Canada should let foreign buyers purchase new homes. That would help developers pre-sell enough new single-family homes and townhouses to secure financing, boosting supply and improving affordability.
Of course, this isn't my idea.
It's the argument made in a recent Globe and Mail editorial, which cites economist Mike Moffatt in support.
But the editorial itself admits foreign buyers aren't interested right now, because rents don't cover ownership costs and price gains are far from certain.
In other words, foreign money only comes back when the investment is profitable again. That happens when prices are rising and rents are high enough to make the numbers work, which is the opposite of what affordability requires.
We've also seen this movie before. Investor pre-sales financed the condo boom, and we got units built for investors, not families, at prices few households could afford.
Now the proposal is to use the same model for the homes Canadian families need to raise their kids, with foreign buyers who, by the editorial's own admission, pay more than Canadians.
Set aside the flimsy economics, though. Here is the more important point.
Housing plays two roles. It is shelter, a human necessity. It is also a financial asset that appreciates in value over the long term.
That makes Canadian homes one of the most important assets our country should protect, to ensure they are owned by the households that live and work in Canada.
Restricting foreign ownership isn't new. Canada already limits foreign ownership of our banks and airlines, because it's in the national interest to keep them in Canadian hands.
Homes aren't banks. There are millions of them, not a handful. But the principle is the same. Some assets matter too much to the country to sell to the highest foreign bidder, and the homes Canadian families live in should be at the top of that list.
Yet when it comes to our homes, experts are eager to open the door to foreign buyers, so foreign investors can profit from our country's most important asset.
If we won't sell our banks to foreign investors, we shouldn't sell them our homes either.