Experts point to deeper systemic issues driving the housing crisis.
Canada’s housing crisis is often framed as a straightforward issue of supply and demand—too few homes and too many buyers, especially from immigration and foreign investors. But experts argue that this explanation only scratches the surface of the problem.
In a new report, academics Yushu Zhu and Hanan Ali of Simon Fraser University point out that the national housing market is shaped by more than just availability. It’s also deeply impacted by decades of policies and a financial system that treats housing as a wealth-building tool rather than a basic need.
Market out of reach
Canada's housing market has become one of the least affordable in the world. Between 2000 and 2021, home prices surged by 355%, while incomes only rose by 113%. This affordability gap has pushed many Canadians out of the homeownership dream. But it’s not just high prices keeping people from buying.
Today’s housing crisis involves a tangled mix of rising rents, overcrowded living spaces, and increasing homelessness.
Renters, in particular, have been hit hard, with rent prices rising at twice the rate of inflation. Meanwhile, homelessness is on the rise, especially among Indigenous and marginalized communities, highlighting how widespread the issue has become.
Another factor driving the housing crisis is the increasing financialization of rental properties. Across provinces like British Columbia and Ontario, one in five residential properties is owned by investors rather than used as a primary residence.
This trend has put pressure on the rental market, pushing rents higher and making it harder for renters to find affordable, long-term housing.
Read next: Illegal Airbnb short-term rentals remain prominent in BC market
Additionally, the popularity of short-term rentals has made things worse. As more properties are used for platforms like Airbnb, the number of homes available for traditional long-term rentals has dwindled. For renters, this has meant fewer choices, higher prices, and less stability.
A shift in housing policies
The roots of the current housing crisis go back to the 1980s and 1990s when Canada made a major shift in its housing policies. Up until the early 1990s, Canada had a strong system of social housing, but in 1993, the federal government stopped funding these programs.
The result was a turn toward the private market, with a focus on promoting homeownership as the ultimate goal for Canadians.
This shift was built on two beliefs: that the private market could provide housing more efficiently than the government, and that homeownership would create financial independence for Canadians. However, the reality hasn’t lived up to those expectations.
Instead, homes have become financial assets—commodities to invest in rather than places to live. As more homes were bought and sold as investments, prices soared, making homeownership out of reach for many.
While ownership rates rose between 1991 and 2011, so did house prices—by 142%. During that same time, incomes grew by just 7%, and household debt spiked as more people took on mortgages they could barely afford. The gap between home prices and wages only grew, pushing many Canadians into precarious financial situations.
Why the current system falls short
The underlying issue, according to experts, is that the current housing system is built around the idea of homeownership as the pinnacle of success.
This “housing ladder” mindset prioritizes owning a home, with renting seen as a temporary or less desirable option. But as prices continue to rise, fewer people can afford to buy, and many are stuck in a rental market that doesn’t meet their needs.
This system creates inequality. It rewards those with the financial means to buy a home, while leaving behind low- and middle-income Canadians who can’t generate enough market demand to influence new housing developments. Instead, the market caters to those with strong purchasing power, driving up prices and deepening the affordability crisis.
What’s being done?
In response to the growing housing crisis, the federal and provincial governments have started to take action. The 2017 National Housing Strategy (NHS) was introduced to increase the supply of rental housing, provide rent assistance, and reduce homelessness.
More recently, the 2024 Canada Housing Plan aims to build nearly 4 million homes by 2031, with new tenant protections and a focus on affordable housing.
Provincial governments, like British Columbia, have also introduced measures to tackle housing challenges. BC’s Homes for BC plan includes efforts to reduce speculation by non-resident investors and increase housing supply. Municipalities have stepped in as well, cutting red tape and promoting housing development, especially in areas with high demand.
While these initiatives mark progress, experts agree that there’s still much more to be done. The problem is that many of these policies remain focused on market-driven solutions, which often benefit private developers more than they do renters or low-income families.
Of the $115 billion budget set aside for the National Housing Strategy, over half is in the form of loans to developers, rather than direct spending on community or affordable housing.
Zhu and Ali argue that without a stronger focus on expanding the community housing sector and moving away from seeing housing as just an investment, the crisis will continue.
They noted calls to de-commodify housing—treat it as a social good instead of an asset—and provide long-term housing security for everyone, regardless of income.
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
