It’s a feeling that has become a rite of passage for a generation of Canadians. You open a real estate app, look at the price of a modest bungalow or a small condo in your city, and feel a knot tighten in your stomach. It’s a mix of frustration, anxiety, and a sense of profound unfairness. For many, the dream of home ownership doesn’t just feel distant; it feels like it belongs to a different era entirely.

The public conversation about this crisis is loud, angry, and full of finger-pointing. Depending on which news channel you watch or which political party you listen to, the villain is either the Bank of Canada for raising interest rates, the federal government for its immigration targets, or greedy developers for building luxury condos.

The problem with this blame game is that while each of those narratives contains a grain of truth, none of them tells the full story.

The housing crisis isn’t the result of one bad decision or one single cause. It is a perfect storm created by decades of overlapping policies, economic forces, and societal shifts. To truly understand why you can’t afford a home, you have to look at all the pieces at once.

The Federal Levers: Setting the National Stage

The federal government and its agencies control the big, overarching policies that create the weather system for the entire housing market.

• Interest Rates: For over a decade following the 2008 financial crisis, rock-bottom interest rates made borrowing money incredibly cheap. This encouraged Canadians to take on larger mortgages, pouring fuel on the housing market and pushing prices to historic highs. Now, the Bank of Canada’s rapid rate hikes to fight inflation have shocked the system, crushing affordability for new buyers and putting immense pressure on existing homeowners up for renewal.
• Population Growth: The federal government sets ambitious immigration targets to grow the economy and offset an aging population. This policy is successful in bringing new people to Canada, but it has not been matched by a federal strategy to ensure enough houses are built to accommodate that growth. It’s a simple case of demand rapidly outstripping supply, year after year.

The Ground-Level Gatekeepers: How Your City Blocks a Solution

While federal policies set the stage, the most significant barriers to building new homes are often found at the local level.

• Zoning Laws: For generations, our cities have been built around “single-family zoning,” which makes it illegal to build anything other than a detached house in most residential areas. This prevents the construction of duplexes, triplexes, and small apartment buildings—the “missing middle” that could provide more affordable housing options.
• Development Hurdles: Builders often face years of delays and millions of dollars in fees and approval processes before they can even break ground. These costs and delays are ultimately passed on to the homebuyer, making new homes more expensive than they need to be.

The Economic Squeeze: Your Paycheque vs. The Market

The core of the problem is a simple but brutal equation. For the past twenty years, the average price of a home in Canada has decoupled from the growth of the average Canadian’s paycheque. At the same time, the cost of building materials like lumber and concrete has been pushed up by global supply chain issues and inflation, making it even more expensive to add new supply.

The Investment Game: Housing as a Commodity

Housing is no longer just about shelter; it’s become a primary asset for financial growth. This has attracted two major types of investment that compete directly with regular families:

• Financialization: Large corporations and Real Estate Investment Trusts (REITs) now buy up thousands of residential properties. This “financialization” of housing means homes are treated not as places for people to live, but as assets on a balance sheet designed to generate maximum profit.
• Individual Investment: For many Canadians, their home is their retirement plan. The belief that “house prices only go up” has encouraged people to invest in second or third properties, further reducing the number of homes available for first-time buyers.

The Full Story

So, who broke Canada’s housing market? Everyone, and no one.

It was broken by a generation of low interest rates, by a federal government that encouraged population growth without a housing plan, by municipalities that made it too hard to build, and by a society that began to treat basic shelter as a financial commodity.

The path forward is just as complex as the problem. It requires a coordinated “full story” approach, with action from all levels of government and a collective shift in how we think about the purpose of a home. The problem took decades to create; it will take years of concerted effort to fix.