this post was submitted on 07 Feb 2026
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The numbers don’t lie: The housing crisis is not caused by a supply shortage (www.policyalternatives.ca)
submitted 1 week ago by sbv@sh.itjust.works to c/canada@lemmy.ca
70 comments fedilink hide all child comments
 

the housing crisis has been created by banking practices that have directed excessive amounts of credit into the property market, and especially residential mortgages. As a result, buyers can bid prices up to ever-higher levels, resulting in a market where people must pay more for the same type of housing. Hence financialization can be defined as an inflationary tendency in the housing market that is induced jointly by banks’ desire to expand mortgage lending and buyers’ confidence that the value of their properties will rise.

...

However, the image of a bubble bursting and prices returning to a more rational “equilibrium” level does not seem to apply to the housing market. Because housing is a necessity, people are willing to pay high prices for it. Bidding wars can therefore persist even when relative supply grows, so long as credit markets enable them.

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[–] CanadaPlus@lemmy.sdf.org 17 points 6 days ago* (last edited 6 days ago) (1 children)

Because housing is a necessity, people are willing to pay high prices for it. Bidding wars can therefore persist even when relative supply grows, so long as credit markets enable them.

Right, that's why I see rural houses literally falling over because nobody wants to live in them. /s

Supply and demand applies to food. It definitely applies to housing.

The central argument of this is that because the number of houses per adult is the same as 1989, the housing supply is fine. And then they have the audacity to claim other people are cherry-picking. No mention of average household size being different now, even just considering adults (nor mention of urbanisation). There's little effort to support their own theory with numbers, either.

Not to mention, that very same graph has a noticeable dip right in the recent years where it's become an issue. They've just scaled the graph so it's not emphasised. 1989 was the last time it was so low.

[–] definitemaybe@lemmy.ca 5 points 6 days ago (2 children)

Housing size is specifically addressed:

On top of that, the square footage of housing units in Canada has on average been growing across all housing types, which should in theory provide more flexibility for people to live with roommates.

Housing units are bigger and there are more of them per capita any way you slice it: by population, by number of adults, or by number of households.

They make a very compelling argument that the big change is not anything to do with supply, it's entirely a result of easing burrowing standards and increased access to credit. It's not as simple a story, but it actually offers a reasonable explanation for the observed data, while ECON101 Supply & Demand arguments don't match the data. Doesn't matter if it makes sense if it's wrong.

[–] FireRetardant@lemmy.world 2 points 6 days ago (1 children)

I think a big part of the supply problem and the generational difference in ownership is the size creep of homes. Homes have been getting bigger and bigger to support the same sized families meanwhile wages have stagnated. Thats all extra flooring, walls, insulation, labor to build, energy to heat, wires to run, property taxes to pay etc. We need to change the way the supply is skewed and start offering more reasonably sized homes.

Sure if you want and can afford a 2500+ sqft 3 storey house then shop for that, we build lots of those, but we don't build lots of 500-1200 sqft homes which reflect the size of starter homes from decades ago. Many homes this size need to be custom built or are built by smaller developers. We don't see entire neighborhoods of these sized homes anymore. Same goes for apartments, they've experienced luxury condo creep despite demand for that level of luxury being met already.

[–] prodigalsorcerer@lemmy.ca 3 points 6 days ago (1 children)

The problem with building a 500-1200 sqft home is that most of the price is in labor and land. So it doesn't cost a lot more to make that a 1500-2500 sqft home instead, which will in turn give more profit.

[–] fourish@lemmy.world 2 points 5 days ago

A local developer bought an old single detached home for 1.3 million and knocked it down to build 4 small sdh micro units on that property. Each one is currently listed for $650,000. I was watching the construction and I’m sure they didn’t pay anywhere near that for materials. They’re ok but definitely not quality.

[–] CanadaPlus@lemmy.sdf.org 1 points 5 days ago* (last edited 5 days ago) (1 children)

Household, not house.

In 1900, people in the West lived with extended family members, like in essentially all other cultures. By 2000, not so much. In between it varied by socio-economic class. Your 1970's family might include grandpa if they're not rolling in it.

Most likely, that's what you're seeing on the bulk of this graph.

It’s not as simple a story, but it actually offers a reasonable explanation for the observed data,

No, no it doesn't. I'd explain why, but that would be the exact same comment again.

ECON101

What, do you have an economics degree?

You can't shit on other people's education unless yours is better.

[–] definitemaybe@lemmy.ca 3 points 5 days ago* (last edited 5 days ago) (1 children)

Did you read the article? Household size is accounted for.

And yes, I have a minor in Economics with a Math major. FWIW.

