\n<\/p>\n
Pop quiz: what is the \u201chousing crisis?\u201d<\/p>\n
I had actually planned to write an entire blog post that examined this question (but not necessarily the answer), but then last week\u2019s news cycle came along.\u00a0 We\u2019ll get to that in a moment.<\/p>\n
But if you had to define the housing crisis, what would you say?<\/p>\n
I have some thoughts on this, in case you weren\u2019t already aware\u2026<\/p>\n
My thoughts won\u2019t be popular (I\u2019m expecting a 70\/30 split today) but at the same time, they won\u2019t be untrue.<\/p>\n
And for many of you who are well-read, the following might not come as any sort of surprise as it\u2019s something I\u2019m sure you\u2019ve heard before elsewhere.<\/p>\n
Simply put:<\/p>\n
\nThe housing crisis is actually:\u00a0I can\u2019t afford what I want.<\/em><\/p>\n<\/blockquote>\n
That<\/em> is the real housing crisis in this country, but we\u2019ve become so used to having everything we want, oftentimes immediately,<\/em> in most other areas of our lives that we\u2019ve grown to develop an attitude of entitlement when it comes to housing.<\/p>\n
Just consider how the world has changed in the last ten, twenty, or thirty years in\u00a0other<\/em> areas.<\/p>\n
Yesteryear, if you wanted to find a companion<\/em>, you\u2019d go to parties to meet people, maybe go to bars and clubs.\u00a0 Perhaps you\u2019d frequent a \u201ctrivia night\u201d somewhere or join beach volleyball in the summer in hopes of running into\u00a0other<\/em> single people who wanted to meet a boy or a girl.\u00a0 But today, you go on your phone<\/em> and you have thousands of people right there that you can scroll through with your thumb.\u00a0 You can do this at your desk at work, on your couch at home, or on the bus.\u00a0 It\u2019s been made easy.<\/p>\n
In the 1980\u2019s, if I wanted to know what the Eiffel Tower looked like, I\u2019d go to the school library, search for travel books in the card catalogue, find the appropriate section with the Dewey decimal system, then open a book and look for a page on\u00a0France<\/em>.\u00a0 But today, I simply go on my phone and I have ten million photos in an instant.\u00a0 You can do this from anywhere.\u00a0 It\u2019s been made easy.<\/p>\n
You don\u2019t need your mom to drive you Thorncliffe Mall, then Eaton\u2019s Centre, then Yonge & Eglinton to shop for blue jeans<\/em>.\u00a0 You just order them from your phone.<\/p>\n
We\u2019re not that far away from cars driving themselves, after all.<\/p>\n
While the world has become infinitely more complicated with every passing year, many components of our lives have been simplified.\u00a0 They\u2019ve been made easy.<\/p>\n
Say what you want about the world, but we\u2019ve never had it better.\u00a0 And I\u2019m the guy stuck in the past who wants to go to 1960\u2019s London \u2013 but I\u2019m still saying what I know to be true, that\u00a0people<\/em> have never had it better on this planet.<\/p>\n
The by-product of this is that we don\u2019t\u00a0realize<\/em> how easy we have it and we want everything\u00a0else<\/em> to be easier.<\/p>\n
We want everything else to be\u00a0better<\/em>.<\/p>\n
And because we\u2019re in a country where, like it or not, the government has taken on a much larger role in our day-to-day lives than ever before and is often tasked with our general well-being, we\u2019ve all made the assumptions that we can have everything and anything we want.\u00a0 In fact, the government has so much as told us this.<\/p>\n
There is a very small population of the country that is unhoused<\/em>, and who are looking for basic housing.\u00a0 While this is a situation that requires our attention, it is also not the definition of the \u201chousing crisis,\u201d and it\u2019s most certainly not the crisis that the media and the rest of society are constantly clamouring about.<\/p>\n
Instead, the same media that glorifies and sensationalizes housing is also<\/em> telling us that it\u2019s a crime we can\u2019t all have the house that we want.<\/p>\n
We also feel, for some reason, like we all have to own<\/em>.\u00a0 Renting is not good enough!<\/p>\n
Even though renting is part and parcel of \u201chousing\u201d as it\u2019s described around the world, here in Canada, it\u2019s become a crime to suggest that a person shouldn\u2019t be able to afford the home that they want.<\/p>\n
We saw this coming a mile away, didn\u2019t we?<\/p>\n
Recall this blog post from January: \u201cWhat\u2019s On My Real Estate Mind For 2025? (pt2)\u201d<\/a><\/p>\n
Bullet point #5 was \u201cHome Ownership Rate<\/strong>.\u201d<\/p>\n
