Carney’s housing ambition doesn’t include a goal for home prices

Prime Minister Carney recently released what is described as the “most ambitious” housing plan Canada has seen in over 75 years. In many ways, it delivers. But for all its ambition on building homes, the plan is silent on deeper tensions that drive unaffordability – especially the generational dynamics at its core.

Build Canada Homes (BCH) marks a notable policy shift – putting Ottawa back in the housing development business, a role it stepped away from decades ago. As promised in the Liberal election platform, there are significant commitments to expand housing supply, with a goal of 500,000 new units per year, including deeply affordable homes for those marginalized in our housing system. To enable this, BCH will deliver new financing, cut the GST for some home buyers, and reduce regulatory barriers.

All of these measures are consistent with Generation Squeeze’s comprehensive housing policy solutions framework, which prioritizes increases in the supply of affordable market and non-market housing. But our plan also makes clear that supply alone isn’t a silver bullet.

After all, between 2015 and 2020, Canada built about 200,000 new housing units each year. We’ve since ramped this up to 250,000 units annually. This 25% increase was no small feat – but it hasn’t restored affordability. Prices continued to rise until the Bank of Canada repeatedly pushed up interest rates to reduce inflation in food and energy prices. Since then, prices have stalled at levels unaffordable for many Millennials and Gen Z, while preserving housing wealth gained by homeowners – especially those who’ve been in the market for decades.

The missing ambition: what is Canada’s goal for home values?

A truly ambitious housing plan must answer the most important question for fixing our broken housing system: What is our goal for home prices?

The Liberal plan doesn’t say whether home prices should rise, stall, or fall. That’s not really a surprise, after Carney’s new Housing Minister Gregor Robertson twisted himself in knots trying to avoid answering a reporter’s question on whether home prices should decline. The Prime Minister’s subsequent efforts to explain his position were similarly convoluted.

Why is it that no Canadian politician can speak openly and honestly about a goal for home prices? The answer obliges Canadians to reflect on an uncomfortable truth: governments don’t want to risk upsetting two key groups.

The first is older homeowners. Boomers and Gen Xers have benefited enormously from decades of rising home prices. The net value of Canadian homes has grown by $1.5 trillion beyond what population growth alone would explain. Canadians over 55 gained 60% of this wealth windfall, and they are now expecting to use it to fuel their retirements.

The second group is younger homeowners who clawed their way into Canada’s over-heated housing market more recently, despite high prices. They now fear going under water on their mortgages if prices fall too sharply.

Of course, there’s also a third group – one to whom politicians pay lip service, but for whom actions tend to fall short: those struggling to find an affordable place to own or rent. Millennials and Gen Z (along with renters of any age and newcomers to Canada) face a radically different housing reality than earlier generations. This isn’t a coincidence – it’s the system our policies have designed.

When today’s retirees were young, it took just 5 years of saving to afford a 20% down payment on an average home. Today, that number has ballooned to more than 17 years nationally, and over 20 years in Ontario and BC. Millennials and Gen Z are already making enormous sacrifices to cope with the fact that their hard work no longer pays off the way it did for previous generations. They pay higher rents, take on crushing mortgages, and delay life milestones like starting a family – all the while protecting the housing wealth gained by those who came before them. For this profound act of intergenerational solidarity, they deserve compensation.

Prime Minister Carney acknowledged the harm these young people are enduring in his election platform, yet failed to deliver a real response to this harm in his new housing plan. Yes, a GST rebate may save some first-time buyers as much as $50,000 on the purchase of a newly-built home. But with roughly 550,000 resales of existing homes each year, compared to 150,000 newly constructed homes, most buyers won’t benefit from proposed GST changes.

It’s a mathematical impossibility to think we can improve affordability while home prices rise

The hope that home values can keep climbing while affordability improves may be comforting, but it’s a mathematical impossibility. Without political willingness to say home values should at least stall (if not fall), housing affordability will remain out of reach for many. No amount of new construction or financing tweaks can undo the basic math: when prices outpace earnings to generate wealth, it’s inevitable that they also drive-up rents and mortgages for those entering the housing system. Put simply, this is a trade-off we must confront. Until we acknowledge the generational dynamics at its core, no housing plan can be complete.

Reasonable people can disagree on how much home prices should fall, or whether long-term stalling is good enough, because it protects wealth gained by older owners while avoiding the risk that younger buyers end up owing more than their homes are worth. But such considerations belong in a national housing plan, so Canadians can weigh the options, and politicians can find a path forward that balances generational fairness with financial stability.

A Task Force can help us face up to hard truths about housing

To build a housing system that delivers homes all generations can afford, we must bring the conversation about our goal for home prices into the open.

That’s why Canada urgently needs a national task force on home prices – to make this question safe to ask, and necessary to answer. By bringing together homeowners and renters, older and younger Canadians, policy experts and community leaders, a task force can negotiate a new intergenerational bargain.

Creating a task force would signal that we’re ready to confront hard truths, and search for common ground across all generations – two things that must be at the core of any serious housing plan. It would show Canadians that political leaders are finally ready to build a housing system that works not just for the next budget cycle, but for the next generation.