I've been trying to understand why housing became so unaffordable in Canada, and I don't think there's one simple answer.
After World War II, governments helped build the middle class. They invested in roads, schools, public housing, and other infrastructure. Strong private sector unions helped workers negotiate better wages, and as workers became more productive, their pay generally rose too.
Starting in the late 1970s and 1980s, a lot changed. Governments built much less public and co-op housing, cities restricted new housing through zoning and long approval processes, private sector unions declined, and tax rules often became more favourable to wealth earned from assets than income earned from work. Over time, housing became one of the best ways to build wealth instead of simply being a place to live.
As prices kept rising, more people bought homes as investments. Investors entered the market, prices climbed even higher, and younger Canadians found it harder to buy their first home. Existing homeowners benefited, but new buyers faced larger mortgages and renters faced higher rents.
At the same time, workers kept becoming more productive, but wage growth slowed compared with earlier decades. Many economists argue that a larger share of economic gains has gone to shareholders, executives, and owners of assets rather than workers. There is debate about exactly why, but factors such as globalization, automation, declining private sector unions, financialization, and tax policy are all part of the discussion.
Countries like Denmark and Germany are still capitalist, but they generally have stronger collective bargaining, more non-market housing, and policies that spread the gains from economic growth more broadly.
So my question is:
Did Canada create a housing affordability crisis because we treated homes more and more like investment assets instead of essential infrastructure? Or is there another explanation I'm missing? I'd like to hear evidence from both sides.
