Carpenters build new homes in Ottawa on June 1.Sean Kilpatrick/The Canadian Press
It is the great policy, and political, conundrum of Canada. Housing prices must, absolutely and positively, fall if younger Canadians are to have any hope of purchasing a home. And housing prices must not, under any circumstances, decline if older Canadians are to avoid seeing their retirement nest eggs ooze value.
The federal Liberals, among others, have danced on this particular pinhead for years, with the most recent pirouettes coming from Housing and Infrastructure Minister Gregor Robertson (who as a former mayor of Vancouver knows a thing or two about unaffordable real estate). In May, 2025, Mr. Robertson said that he did not think that housing prices should fall, but that supply should be added so the market was “stable.” He followed up that economic non sequitur last October with the pensée that the important thing was to reduce average home prices, by adding government-subsidized housing.
Neither of those statements make sense (to be fair to Mr. Robertson, his are only the latest in a long lineage of nonsensical evasions by federal Liberals). The rhetorical fog is aimed at obscuring the truth: there will be a tradeoff, one way or the other, between the interests of would-be buyers shut out of the market and incumbent owners.
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Coleen Volk, president and CEO of the Canada Mortgage and Housing Corporation, has a more pertinent, if no less evasive, answer to the housing conundrum. In a recent meeting with The Globe and Mail editorial board, Ms. Volk acknowledged the tension between the interests of home buyers and owners – but said rising incomes could restore affordability.
Arithmetically speaking, that is certainly true: double every one’s income, and housing would indeed be more affordable (setting aside the small issues of inflation or an income-fuelled surge in demand).
The problem with Ms. Volk’s solution is that the affordability gap in the priciest markets is so enormous that it would take decades of outsized income gains to get the job done. Mike Moffatt, economist and founding director of the Missing Middle Initiative, estimates it would take at least 25 years and as much as 40 years for income growth alone to close the gap – and then only if housing prices flatlined. And that also supposes nominal income growth of 3 per cent to 4 per cent – hardly guaranteed, given Canada’s deep-seated productivity woes.
So, Ms. Volk could be right, if today’s Gen Z buyers are willing to wait until they are collecting Old Age Security cheques to buy a house. Prices will need to come down, in absolute terms, for at least some categories of housing.
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The reluctance of politicians and policy makers to say that out loud isn’t hard to figure out: the net worth of a lot of Canadian households is built on outsized real estate gains. Data from Statistics Canada’s Survey of Financial Security, tell the tale. More than 41 per cent of the increase in Canadians’ assets between 1999 and 2023 (the most recent year for which there are data) came from gains in the value of principal residences. If the value of private pensions are excluded, principal residences account for more than half of the gain in assets.
That is one big nest egg, nestled in a single basket. With that kind of exposure, there’s little mystery that homeowners are ready to howl about any downdraft in prices.
Mr. Moffatt says the key is to focus on driving down the cost of new housing, particularly multiunit options in core urban areas. That would not eliminate all downward pressure on the existing stock of homes, but effects would vary. There will be winners and losers.
Suburbs would likely see little net change, while prices in exurb communities would likely fall substantially. Single family dwellings in urban areas might actually see further gains, because of increased land prices from that multiunit development.
There are other options: massive buildout of single family homes in exurban areas, for instance, although that choice would be accompanied by costly infrastructure expansion and the environmental costs of sprawl.
No matter what, there will be tradeoffs. But politicians need to stop pretending that happy talk and lack of action amounts to a plan. Younger Canadians are facing the prospect of a life less prosperous than their parents. Such a future would represent the starkest of policy failures. But that future is avoidable, should governments choose to avoid it.