frequently. This article from the National Post tells the shocking tale of an international student sleeping under a bridge for four days, unable to find lodging after arriving to attend school –> “International Student Living Under A Bridge In Toronto Helped By Strangers“. This CBC article “Would You Share A Single Room With 3 Other People? Why Student Housing Is In A Crisis” tells the story of landlords charging egregious rents.

With fraud issues, challenges finding employment, and a lack of suitable affordable housing, there had been a discussion about capping the number of international students, which was met with opposition from a number of provinces and individual schools. Limiting the number of international students may be counter-effective, too. If someone comes to study in Canada, they are more likely to integrate and stay after they graduate, meaning that there are more educated people immediately on-hand to fill those empty (and soon to become vacant) positions in the labour force.

In reality, the issue is not around the number of students coming in; the issue is around having a comprehensive approach to inviting, welcoming, housing, and integrating students, all as part of the larger immigration picture.

This Globe and Mail article –> “Universities Bring In Foreign Students But Take No Responsibility To House Them, Therein Fueling The Housing Crisis” suggests some salient points. Namely, while student enrollment has increased substantially, housing and other support has not increased proportionately.




This CBC article has a good timeline, chronicling the series of events that has led to the current dilemma with housing: “We’re Welcoming Record Numbers Of International Students. Here’s How They Got Caught Up In The Housing Crisis“.

As this CTV story outlines, “Housing Crisis: Feds Stick By Immigration Plan, Rethink International Student Flows“, the housing crisis, lack of supply, and subsequent problems with affordability aren’t about immigration targets. Rather, the lack of synchronicity between levels of government (which is a crucial cog in the development wheel) along with high development fees and miles of red tape contributing to inefficiencies and slowing the process, just when it needs to be expedited, is at the crux of the matter.

The reality is that this influx of students needs somewhere to live while they study, which creates additional pressure on already tight rental markets. This, in turn, pushes prices up, causing debt-laden students to have to pay high prices just to find somewhere suitable to live. The pinch on affordability isn’t shouldered only by students, as all renters are faced with escalating prices, a consequence of the mismatch between supply and demand.

Focus Should Be On An Affordable Supply, Not Demand

In an effort to reign in housing prices, various levels of government have introduced policy measures to help with affordability, but most of this addresses the demand side: mortgage stress test, foreign ownership restrictions, vacant housing tax, etc.

While these have not led to softening housing prices, you’re certainly not going to be able to regulate your housing market when you’re ensuring a built-in demand by having aggressive immigration targets and woefully inadequate policy to fast-track building enough supply to keep up.

As for the discussion around capping the number of foreign students attending university in Canada, the thinking is that until we have enough housing maybe the government should curb demand by reducing admissions.

While there is truth to the relationship between population growth and pressure on housing supply, it’s worth pointing out that it is not immigration (and foreign student) numbers in and of themselves that are creating housing affordability problems; rather it is policy around the development of housing and a long-standing problem of supply lagging demand that has contributed heartily to eroding affordability.

As this BBC article “Canada Considers Foreign Student Cap Over Housing Crisis‘ points out, international students are a “valuable asset to Canada’s long-term economic growth,”

So, capping the number of students isn’t really the solution – and many universities share that same sentiment, as pointed out in this CBC article “Integrity Of Immigration System At Risk As International Student Numbers Balloon, Minister Says“.

Universities have called for dedicated funding from the governments to help them create housing for international students. They suggest that international students themselves should be part of the dialogue.




Affordability For All

The international student housing problem is part of a larger problem plaguing the entire population: housing affordability. The higher cost of borrowing, along with high housing prices, has pushed more people into the rental market.

It’s crowded in that rental pool. There are regular renters, a surge in immigrants and international students, as well as sidelined house hunters all competing for housing. With a serious lack of rental housing, prices have climbed rapidly, threatening affordability not only for incoming students but for anyone seeking rental housing.

In fact, according to the latest release of report, rents rose across the country by almost 2 percent month-over-month, while the annual increase is a staggering 9.6%, pushing rents up to yet another record-breaking amount, to an average of $2117/monthly.

And to no one’s surprise, the highest increases have been in Vancouver and Toronto respectively, where a large rental pool, growing larger because of high housing prices and rising interest rates, is competing for scant rental stock, effectively pushing prices higher and higher.

Smaller university cities and towns are also experiencing similar surges, as more international students arrive and not enough housing exists for them.

The answer is not to divert demand, but to create more supply where demand is greatest. This should mean building more on-campus housing funded under the Government of Canada’s National Housing Strategy (NHS) specifically to address student needs, including a mix of student housing that ranges from shared accommodations, dorm rooms, and family dwellings, with a healthy amount of affordable units, right on campus.  It would be a great way for universities and the government to partner by creating guaranteed accommodations for many generations of incoming students.




Policies Proposed, But Are They The Right Policies?

This shortage of rental housing isn’t new; it’s a problem that has been on the horizon for some time. Incentives and tax breaks for purpose-built housing were slowly repealed in the early 1990s and have not been replaced with new policies.

Just last week, the Liberals announced that they would forgo GST on the development of new rental housing, a step in the right direction, but only a start.

Repealing the GST only helps with one of the many (and variable) costs of producing new housing, including materials and labour. Some critics complain that it’s only the big developers with funding already in place that will ultimately benefit from this policy, and that more needs to be done to incentivize small and medium-scale developers to generate substantial amounts of new housing.

There needs to be support from all levels of government, around financial incentives (i.e., tax breaks, incentives, etc.) but also help to cut through red tape, which slows everything down, exactly when it needs to speed up.

A new study “Wait Times For City Approvals Holding Back Homebuilding Efforts, Builders’ Study Finds” draws a direct link between the myriad of approvals and the delay of development.

More land needs to be made available, with more funding and support specifically around purpose-built housing.

As this article from the Globe and Mail points out “How Canada Can Create More Rental Housing” more than 85 percent of Ontario’s rental stock was built prior to 1980, so time is of the essence. The authors of this article suggest that revisiting some of the incentives and policies that spurred purpose-built housing in the 1970s is the path forward.




High Immigration Targets Can Help With Affordability, Not Hurt It

It’s worth mentioning too, that immigration, while constricting housing affordability because of an immediate pressure on the demand side, can also simultaneously assist with the supply side of the equation.

One of the industries where the labour gap is the highest- is construction and skilled trades, which is one of the reasons that housing is slow to be built. Having those skills at hand in numbers could speed up construction and new supply substantially, which is where labour-focused immigration could help.

It underscores that the answer to affordability challenges is multi-faceted and has many layers, requiring strategy and cooperation from various levels of government and stakeholders alike.



Did you enjoy this post? Here is some great further reading:

Shades Of Duplicity In The Foreign Buyer Tax For Canadian Housing

Dear Urbaneer: Will The New Anti-Flipping Legislation And A Ban On Foreign Buyers Impact My Toronto Property Investment?

Making Housing Affordable: When Hotels & SRO’s Were Homes

Realtor Steven Fudge Joins The Panelists On theZoomer To Discuss Housing Innovations

Design Innovations For A More Affordable Canadian Housing Future

Dear Urbaneer: What’s Being Done To Create Affordable Housing In Toronto?

How Canada’s 3 Levels Of Government Shape Housing Policy & Programs

Dear Urbaneer: Does Canada Have A History Of Building Affordable Economical Housing?



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