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House and Climate Crises whiplash

<a href="https://unsplash.com/@slrncl?utm_source=unsplash&utm_medium=referral&utm_content=creditCopyText">Nicolas Solerieu</a> on <a href="https://unsplash.com/s/photos/drafty-window?utm_source=unsplash&utm_medium=referral&utm_content=creditCopyText">Unsplash</a>
Nicolas Solerieu on Unsplash

This has been a bit of a “whiplash” week.

In Vancouver, the Federal Government announced their Emissions Reduction Plan to achieve 2030 climate targets. In Toronto, the Provincial Government introduced the More Homes for Everyone Act to promote the construction of 250,000 new homes. On LinkedIn, a home inspector posted a picture of a newly constructed home with no insulation in the attic. He’d had to cut access into that attic as a rumour on the street had it the Builder had failed to insulate some areas in the homes. The rumour was confirmed.

After the Oil & Gas Extraction and Transportation Sectors, the Housing Sector is the third-largest contributor to GHG emissions. Canadians turn off our furnaces as we turn on our Air Conditioners, sometimes on the same day.

As we switch to electric modes of transit, why would we build 250,000 new homes without making darn sure they were practically air-tight?

Builders and their lobbyists have done an admirable job of convincing our Provincial Government that the Housing Crisis is a “supply crisis” that can only be solved by building more homes.

Is it though?

CMHC reports that Canada is “short” 2M bedrooms while 12M lie empty every night. OMERS Ventures describes housing as the world’s largest but least liquid asset class. The Housing Market is too costly to enter, move around within, and then exit. Illiquidity begets inefficiency, and our Housing Markets are extraordinarily inefficient, leaving us with 12M empty bedrooms.

At the root of this inefficiency is a concept that is an anachronism in our modern data-rich society – caveat emptor or “buyer beware.” Buyer beware is a risk management construct that creates the need for “due diligence”. It is the need for due diligence coupled with crude risk allocation that makes the real estate market inefficient and housing illiquid. If data is the “new oil” why all the due diligence?

We should be able to come up with ways to mitigate the Housing and Climate crises together. Building another 250,000 illiquid and leaky homes can’t be the only answer.