THE GREAT CANADiAN HOUSiNG CRiSiS

Introduction: In the last few years, Canada’s housing market has consistently been the highlight of discussion as prices rise and buying a home becomes increasingly out of reach for people who want them. On average, Canadian home prices have risen by 180% in the last 10 years while average incomes have increased 38% (Fallis, 2022), leaving many to wonder if they will ever be able to own a home, or if they will be stuck perpetually renting. Importantly, this has negative consequences for those who don’t have access to intergenerational wealth or who don’t already own a home. First we will examine why Canada’s home prices keep increasing. Then, we will discuss the implications on the rising home prices on wealth inequality. Context: Since 2008, interest rates have remained low in order to encourage recovery and growth after the recession (Bank of Canada). This made mortgages in effect cheaper bolstering the home buying market and resulting in an increase in home prices. Furthermore, as people expected home prices to rise in the future, this increased demand for homes today, again driving up home prices. Today, as the Canadian population grows, demand for houses is quickly outpacing supply (CMHC 2022), becoming yet another reason why prices keep rising. Another major factor in rising home prices is that people are moving out of cities to the suburbs in search of more affordable housing. While this may allow for an individual to buy a cheaper home, as demand for housing increases in the suburbs, prices go up. This “spreads the contagion” of unaffordable housing (Kalinowski and Vincent, 2022). Soon, the cost of homes in the suburbs might be just as high as in the city ...

HOUSiNG CRiSiS
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Author: Farhan Sakkir Karepilakkiyil & Emily Downing