I wrote about how this would become a topic of greater importance in 2025, and while we\u2019re not\u00a0directly<\/em> talking about this today, all the fervour about home prices in the media last week seems to suggest that everybody in the country should be able to afford to purchase the home that they want.<\/p>\n
Let\u2019s start from the beginning\u2026<\/p>\n
Last week, the former mayor of Vancouver and new Minister of Housing, Gregor Robertson, was asked by a pool reporter \u201cDo you think home prices need to fall?\u201d<\/p>\n
Robertson made waves when he said that\u2026\u2026\u2026GASP\u2026\u2026.he\u00a0didn\u2019t.\u00a0\u00a0<\/em>He added some other colour, but the damage had been done, accordingly to a large portion of the country (and the media) who felt that his comment was offside.<\/p>\n
Just think about that for a moment.<\/p>\n
Think about the implications of a society, in part, who\u00a0want<\/em> house prices to fall and who think house prices\u00a0need<\/em> to, for whatever reason.<\/p>\n
Is\u00a0that<\/em> evidence of a housing crisis?\u00a0 Or is that simply like cheering for the Toronto Maple Leafs to beat the Florida Panthers because\u00a0you\u00a0<\/em>are from Toronto but\u00a0other\u00a0<\/em>sports fans are not?<\/p>\n
The sheer amount of articles written about Mr. Robertson\u2019s comment, and about further comments on this topic by Prime Minister Mark Carney, certainly caught me off guard.<\/p>\n
Let\u2019s start with this article:<\/p>\n
\u201cCanadian Government Has To Allow Home Prices To Fall To Make Housing More Affordable, Experts Say\u201d<\/a>
CTV News
May 23rd, 2025<\/p>\nHere\u2019s what everybody is talking about, from the article:<\/p>\n
\nGregor Robertson, the former mayor of Vancouver who was elected to the House of Commons in April, sparked the debate after he was sworn in as housing minister earlier this, when a reporter asked him whether he thinks home prices need to fall.<\/p>\n
\u201cNo, I think that we need to deliver more supply, make sure the market is stable. It\u2019s a huge part of our economy,\u201d he said.<\/p>\n<\/blockquote>\n
Also from the article:<\/p>\n
\nDays after Robertson weighed in, Prime Minister Mark Carney was asked the same question. Rather than offering a yes-or-no answer, he asserted instead that he wants \u201chome prices to be more affordable for Canadians.\u201d<\/p>\n<\/blockquote>\n
I find this entire conversation to be incredibly ironic, given who voted the Liberals into power.<\/p>\n
Statistically speaking, older voters overwhelmingly voted in favour of the Liberals.<\/p>\n
Older voters own more houses than younger voters.<\/p>\n
Older voters have a ton of equity in their homes, and thus these folks are the least likely to want the government to \u201cmake housing prices fall.\u201d<\/p>\n
But that aside, I would ask the following two questions:<\/p>\n
1) Is it the \u2018job\u2019 of the federal government to force home prices to fall?<\/em>
2) How would they do this, anyway?<\/em><\/p>\nThe answer to the first question is an emphatic \u201cno,\u201d especially given how seniors voted in the last election.<\/p>\n
The answer to the second question would keep me up at night, so I don\u2019t even want to think about how the federal government could harm our economy\u00a0deliberately<\/em>, considering they are exceptional at harming the economy on a day-to-day basis\u2026<\/p>\n
But seriously: is it really the job of the federal government to make the housing market increase or decrease?\u00a0 Central banks might be tasked with increasing or decreasing the lending rate, and they use fiscal and monetary policy to expand or contract the economy as needed, but is it really the job of the government to \u201creduce home prices?\u201d<\/p>\n
Talk about \u201ccooling the market,\u201d if you want to.\u00a0 We\u2019ve heard this before.<\/p>\n
But there\u2019s a difference between the following:<\/p>\n
\nCool the housing market \u2013 stop prices from skyrocketing in a time of hyper-appreciation.<\/p>\n
Cool the housing market \u2013 stop prices from appreciating in any way, shape or form.<\/p>\n
Cool the housing market \u2013 seek to keep prices balanced, level, and steady.<\/p>\n
Cool the housing market \u2013 seek to\u00a0reduce\u00a0<\/em>the value of homes.<\/p>\n<\/blockquote>\n
Say what you want about the first two options, or even three.<\/p>\n
But when you get to the\u00a0fourth<\/em> option, I think this is so far out of the realm of what\u2019s logical or responsible, that I question the sanity of those openly advocating for this.<\/p>\n
Answer me this:<\/p>\n
\nWhen, in the history of modern civilization, has a country\u2019s government deliberately tanked the value of existing homes by 30% and had this lead to economic prosperity?<\/em><\/p>\n<\/blockquote>\n
People advocating for this have lost their minds, and yet it\u2019s becoming a real \u2018thing.\u2019<\/p>\n
