How Canada can build more homes without higher housing costs - report

November 9, 2023

Erik Fertsman

Over the last decade, the cost of housing in Canada has risen so suddenly, and so rapidly, that it has caused a housing affordability crisis in most areas of the country. Governments are now starting to realize that solving this crisis will require building more homes, and faster than ever before. The Canada Mortgage and Housing Corporation (CMHC) estimates that Canada must increase the number of homes across the country by 3.5 million by 2030, on top of what is already expected (optimistically) to be built in order to restore housing affordability. CMHC also estimates this will require additional investments of $1 trillion or more.

But how can Canada build this many homes when the increased levels of investments - particularly bank mortgages - that are needed to build more housing have consistently led to higher housing costs? How do Canadian governments deal with this Gordian knot?

We've prepared a report that tackles these important questions, and it's available for download at the link below. This report outlines the main cause of the Canadian housing affordability crisis (an imbalance between bank mortgages and housing supply) and how governments across Canada can respond. We hope that you will find it interesting and informative enough to spread the word and engage with your local member of parliament (MP) and your local member of the legislative assembly (MLA).

If you have any questions or comments, please reach out to us on our contact page or on X (formerly Twitter).

Download Report

ADVERTISEMENT - ARTICLE CONTINUES BELOW

< Older Post

SHARE THIS ARTICLE

Most Recent

A disaggregated credit model of mortgage rates: forecasting the price of Canadian real estate loans

By Erik Fertsman • September 15, 2020

Mainstream analysts usually say that interest rates on mortgages and home prices are inversely correlated. When interest rates fall, home prices rise. This relationship has little evidence behind it, unfortunately. So, we took a hard look at how things actually work and found that interest rates on mortgages actually lag mortgage credit growth (and, by extension, home price growth) by about 12 months. Causality is reversed in the sense that credit growth drives credit costs (interest rates). This makes much more sense and allows us to forecast rates on mortgages.

A disaggregated credit theory of home prices: explaining Canada's real estate bubble

By Erik Fertsman • February 5, 2020

Experts have attempted to explain the cause of Canada's real estate bubble. Several theories have been put forward in an attempt to understand what is fuelling the intense home price growth. However, many of them -- especially those considering interest rates -- fall short. I propose an explanation of home prices that is linked to mortgage credit issued by commercial banks. This approach not only helps us better understand Canada's real estate bubble, but most importantly, offers insight on how to solve it.