The regular market generally means all of the housing in Canada that’s privately owned by a person or for-profit company, with rent and ownership prices set by the market.

We know the regular market is broken because housing costs have broadly skyrocketed while local incomes have remained relatively flat, and because a range of specific market failures have been thoroughly described (e.g. excessive demand, insufficient and/or inappropriate supply, etc.).

All markets are managed by governments in one way or the other, and with approximately 19 of every 20 Canadians relying on the regular market to find housing, it’s clear that failures in the regular market must be addressed.

We can work to fix the regular market by dialing down harmful demand, dialing up and upgrading the right kind of supply, and dialing up protections for renters and rental housing.

Adjusting these dials won’t guarantee affordability or make the most expensive neighbourhoods available to everyone, but we can use them to push the market’s creative energies in the right direction.

Policy Category 1: Dial Down Harmful Demand

One of the ways the regular housing market can fail is when we allow harmful types of demand to push up prices.

Harmful demand can come in the form of too many people buying housing for purposes other than a home, and it can come from too much money pouring into the system from low interest rates, loose mortgage regulations, foreign capital, home buyer subsidies and other sources.

For example, every year tens of thousands of potential homes across Canada are left empty as speculative or cash-holding properties, or used for commercial short- term rentals, flipping, or money laundering.

Meanwhile, banks and households are caught in a bubble/feedback loop of ever-larger mortgages fueled by low interest rates, rising prices and other factors.

Governments can dial down harmful demand by restricting global capital flows into local real estate, eliminating hidden ownership, cracking down on excessive speculation, “flipping,” money laundering and fraud, taxing empty homes, regulating short-term rentals, revisiting homeowner subsidies, tightening how mortgage lending is regulated, insured, and incentivized compared to more productive non-mortgage lending, and revising how housing costs factor into official inflation statistics.

Policy Category 2: Dial up and Upgrade the Right Supply

One of the ways the regular market can fail is by providing too much of the ‘wrong’ (problematic) kinds of supply, for example:

• ‘Tall and Sprawl’ patterns that force a choice between an overabundance of small condos not suitable for families, or long polluting commutes
• ‘Mansionification’ where it’s easier to get approval to build giant mansions than much-needed multiplexes
• New construction in places with limited livability or jobs
• New construction that destroys existing affordability
• Overabundance of condos over purpose-built rentals

‘Right supply’ means building homes that – in location, form, tenure and price – better suit the needs of existing and aspiring residents.

Governments can dial up the right supply by first rigorously assessing housing needs, then opening up low-density and discriminatory zoning for a diversity of people, families, forms and tenures (inc. lots of rentals), streamlining associated approvals, incentivizing and/or mandating affordability, climate upgrades, integrated practices and collaborative project delivery (to make the development process more efficient and cost-effective), all while protecting existing low- income housing and capturing land value uplift.

Provincial and federal incentives can be provided to make all of this happen faster.

Policy Category 3: Dial up Protections for Renters and Rental Housing

One of the ways the regular housing market can fail is when it incentivizes or enables the destruction of existing affordable rental housing.

This can happen when buildings deteriorate to the point of being uninhabitable, and on the flip side when there’s excessive incentive to demolish or renovate older buildings in the quest for higher rents. In either case, renters are displaced and sometimes subject to mistreatment including improper evictions, discrimination, price gouging and even intimidation.

For example, Canada lost an estimated 322,600 affordable apartments (monthly rents <$750) between 2011 and 2016 due to demolition or rent increases, far outstripping e.g. Canada’s commitment to build 150,000 new affordable units over 10 years.

Governments can protect existing affordable rentals by helping nonprofits purchase buildings that are for sale, mandating their replacement upon redevelopment (e.g. via higher density), with rent controls (e.g. counterbalanced with rental construction incentives), and with direct income support to help fill the gap.

Tenant protection and assistance policies can be designed to protect renters from mistreatment and to minimize the impacts of displacement, without unduly burdening landlords, or making it too expensive for developers to build new rental units.