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The Supreme Court tackles homeless right to sleep outside
Is sleeping like breathing? Do Americans have a Constitutional right to sleep? In April, Supreme Court justices heard a case involving homeless encampments and whether cities that don’t provide shelter space can arrest or fine people for sleeping outside. At oral arguments, they asked philosophical questions about the idea of sleeping and whether or not providing space to sleep qualifies as “cruel and unusual” punishment under the 8th Amendment of the Constitution.
Legal expert Emily Bazelon joins Ian Bremmer on GZERO World to unpack some of the biggest cases before the Supreme Court this year. Former President Trump’s legal woes are front and center in the news, but many other major issues are at stake during this court term, including homelessness, gun rights, free speech on social media, and the power of federal agencies to interpret laws.
One case in front of the Court this year that isn’t generating a lot of headlines but will have a big impact on the daily lives of Americans involves the landmark 1984 Chevron v. Natural Resources Defence Council decision that provides the legal bases for government agencies like the EPA, SEC, and FDA to interpret laws how they see fit if they are ambiguous. At oral arguments, the Court’s conservative majority seemed skeptical of allowing the Chevron ruling as it stands to remain in place, which will fundamentally change the way the federal government operates.
“One way to think about these agencies is that they keep us safe. They make sure the water is clean and that the air is clean,” Bazelon explains. “Another way to think about them is they're intruding on corporate profits and taking up too much power.”
Catch GZERO World with Ian Bremmer every week on US public television (check local listings) and online.
Houses are seen under construction in a neighbourhood of Ottawa, Ontario, Canada.
Betting big on housing
Justin Trudeau’s Liberal government is going all-in on housing. The government has been rolling out announcements ahead of the official budget drop on April 16, a departure from the tradition of politicos trying to keep a tight lid on plans.
This week, as the country grapples with a housing affordability crisis, the government announced CA$6 billion in funding for home building and municipal infrastructure. But a few provinces, including Alberta and Ontario, pushed back, complaining about the strings attached to some of the cash, which would require provincial governments to permit builders to put up fourplexes without needing special approval.
Alberta is complaining the feds want to “nationalize” housing, which is a provincial constitutional responsibility, but a policy area in which the national government has been involved for decades.
On Thursday, Trudeau announced another $1.5 billion to protect and extend affordable rental stock, which is desperately needed in a country, where the average one-bedroom apartment goes for nearly $2,200 a month.
Stateside, the General Accounting Office said last year that the country was facing a shortage of affordable housing that’s been a growing supply since the early 2000s – and a broader supply shortage that isn’t helping matters.The average rent in the US is now just under $2,100 a month. But Congressional fights over funding have led to limited cash for making affordable housing more prevalent.
FILE PHOTO: People walk on the grounds of the University of Toronto in Toronto, Ontario, Canada September 9, 2020. Picture taken September 9, 2020.
Ottawa caps visas for foreign students
The Trudeau government is shutting the door to hundreds of thousands of foreign students. This week, Ottawa moved to reduce the number of undergraduate international student visas for 2025 to just 360,000, a 35% cut, in an effort to tackle the housing crisis and rein in diploma mills that are profiting off the system.
The reduction is expected to pose serious enrollment problems for some institutions. The schools have already warned that the government’s visa cuts could lead to tuition increases, job losses, and even closures. But Immigration Minister Marc Miller said he had no choice: "We've got two years to actually get the ship in order. It's a bit of a mess, and it's time to rein it in."
International students fall in a jurisdictional gap in Canada between the provinces, which fund and regulate universities and colleges, and the federal government, which issues the visas. As provincial funding has failed to keep pace with post-secondary costs, universities and colleges have kept their bottom lines intact by increasing the enrollment of foreign students, mostly from India and China.
“I’m not the minister of post-secondary education underfunding,” Miller said. “I’m the minister of immigration and clearly in the last decade or so post-secondary institutions in Canada have been underfunded.”
While Miller pointed to systemic issues, the primary impetus seems to be the housing crisis, which has led to a shift in public opinion against immigration. And against Justin Trudeau. Conservative leader Pierre Poilievre has successfully attacked the prime minister about the housing shortage.
Unlike in the United States, where immigration is at the heart of the national political debate, a cross-partisan consensus around the value of immigration is normal in Canada. So the Liberals moving to rein in student visas lies in stark contrast to a longstanding welcoming approach to immigration.
There may be more to come. Radio-Canada, the French language branch of CBC, reported Thursday that Canada is poised to reimpose a visa requirement on Mexico after more than 25,000 people from that country sought asylum in Canada last year.New university graduates line-up in a hall before convocation in Ontario, Canada.