[–] CanadaPlus@lemmy.sdf.org 1 points 5 days ago* (last edited 5 days ago) (1 children)

How could I possibly be quoting out of this article if I didn't read it? They divide housing stock by number of (thousands of) adults for the upper line of the second graph. If the average number of adults in a household changes, that line is misleading. They make an effort by not including children, but it's not enough.

That's my guess why the 20th century looks that way, anyway. If you crop at 2000, suddenly it shows exactly what mainstream analysts have been saying - lots of immigrants came in all at once, and the housing supply tightened. Otherwise it's close to flat.

Beyond housing itself, they inject (current, Canadian) numbers about debt, but that connects to a lot of things, and the ratio of home price to median income. Median household income has diverged from the mean, and yes the finance system has changed. They really haven't made an argument for their version to dissect. It's all innuendo and appeal to the authority of other people they agree with.

They start with "the CMHC is recommending too much construction", which is defensible, but "housing is all a huge bubble" is a more extraordinary claim, and "actually there's plenty of houses" is a non-sequitur.

And yes, I have a minor in Economics with a Math major. FWIW.

I'm surprised at the language you're using, then. ECON101 is a phrase you see from people who think Das Kapital is a current textbook.

[–] definitemaybe@lemmy.ca 2 points 5 days ago (2 children)

The stock of dwellings per capita has risen considerably over that time, from about 290 per thousand people in 1971 to 403 in 2023. Even housing stock relative to the adult population alone (which has remained at a flatter and higher level due to the declining share of children in Canada’s population) has grown, from 477 dwellings per thousand adults in 1971 to 510 in 2023.

Some analysts prefer to take households as the key demographic unit, but this approach also reveals no clear evidence for the supply-shortage argument. Census data show that there have consistently been more dwellings than households since 1971. In the intense period of housing inflation since 2001, that ratio has actually risen slightly, from 1,011 dwellings per thousand households to 1,017 in 2021.

They address all three metrics explicitly.

[–] CanadaPlus@lemmy.sdf.org 1 points 4 days ago* (last edited 4 days ago)

If you have a minor in economics, you know about frictional misallocation. It addresses nothing.

Maybe I'd attach some kind of significance to the slight fluctuation they mentioned, if the "trends" they identified from the statistics they actually showed us weren't lying with statistics. As it is, I'll put that in the innuendo category.

[–] ChairmanMeow@programming.dev 1 points 5 days ago (1 children)

And they're never going to correctly identify the problem if they're analysing it as a national issue, rather than a bunch of local issues in a trenchcoat.

It's clear that there must be a supply issue, as there is an observed reduced availability in homes, driving up prices. But it's hard to spot in nationally averaged data, as these are local shortages, not national ones. The capitalisation of the economy demands a centralisation of labour, meaning people move from rural to urban areas. Similarly, there are some urban areas facing population flight due to the closure of key industries, meaning people move out to where their income is. And then there's the matter of immigrants, who tend to stick around in progressive cities where they are both welcome and can get a job.

This is also why Covid had such a high impact on housing prices: mostly rural businesses went under, whereas urban businesses in high-density areas were more easily able to keep sufficient customers, or could rely on subsidies provided by richer cities. This too shifts the demand for labour from rural areas to denser urban areas.

The availability of credit is an accelerator of rising prices, not a direct cause. In a buyer's market, supply is plenty so there's no need to overbid as you can easily buy a similarly priced (or even cheaper) home nearby. But as anyone who's looking for a home will tell you: that's not available at the moment. So they have to overbid to get anywhere, and prices rise faster because that credit is available to do so.

In a nutshell, available houses aren't where the demand needs them to be, ergo there are local supply issues. Building more homes in economically attractive areas would cool off prices.

[–] patatas@sh.itjust.works 1 points 5 days ago

Sounds like remote work would help, then. Unfortunately most Canadian employers and governments are forcing return-to-office.

[–] grue@lemmy.world 14 points 6 days ago (3 children)

Housing is not fungible. It doesn't matter how much supply there is in the middle of nowhere; lack of supply in the places people actually want to live is a shortage.

Also, it has fuck-all to do with financialization and everything to do with restrictive zoning laws that enshrine single-family. Y'all are literally prohibiting building more density; WTF did you think was gonna happen?!

[–] twopi@lemmy.ca 9 points 6 days ago (5 children)

It def is both financialization and zoning. Restrictive zoning increases the value of housing hence line goes up.

Rezoning is framed as increasing supply and affordablity, instead of decreasing values of existing homes. When both will happen.

[–] sugarfoot00@lemmy.ca 2 points 6 days ago

The irony is that decreasing the value of homes really is the inevitability. Because rezoning encourages redevelopment, that redevelopment generally includes more dense and theoretically more affordable housing types. But developers still want to make money, so they are built to maximize profit, not affordability. So it suggests that if they sell, other houses have less demand, and demand will fall. But that hasn't been borne out.

