Canada is at a housing crossroads. After decades of relentless increases, home prices are beginning to stall or fall moderately, largely thanks to rising interest rates. Some see this as a weakening of the market that risks undermining the financial security of home owners. Others see it as hopeful, a small first step towards restoring affordability for younger people and newcomers to Canada. 

What we decide is the right direction for home prices is critical. Our next steps can challenge a housing system that pits aspiring (often younger) home owners against those who’ve gained wealth windfalls, thanks to the good fortune of buying a home decades ago. Or we can prop up our dysfunctional system by continuing to rely on flawed inflation data, and protecting the home ownership tax shelter.

Our latest analysis of the gap between home prices and earnings confirms that our primary goal should be that home prices stall for many years ahead – or even continue to fall moderately.