Foreign students get caught up in Canada’s housing crisis
As Canada’s housing crisis continues – with the average selling price up 6% in six months, to CA$668,754, and the average 1 bedroom rental price at CA$2,078 – policymakers are looking at the effect of international students on prices. Last year, Canada saw over 800,000 international students arrive in a country of roughly 40 million people, over half of whom ended up in Ontario. In 2022, nearly 1 in 48 people in Canada were international students on a study permit.
International students are critical to university budgets and major contributors to the economy, at somewhere near CA$18 billion in 2018. With tuition caps on domestic rates and insufficient government funding, schools turn to foreign students to make up the difference. Those same students are also permitted to work while in Canada, and do. International students often become permanent residents, with roughly 30% of them doing so within 15 years.
But Housing Minister Sean Fraser is now considering a cap on the number of international students welcomed to the country in order to take pressure off housing prices. This comes as Canada recently revised its immigration target upwards, aiming for 500,000 admissions in 2025.
Canada isn’t building enough housing to keep up with demand, including purpose-built rentals and non-market options. The Canada Mortgage Housing Corporation says the country must build over 800,000 units a year. In 2022, it built 260,000. On-campus housing options are also inadequate, lagging behind growing demand.
In the coming months, with students set to start school in September and applications for next year due in February and March, we’ll be watching to see how the government manages competing needs to fund universities, welcome newcomers, juice GDP, and house students – and everyone else.
Broken housing markets could shape US and Canadian elections
The United States and Canada share hundreds of billions in annual trade, a deep defense relationship, the world’s longest undefended land border, and an affordability crisis that threatens to upend political fortunes. At the heart of that problem is housing. As both countries grapple with inflation and rising interest rates, the cost of shelter and the risk of foreclosures are rising.
The causes of unaffordable housing include a complex mix of under-supply (itself caused by several things), urbanization, marketization and speculation, immigration, population growth, temporary foreign workers, international students, and natural barriers. But whatever the cause, the US and Canada are both millions short on needed housing stock.
For President Joe Biden and Prime Minister Justin Trudeau, unaffordable shelter presents both a policy challenge and a political liability, especially as each faces looming elections. Biden is up for reelection in late-2024, and Trudeau must face voters by the fall of 2025.
Rising interest rates – and foreclosures
On Tuesday, Canada’s consumer price index revealed an inflation jump, moving from a two-year-plus low of 2.8% in June to 3.3% in July. The uptick makes a Bank of Canada rate hike in September more likely. The bank raised rates 25 basis points last month, sending the target rate to 5%. This summer, mortgage costs have been the primary cause of inflation – a vicious cycle of rate hikes driving mortgage costs, which drive rate hikes.
In late July, the Federal Reserve raised US interest rates to 5.25% – the highest in 22 years. That same month, the inflation rate moved 0.2% to hit 3.2%, driven, like Canada, by high housing costs.
As rates rise, so do US foreclosures. According to property data firm ATTOM, foreclosure starts rose 15% in the first half of 2023 – and a whopping 185% over the rate two years ago. Over 185,000 properties faced foreclosures in the first half of 2023 as the numbers trend back toward pre-pandemic rates. In 2017, more than 428,000 homes were foreclosed, while in 2018 it was more than 362,000, and 2019 saw over 296,500. The number of foreclosures had been in decline after the 2010 high of 1.65 million in the aftermath of the 2008 financial crisis. But last year was the first year that saw a rise in foreclosures since those dark days. Pandemic measures protected homeowners in recent years, but those are now in abatement.
Anecdotal data in Canada suggests an upward trend in foreclosures there too. A Calgary lawyer, for example, says the numbers are surging in Alberta’s largest city – the worst he’s seen since 2008. According to the Canadian Bankers Association, 0.15% of mortgages, just over 7,600, were in arrears in June 2023. That rate is low, but underlying conditions suggest trouble ahead, with the government offering new lending guidelines to support distressed borrowers in a bid to keep them in their homes. As the Globe and Mail reported in July, significant numbers of mortgage holders are falling behind on bills and borrowing to cover daily expenses. Meanwhile, household debt in Canada is the highest in the G7.
Moreover, many Canadians have variable-rate mortgages, where the interest rate paid is tied to a fluctuating prime rate. As interest rates have risen, more homeowners have shifted to fixed-rate mortgages. As the Financial Post reported in June, variable-rate mortgage share fell last April to under 8% – down from a January 2022 recent high of 56%.
