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.
Is there any reason to think that is at all likely ever to happen? Incomes will surely only rise if employers are prepared to pay people more, and all the signs are that employers, particularly large ones, will do pretty much anything before they'll pay ordinary employees more.
I agree, it's not fair or ideal. We face a huge challenge on the price and income side of things and it is not an area that is easy to solve. That's why I think it's smart that he's focusing on the things that are (relatively) easier to solve, like creating more supply of more right-size, right-place, budget-oriented homes, and providing more access to cheap debt so that people can afford both those budget-oriented homes and the even more inflated prices in the rest of the market, even if they don't get the additional income. I think those are not only achievable goals, but are going to improve the situation in a measurable way, even if it doesn't "solve" it in the ideal sense and still leaves Canadians with a lot of (partially government-backed) debt.
To paraphrase Batman, it's not the solution we deserve, but it is the solution we need right now.
I don't know what his plan is on the longer term for dealing with Canada's low productivity and lagging incomes, but I'm looking forward to finding out.
Yeah this is not technically impossible, but extremely unlikely.