The articles continued to roll in last week and we saw some really, um, \u201cinteresting\u201d takes, like this one:<\/p>\n
\u201cThe Only Solution To The Housing Crisis Is Falling Prices\u201d<\/a>
Toronto Star
May 16th, 2025<\/p>\nOh, the Toronto Star?\u00a0 You don\u2019t say!<\/p>\n
From the article:<\/p>\n
\nRobertson has only been on the job for days, but his comments \u2014 and his track record \u2014 indicate a politician more concerned with protecting the inflated value of some Canadians\u2019 nest eggs than with making sure everyone has a place to call home. If he wants to serve the entire country, he needs to come out and say it: Home prices have to go down.<\/p>\n<\/blockquote>\n
Got it.<\/p>\n
\u201cHome prices have to go down.\u201d<\/p>\n
I wonder where the author got his Masters in Economics?<\/p>\n
At least he got the obvious part right \u2013 that the federal government, elected by seniors who have an inflated nest egg, is going to protect those inflated nest eggs.<\/p>\n
Why would this come as any sort of surprise?<\/p>\n
But seniors and their tax-free capital gains aside, I would ask again:\u00a0where is the economic data to suggest that a housing crash is GOOD for an economy<\/em>?<\/p>\n
The Toronto Star had more to say:<\/p>\n
\u201cAs Questions On Housing Go, It\u2019s Just About The Easiest.\u00a0 So Mark Carney Needs To Give A Clear Answer\u201d<\/a>
Toronto Star
May 22nd, 2025<\/p>\nFrom the article:<\/p>\n
\n\nPrime Minister Mark Carney recently<\/span>\u00a0restated<\/span><\/a>\u00a0that this is \u201cnot a yes-no question,\u201d and that it depends on \u201cdifferent time horizons.\u201d<\/span><\/p>\n
But this kind of linguistic loopty-loop isn\u2019t harmless. It\u2019s a political strategy \u2014 one that dodges a simple but essential question: Is the goal of Canadian housing policy to lower home prices or not?<\/p>\n
It is, in fact, a yes-or-no question. And the answer matters.<\/p>\n<\/blockquote>\n<\/div>\n
No.<\/p>\n
The answer is no.<\/p>\n
Housing \u201cpolicy\u201d to substantially reduce home values would have catastrophic consequences for the economy and would plunge the country into a recession, or worse.<\/p>\n
But then there\u2019s this:<\/p>\n
\nAnd if prices are to fall, provincial and federal governments alike will have to act to mitigate the impact: protecting recent buyers from excessive financial distress, supporting homebuilders through the transition, and ensuring retirees who counted on home equity aren\u2019t left behind.<\/p>\n<\/blockquote>\n
The author argues that if prices were to fall, then the government would have to \u201cprotect recent buyers from excessive financial distress.\u201d<\/p>\n
So we\u2019re just\u00a0bailing them out<\/em>?<\/p>\n
We\u2019re going to cause home prices to decline and then bail out those who were hurt by the decline?<\/p>\n
That makes absolutely zero sense, but in the socialist republic of Canada, the answer to\u00a0everything<\/em> over the last decade has been for the government to make everybody whole.\u00a0 It only took about five minutes for Justin Trudeau, after Donald Trump announced his first round of tariffs, to stand up and announce that the government was there to bail out anybody affected.\u00a0 So why would a reduction in home prices be any different?\u00a0 Just print more money!<\/p>\n
The Globe & Mail chimed in:<\/p>\n
\u201cThe Liberals Sing The Same (Nonsensical) Housing Refrain\u201d<\/a>
The Globe & Mail
May 20th, 2025<\/p>\nFrom the article:<\/p>\n
\nSetting aside the economic incoherence of Mr. Robertson\u2019s comments, his quote indicates that he is firmly on the side of keeping home prices buoyant, or at least stable. That will play well with Liberal voters, which tend to be older and more established. But it cedes ground on a crucial issue to the Conservative Party, which has made large inroads with younger people who can\u2019t afford homes.<\/p>\n<\/blockquote>\n
Gasp!<\/p>\n
Imagine a Housing Minister who wants to \u201ckeep home prices stable.\u201d<\/p>\n
As is usually the case, we have to turn to the National Post<\/em> and the Financial Post<\/em> to find any school of thought that doesn\u2019t seem like it was bred in a first-year university classroom during a discussion about feelings and micro-aggressions.<\/p>\n
Murtaza Haider and Stephen Moranis authored this:<\/p>\n
\u201cThe Housing Market Can Be Made More Affordable Without Crashing Home Prices\u201d<\/a>
Financial Post
May 22nd, 2025<\/p>\nThe sub-title reads:<\/p>\n
\u201cCanadians want a government that protects the value of their assets and safeguards their savings, not the other way around.\u201d<\/em><\/p>\n
No kidding.<\/p>\n
From the article:<\/p>\n
