Whether you’re trying to buy your first home, find an affordable apartment to rent, or just watching the news, the feeling is undeniable: housing in Canada has become incredibly expensive. It’s a source of daily stress for millions and a defining challenge for a generation.

The conversation is often dominated by simple explanations and blame, but the reality is that there is no single cause. Canada’s housing crisis is a complex problem that has been decades in the making. So, why is housing so expensive? Let’s break down the interconnected factors.

The Core of the Problem: A Chronic Lack of Supply

The most fundamental reason for the crisis is a classic case of supply and demand. For decades, the number of new homes being built in Canada has not kept up with the needs of its growing population.

• Demand is High: Canada’s population is growing, both through immigration and natural increase. At the same time, the way we live has changed—more people live alone or in smaller households than in previous generations, meaning more individual housing units are needed for the same number of people.
• Supply is Low: The construction of new homes has been too slow to meet this rising demand. We simply do not have enough houses for the number of people who need them. According to the Canada Mortgage and Housing Corporation (CMHC), the country needs to build millions of additional homes by 2030 to restore affordability. [LINK NEEDED: Canada Mortgage and Housing Corporation (CMHC) report on housing supply]

When more and more people are competing for a limited number of homes, prices inevitably go up.

The Role of Money: Low Interest Rates and High Investment

The supply shortage was supercharged by financial factors. For most of the 2010s and into the early 2020s, historically low interest rates made borrowing money very cheap. This “cheap money” allowed buyers to take on larger mortgages, further fueling competition and pushing prices higher.

At the same time, housing began to be treated less as shelter and more as a prime investment vehicle. This attracted not just individuals but also corporate and foreign investors, adding even more demand to an already strained market.

Government’s Hand: How Policy Shapes the Market

Different levels of government play a significant role, often in ways people don’t see.

• Restrictive Zoning Laws: At the municipal level, zoning laws have historically made it difficult or illegal to build anything other than single-family houses in many neighbourhoods. This prevents the construction of “missing middle” housing like duplexes, triplexes, and small apartment buildings, which are more affordable and crucial for increasing density.
• Long Approval Processes: It can take years for developers to get the necessary permits to build new housing, adding costs and delays that slow down supply.

What Are the Proposed Solutions?

There is no easy fix, but most proposed solutions fall into a few key categories:

• Drastically Increase Supply: This is the most widely cited solution. It involves everything from reforming zoning laws to allow for more density, to federal funding for affordable housing projects, to finding ways to speed up construction.
• Manage Demand: This includes policies like taxes on vacant homes or foreign buyers, aimed at cooling down the investment side of the market.
• Provide Financial Support: This involves programs to help renters or potential first-time buyers. [LINK NEEDED: Reputable source outlining various housing crisis solutions]

The immense financial strain the housing crisis places on households is a key driver of broader conversations about social safety nets and affordability, including ideas like a universal basic income.

The Bottom Line

There is no single villain in the story of Canada’s housing crisis. It is the result of a “perfect storm” of factors: not enough homes being built, years of cheap borrowing costs, restrictive local policies, and a growing population. Understanding that this is a complex, interconnected problem is the first step toward having a meaningful national conversation about how to solve it.