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[–] Einskjaldi@lemmy.world 1 points 6 days ago

2020 had that effect, where work from home spurred people to move to some of the extremely low cost areas but that just meant that the absolute cheap houses under 80k were all bought up and 100k is the floor. But that was a one time adjustment.

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[–] HubertManne@piefed.social 11 points 6 days ago (1 children)

A bank owned condo is going up for the market in my complex. they want 395000 and the thing mentions 25% down. So like 100k down. I could not afford to live here if I did not already even if my financial siuation was rosey. This is some of the cheapest real estate in the area. Its insane.

[–] Soup@lemmy.world 1 points 5 days ago

Yea, the only thing that would ever let me buy a home is my insane privilege. If even I am pissed, living a very advantaged life, I have no clue why the whole planet hasn’t been burned to the fucking ground yet.

[–] ohshit604@sh.itjust.works 3 points 5 days ago (2 children)

This government doesn’t care about statistics, they only care about their precious votes, not the people.

[–] cyberpunk007@lemmy.ca 3 points 5 days ago (1 children)

Isn't that so funny? They care about the votes... To get in power to... Get the votes again... How ridiculous.

[–] ohshit604@sh.itjust.works 1 points 5 days ago* (last edited 5 days ago) (1 children)

I understand the need for votes but they shouldn’t be able to twist or downplay statistics for political gain.

[–] cyberpunk007@lemmy.ca 1 points 5 days ago

Oh I definitely agree.

[–] Soup@lemmy.world 1 points 5 days ago (1 children)

Votes are the people, and we keep letting this happen to us. It’s insane, really, knowing that even as fucked as our system is there’s still really no reason any significantly intelligent nation should be dealing with any of the crap we support.

[–] ohshit604@sh.itjust.works 1 points 5 days ago* (last edited 5 days ago) (2 children)

Votes are the people

I find it hard to believe when Quebec and Ontario hold well over half of the electoral districts, and a Minister on the Liberal side having already admitted to certain policies being implemented solely for Quebec voters.

This voting system doesn’t seem fair for the rest of the provinces and territories, but I’m just an average joe so what do I know eh.

[–] patatas@sh.itjust.works 3 points 5 days ago

Any guesses as to why Ontario and Quebec hold more than half the electoral districts?

[–] Soup@lemmy.world 1 points 4 days ago

Could have something to do with the huge amounts of people living in those places. And a Liberal’s policies are not the pinnacle of democratic fairness, either.

[–] BCsven@lemmy.ca 5 points 6 days ago (2 children)

But also a supply shortage, out in Vancouver anyway. People dividing living rooms in half to act as bedrooms

[–] BlameThePeacock@lemmy.ca 4 points 6 days ago (12 children)

It's not a housing shortage, it's a pricing issue.

If you do the math based on statscan data, there are FAR more bedrooms in Canada than people, even if you assumed couples never slept together and kids never shared a room.

People are splitting rooms to make it more affordable, not because rooms don't exist.

There are retired couples, or families with a single kid, living in 4-5 bedroom houses in Vancouver, because they either don't want to downsize, or they can afford the space so they buy more than they need.

The problem ais the distribution of housing, some people have too much, and some people don't have what we would reasonably consider enough.

There is also some distribution issues around where those houses are located compared to the desires of where people want to live. If someone has a house in Edmonton, but wants to live in Vancouver in a similar house and can't afford it, is that a housing shortage in Vancouver? I would argue it is not.

Where we define that "reasonable" line is where an ACTUAL shortage would come in. How much housing is reasonable for each person, and how reasonable is the location they want that much housing in?

However, I don't believe we have crossed that line. In my opinion we need to regulate the market better in order to have the distribution more aligned with overall social benefit. Of course we need to continue building more units with the population and to replace buildings over time, but policy could re-distribute the existing housing more fairly without needing a single one of those today.

[–] grue@lemmy.world 2 points 6 days ago (7 children)

There is also some distribution issues around where those houses are located compared to the desires of where people want to live. If someone has a house in Edmonton, but wants to live in Vancouver in a similar house and can't afford it, is that a housing shortage in Vancouver? I would argue it is not.

It absolutely is. Houses aren't fungible; they don't fucking move! A house in Edmonton is not a substitute for a house in Vancouver!

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[–] sbv@sh.itjust.works 2 points 6 days ago

I can't speak for Vancouver, but in Ottawa, I'm in a suburb that has a tonne of empty nesters living in 4 bedroom houses. There are young families that could use that space, but the current residents have no incentive to move. Housing is so expensive that selling off and moving to a smaller place would be hard. It's bizarre.

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