\n \n\nAlready, Robertson has attracted criticism for suggesting that housing prices need not fall for affordability to improve in Canada. We believe the minister is correct in advocating for stability in housing prices. The criticism stems from a misconception that a price collapse is essential for restoring affordability.<\/p>\n
Nothing could be more disastrous for the economy\u00a0 than a plunge in housing prices. A significant correction would wreak havoc on household finances, savings and both short- and long-term consumption.<\/p>\n
Let\u2019s unpack this puzzle. First, a large price decline due to an imbalance in demand and supply is highly unlikely. Given Canada\u2019s immigration-driven population growth, demand for housing is expected to remain stable over the long term. Canada is also unlikely to overbuild housing to the extent that it would inadvertently exceed demand.<\/p>\n
Further, urban economists anticipate housing supply will struggle even with moderate population growth. Therefore, only a sudden shock to the economy \u2014 such as a recession, pandemic or war \u2014 could lead to a drastic fall in housing prices.<\/p>\n
The economic and social conditions following a massive collapse of asset values would erode market confidence, deplete the savings of vulnerable households and push aspiring homeowners farther from their goals. When prices fall, sales plummet (not surge) and listings linger on the market for months, awaiting elusive buyers.<\/p>\n
Unlike other financial markets where a decline in asset values often presents a buying opportunity, aspiring homebuyers hesitate to bid when prices are falling. They are wise enough not to purchase a depreciating asset that will likely be worth less by the time the transaction closes. Securing financing during a price drop is even more difficult due to inflated loan-to-value (LTV) ratios. If prices continue to fall in the months between signing a purchase agreement and closing, the lender may adjust the valuation and ask the buyer for a larger down payment to keep their LTV below the required 80 per cent.<\/p>\n
Some commentators present yet another unfounded argument for a decline in house prices. They mistakenly believe that because the Liberals were elected with the promise to restore housing affordability, Canadians expect them to facilitate a drop in prices.<\/p>\n<\/blockquote>\n<\/div>\n<\/section>\n
Whoever believes that \u201cexpectations\u201d are in any way in line with \u201ccampaign promises\u201d will be sorely disappointed!<\/p>\n
But an even better article is this one:<\/p>\n
\u201cHousing Will Become Affordable Only If Incomes Grow Faster\u201d<\/a>
Financial Post
May 23rd, 2025<\/p>\nFrom the article:<\/p>\n
\nThe key is investment: to expand the housing supply, to\u00a0grow the economy<\/a>\u00a0and to boost wages. In a\u00a0capital-scarce<\/a>\u00a0economy such as Canada\u2019s, these goals may compete with one another. So governments need to adopt policies that attract investment, such as streamlining\u00a0regulation<\/a>\u00a0and\u00a0reforming<\/a>\u00a0capital gains taxes. Also, if rising incomes are to translate into improved affordability Canadians must keep more of what they earn. That will be difficult if increases in federal spending generate\u00a0a higher tax burden<\/a>. Ottawa must also\u00a0craft<\/a>\u00a0immigration and residency<\/a>\u00a0policies that stop population growth from overwhelming housing supply and further increasing prices.<\/p>\n<\/blockquote>\n
Every one of those hyperlinks will take you to another article that\u2019s essential to understanding this line of thinking.<\/p>\n
The line of thinking that tanking the real estate market is\u00a0not<\/em> the answer?<\/p>\n
Yes, among other things.<\/p>\n
But also the line of thinking that a strong economy is a \u201ctide that floats all boats,\u201d which is simply not what we\u2019ve experienced over the last decade as federal government policies have stifled innovation, punished corporations based in Canada, taxed citizens beyond what is reasonable, and driven inflation through the roof.<\/p>\n
I don\u2019t expect anybody to read my thoughts and opinions on the matter without, at best, a\u00a0grain of salt<\/em>, and at worst, completely disregarding what I\u2019m saying because I work in real estate.<\/p>\n
\u201cYou don\u2019t want the market to decline because you sell homes for a living!\u201d<\/p>\n
That has absolutely nothing to do with my opinions, and yet any contrarian will hang on to that no matter the argument.<\/p>\n
I simply cannot believe that we\u2019ve reached this point.<\/p>\n
And as I\u2019ve said before many times here on TRB, there\u2019s nobody more guilty of driving up home prices in the first place than our three levels of government.<\/p>\n