Mike Moffat, founding director of the PLACE Centre at the Smart Prosperity Institute, says the foreclosure rates aren’t showing up at scale in data yet – but pressure is mounting. “Most of the cases that are starting to face pressures are the variable-rate mortgages,” he says. Lenders are using “creative solutions” such as extreme long-term amortization periods to manage cases, he notes. But there may be greater trouble on the horizon.
“Where we might start to see cracks forming is on fixed-rate mortgages,” he says, “particularly anybody who took a three-, four-, or five-year mortgage back in late-2020 or early 2021 ... When more of those fixed-rate ones start to come up for renewal, that’s when you’re going to see those pressures.” Folks who had locked in cheap rates will face much higher borrowing costs – and tough choices.
Broken markets home to sky-high housing prices
Unaffordable housing for owners and renters alike is a problem in both countries, but the problem is more pronounced in Canada. As Moffat notes, “Both Canada and the United States have some markets that are essentially just broken. You have maybe a half dozen big cities in the US where the housing market is out of control, and it’s the same thing in Canada where a half dozen housing markets are completely out of control, but the difference is in Canada, that half-dozen is 75% of the country.”
In April, the average price of a home in Canada rose to CA$716,000, up $100,000 in four months. While that’s the national average, some local markets are much worse. In Toronto, the average is over $1.1 million. In Vancouver, it’s over $1.2 million. This is also bad news for renters. According to Rentals.ca, in August, the average rental price for a one-bedroom apartment was $1,860 a month, up nearly 11% year-over-year. The average is $3,013 in Vancouver and $2,592 in Toronto.
Prices in the US are better overall, but some parts of the country are, as Moffat says, “broken.” According to Zillow, the average home cost in America is now over $348,000. But in the top markets, prices are much higher. New York averages over $618,500, while Seattle is above $701,000. Los Angeles is nearly $890,000, San Diego is almost $882,000, and San Francisco comes in at a whopping $1.12 million (that’s after a 4.98% year-over-year price decline).
Governments are waking up to the problem
The federal government in Canada is now ramping up its housing rhetoric – and perhaps its action. Newly appointed Housing Minister Sean Fraser says the feds should have never left the affordable housing game (which it has done over the last five decades). He is advocating more building, and there’s now talk of the governing Liberals leveraging their power and money to induce cities to build more supply. Fraser also says the government plans to make housing affordablewithout tanking the value of homes for existing owners. The government also recently launched a tax-free First Home Savings Account designed to help first-time buyers save for a downpayment.
Fraser’s comments come as Conservative opposition leader Pierre Poilievre is making affordability, including housing, a core part of his campaign message, and promising that, if elected, his government would withhold federal money from municipalities that don’t meet housing goals. It also comes in the wake of a Trudeau gaffe: The PM recently said housing isn’t primarily a federal responsibility, which is both true and the last thing Canadians want to hear.
The Biden administration has also caught on to the importance of affordable housing and is aiming to boost supply and bring ownership within reach for more Americans. The new strategy, announced in July, includes measures to ease land use and zoning restrictions, expand financing, and convert commercial spaces into residential spaces.
Housing could shape elections
With the Liberal government lagging in the polls, it seems to have caught on that it needs to go all-in on housing ahead of the next election. For months, Canadians have felt the federal government wasn’t paying enough attention to housing.
While events matter and can shift what the next election will be about, Moffat points out that housing is poised to be a major issue. “Barring any large crisis in the next 18 to 24 months, I do believe housing is going to be a top issue, either on its own or in a larger basket of affordability issues.”
In the US, housing policy proposals may end up in broader packages. Clayton Allen, US director at the Eurasia Group, says “presidential candidates are focused more on the question of how to address cost increases and inflation in general, and housing costs would fall under that broad umbrella.” So while there aren’t many specifically targeting housing, there’s a “laundry list of ideas to increase wages, improve the US economy, and tamp down inflation.” And since housing is bound up with affordability, it’s likely to be on the campaign agenda one way or another.
Will things get better?
Foreclosures could drive down housing prices. A recession – which would also induce foreclosures – could do the same. But nobody with an ounce of empathy wants that, and political incumbents certainly don’t. Doubts remain about the future of inflation, interest rates, government willingness to adopt effective housing policy, and the market’s response to government action. On top of that, both the US and Canada face major housing deficits that will take years to remedy.
There is some hope that things will improve as people demand housing action and punish politicians who fail to deliver. But relief, if it is to come, may be years away – perhaps too late to save today’s leaders, who will soon meet angry and anxious voters.