CanadaPolitics

I'm not trying to sugar coat it, I don't think it's going to be roses and daffodils in the housing market under this plan. Carney's not going to be doing the Oprah show giveaway, "You! get a home! and YOU! get a home! EVERYBODY gets a home!" with everyone dancing and cheering. The new homes he's talking about building, the "war time housing" is not going to be anyone's dream home. It's going to be cheap ticky tacky crap, it's going to be ugly, it's going to be second-best, it's going to be stigmatized (hopefully not too severely). Let's get that out of the way. But the goal is that they'll be safe, sturdy, reliable and functional, and hopefully energy efficient, if they're done right. I'll be the first to admit the government doesn't have a good track record at this. Hopefully this, with the amount of attention focused on it, is what changes that. The way I see it, all it has to do is be an improvement over the current situation where some people are living 3 or 4 generations in a home, or a dozen students or immigrants, with beds in living rooms, garages, basements, anywhere people can sleep, often just renting rooms, or even just "a bed". Or where immigrants and refugees have been living "temporarily" in hotels for years (on the taxpayer dollar) making those hotels unavailable for guests. This is a reality, and this is happening. The goal is not luxury and perfection, the goal is just to be better than that, to be an improvement in the situation, and I think that's very achievable.

The affordability increase for the people with the stagnant salary you're describing, comes from the fact that those people will be lowering their expectations (or actually raising their expectations in many cases because a lot of them have simply given up now and are living with parents or other groups) and buying these lower-priced, lower-end homes (which really don't exist at the moment, which may be why it's hard to picture this choice) and accepting that they come with compromises but at least you get a decent, detached house with a roof over your head that you might be able to reasonably start a family in. Or they'll go further into debt to buy something nicer and better, like the stuff at the current lowest-end of the market, which will be possible because more credit will be available to be extended to them.

This on its own doesn't inflate the price of the rest of the housing market, it reduces it, because there are fewer buyers desperately scrabbling for all the previously existing housing stock, more supply balanced against the same demand. If that's the only thing that we did, and it was done in a vacuum where we stopped all population growth and rent-seeking and all other factors contributing to housing inflation, there would ONLY be downward pressure on prices. Realistically, we know the downward pressure will be counteracted by those and other factors, and those will have to be addressed separately, which means this home-building program will have to be pretty significant to even maintain stable price levels in the current environment but we'll have to wait and see what actually comes out of it and what else is done to manage the rest of the market and the rest of the economy too. It's all connected.