How Can We Actually Solve Canada’s Housing Crisis?

In our latest episode with Amanda Lang, we explored what it would take to make housing affordable again—even if that means lower prices for current homeowners.

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 I don’t see this problem being resolved over the next 10 to 15 years. It’s gonna take a long time for incomes to catch up. We’ve gotta figure out how to get the supply problem taken care of.

What are your thoughts?

I think, uh, one of two things is gonna happen. I think, uh, you’re right. The first scenario is it takes a very long time because we don’t actually take the effort we need to do to, to address it. And the reason why we don’t do it is because door number two is you build enough houses, uh, you stop favouring investors.

You stop treating this like an asset class people are gonna get rich on. And the value of the homes, uh, the existing stock drops and it doesn’t drop a little bit. It reverts to the mean. And if anybody goes and looks at the chart of house prices, the reversion to that mean is not pretty. But it’s probably what should happen and if we manage it properly, you could do it gradually over time so that as you know, many of us are older and we are kind of counting on some, you know, increase. That’s fine. But my wish for our housing market, Dave, and I think you know this, is that it goes back to what it has always been until the last 15 years. And that is a store of value that will increase at the pace of inflation. Which is, by the way, pretty decent over time.

The miracle of compounding return. Uh, and that’s all it is. This idea that you invest and get rich and you own more than one house, just as an, uh, an income stream is where we’ve, I think, gone astray because people need them to live and it’s a basic human right, and you can’t have both. And I always say like, what if we did this with clean water?

What if some people had good water and some people had no water, uh, and you know, you had to beg and borrow and steal to try to get access to the water. We’d be horrified. And yet we’re doing it with housing, which is, I, it’s a mystery to me why we don’t fix it, except that it’s, it’s political. Right? No politician wants to stand up and say, of you, middle aged people are gonna lose value on paper in your houses.

But that is the answer.

Well, that’s exactly right. I mean, it’s a crisis for those who haven’t bought yet, and it’s a windfall for many of us who’ve owned forever, and so many people do own two and three and four houses, and sometimes not even renting them out by the way they’ve owned them, capital appreciation has carried them, et cetera.