Buying a house may remain out of reach for many Canadians for the foreseeable future, with mortgage costs unlikely to fall enough to offset lofty home prices and weak spending power, economists and real estate agents say. 0 Even with expectations that Bank of Canada will keep cutting rates in the coming months, the issue of home affordability - which has strangled Prime Minister Justin Trudeau’s poll numbers - is unlikely to fade before the next election.
The mandate for the Liberal minority government ends at the end of October 2025, but an election could come well before then, with the Conservative opposition spoiling to end Trudeau’s nine-year run at the top.
“You won’t get back to an affordable range for housing on a sustained basis for a decade,” Tony Stillo, director at forecasting and analysis group Oxford Economics, said last week at a conference.
That’s still fundamentally a supply (and by extension pricing) issue. Prices are high, therefore small units are the only thing people can realistically afford, therefore that’s what developers build.
Here: “When we had urban sprawl, you could still buy cheap land on the outskirts and build your own house if investors stopped building new developments, but with (very necessary) greenbelt policies, it eliminates that release valve, putting the housing market basically entirely in control of investors who’ll keep it inflated to profit themselves.”
How do you define “financialization” here, especially in the context of non-rental units? If we’re talking about REITs, sure, but rentals are only a small part of the picture.
It also incentivizes builders to build, so as long as that isn’t impeded, prices should stabilize. Unfortunately building is severely impeded, which is what I mentioned in my earlier post.
Again, this is a land value issue, not one of construction costs. Of course land is going to be expensive in an urban centre, as it should be! It’s a very limited resource. it makes much more sense to have two hundred people living on a building lot rather than four. Hence my confusion about your desire to reduce supply even further in order to reduce the price of housing.
Not OP, but you keep hinging on the supply reduction that OP supposedly said (which he did not). He just explained the context of today vs the period of urban sprawl where land was cheap.
He is right that reducing urban sprawl and setting limits on what can be build where put upwards pressure on the existing land price, and that only corpos can afford to buy land to build multi-units.
The policies that densify urban region are good and necessary, but we have to make sure that the pressure it creates on land price is somewhat controlled.