this post was submitted on 30 May 2025
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I think their plan is: Increase supply of (actual) starter and family homes that have been lacking -> these homes are sold at low prices and start dragging the rest of the housing market lower -> government chops interest rates and increases loan guarantees and incentives as much as needed to prevent prices of other homes from falling
All of these actions will help improve housing affordability and make homeownership more accessible, but not all of them will lower prices, some of them cause price inflation. I think he's intending to balance these to keep the market neutral. Whether they can successfully pull that off, remains to be seen. But Carney's not stupid, he knows he can't tank the housing market. There are literally millions of Canadians depending on the value of their house, for better or worse, it may be a bad and stupid situation but we're deep in it now and Carney's not going to rip the bandaid off yet. His goal will be to stop it from getting too much worse and try to keep it stagnant for a long time so that incomes and economics get a chance to catch up.
Yes it would be nice if you just got a reasonably priced house right out of the gate and didn't have to take out a low interest mortgage to cover the unreasonable additional cost. But we're not there yet, and I think Carney's plan is going to take that into account.
We'll see if I'm right. This is all speculation.
Regardless of how smart Carney is, they couldn't tank the housing market even if they tried. I don't know why people keep mentioning this as if it was even a possibility. This is the same as people who think someone can just happen to work out too much and end up looking like a monstrous bodybuilder. This is not a thing that is achieved easily enough to consider.
To be honest I don't really get what's the scenario you're envisioning here. Making homeownership more accessible is lowering prices relative to purchasing power. This is what lowering prices means, and this is what making it affordable means. You can't say the intent is to make it affordable while not decreasing prices, these are at odds.
One trick here is using inflation to alter the context of "increase" and "decrease" means. Prices have to decrease in real value (net of inflation), slowly and steadily. In order to keep homeowners in line in their illusion of preserved wealth, prices have to increasing nominally (not counting inflation). So the formula is this: make sure that housing prices climb steadily below inflation for a very, very long time.
@[email protected] 's point is subsidizing first time buyers allows for affordability without lowering prices. It in fact, increases prices of starter homes because of the subsidy, but only while the subsidy lasts.
A balanced policy would be government construction companies that build small market housing that is affordable due to being small, that ramps activity up and down based on trailing 5 years home appreciation being 15% (3%/year).
This is a zero cost program. Subsidies cost money, without solving problem.
Exactly, we mostly agree. Demand subsidy is yet another way to enable price increases. It doesn't really make housing more affordable. So that's why agree with you that subsidies cost money without solving the problem.
Now this is good, despite all the hot feelings regarding affordability right now, it is true that in the last two years several markets have observed real estate performing below inflation, which is good. We just need this to last 20 years to go back to a healthier market. In the mean time, subsidies can help the families that cannot wait 20 years to afford housing, so I'm not against demand subsidy - I'm just against the notion that subsidies are good for affordability, they're not.
Prices have to decrease, period. We can put some makeup on this and trick homeowners into satisfaction by having some nominal increase without accounting for inflation... but just being real (pun intended), prices have to decrease. Price net of inflation is the number that matters, and it has to go down. Real returns on housing has to be negative, sustained over decades.
It's about policy to not completely screw over home owners. Policy to pretend to do something is motivated by protecting home owners while concern troll gaslighting. An explicit bargain to give "fair gains" to home owners while solving housing affordability is an honest one. Federal government doesn't need to be involved at all other than perhaps providing cheap credit to "city owned housing development and construction company".
From city perspective, more housing is more property taxes. There is a ROI to it for all residents if city spending is efficient and valuable. Denser housing means more commercial revenue and tax potential.
Decreasing home values can get banks in trouble, and they rule, which is why nothing ever gets done. Limiting price increases to fair amounts is only practical political possibility.
There is no “fair” real estate appreciation, and a nominal increase slightly below inflation is not screwing anyone over. Homeowners will be fine, this is the one thing that is for certain in all of this