Politicians meddle with real estate but would Canadians tolerate intervention in other markets?

There's a difference between housing and real estate. Housing is where we live;real estate is an investment. It's a pedanticbut critical distinction. In all the breathless debates over housing bubbles and policy options, we look primarily at the investment.

Imagine for a momentthose debates centred around aninvestment other than real estate. A mutual fund. Or gold. Or an Exchange Traded Fund.

Wouldn't there be a backlash againstgovernment intervention in those investments? Would any of the stern statements from politicians keen on cooling the market make any sense?

OntarioPremier KathleenWynnehas unveiled aseries of 16 steps she hopes will cool the red-hot housing market in Toronto. Forget for the time being that we simply don't have the data to tell us whether any of these policies will work. Others have written about themotivationsand risks ofunintended consequences.

Consider instead how all this would be regarded if it wasn't as emotional a subject as real estate. Or if governments were not focused so intently on the investment side of soaring house prices, but rather on the supply side by providing more affordable housing for its citizens.

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"When young people can't afford their own apartment or can't imagine ever owning their own home, we know we have a problem,"Wynnesaid.

Imagineif the premier had said: "When young people can't imagine buying gold, we knowwe have a problem."

OntarioFinance Minister Charles Sousarecently told a news conference that the government had become "increasingly concerned about rapidly rising rents and housing prices, and their impact on the many people looking to find a home." At the news conference, officials from three levels of governments, as well as assembled media types, nodded in apparent agreement.

It's hard to fathom a similar reaction if Sousa had said the government was increasingly concerned about rapidly rising pricesof large cap stocks and their impact on the many people looking to invest.

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The list goes on.

"I don't want people to lose hope with respect to home ownership," said Toronto Mayor John Tory, seemingly forgetting that home ownership is not aright it's an investment like any other.

Echoed Prime Minister Justin Trudeau: "People need to afford the homes in the cities that they work."

The point here is that nearly all the oxygen in any discussion around housing focuses on that investment, and on one generation being priced out while the retirement plans of another generation arebased almost exclusively on the soaring value of their homes.

That preoccupationalso pays short shrift to the fact that the housing market has already shown some signs of cooling outside of southern Ontario and the Greater Vancouver Area.

Governments don't talk about intervening when certain stocks soar or the price of food rises. They certainly don't implement taxes or restrictions on certain buyers, including foreign investors,in an attempt to make an investment more affordable for a younger generation.

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There's also a bigger issue at play. If all the time and money spent talking about cooling the investment side focused more on the housing side, many of the issues we're struggling with today just mightbecome more manageable.

More affordable rental housing is key

The ability to invest in the housing marketmay not be a right, but having a secure place to live and raise a family certainly should be. If we focused on that side of the equation, we'd spend less time focused on foreign buyers, speculators and the spectre of an ominous housing bubble that could burst at any moment.

Governments could reviewzoning ordinances and the permit process to ensure we build more purpose built rentals. Theycould consider building a stock of housing that meets the needs of the market, rather than the profits of the developers.

Home ownership still a measure of success for millennials

But it's hard to change decades of thinking.

Governments have been nurturing, protecting and underpinning the housing market in multiple ways for decades. Among the most notable supports are the mortgage insurance backing provided by CMHC and the fact that, on the sale of a principle residence, home owners are not obligated to pay capital gains taxes.

EconomistArmineYalniziansays politicians need to rethink the path to prosperity. Traditionally, she says, thetwo paths were higher education and/or home ownership.

"The former no longer guarantees even employability, let alone higher wages; the latter is increasingly out of reach in part because of the former," she says.

Riskyto dismiss home ownership

ButYalniziansays breaking from that orthodoxy comes with risk.

"Politically it is hard for politicians to get off the 'ownershipsociety' narrative track, because it looks like they're waving the white flag on the future of the middle class for younger voters," she says.

Still, Benjamin Tal, Deputy Chief Economist ofCIBCWorld Markets, says other global cities and societieshave a completely different way of thinking about housing. And he notes that politicians won't change until those who vote for them start thinking differently first.

"We have to develop that mentality that if you are 35 years old, you're married, you have two kids and you're renting, nothing is wrong with you."