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A women wearing a mask walks past real estate listings in Mississauga, Ont., on May 26, 2020.Nathan Denette/The Canadian Press

It’s hard to shake the faith Canadians have in the housing market, but the surge in real estate prices during the pandemic may have done it.

Asked in an informal poll whether recent developments in housing are good for the country, respondents overwhelmingly said no. A strong majority think the housing market is either in or approaching bubble conditions, and that they or someone in their family will never be able to afford a home.

The sampling of reader opinion was featured in a recent edition of my e-mail newsletter, Carrick on Money. Responses totalled 6,432 as of midweek. While this was a quick online callout and not an independent poll, the large response conveys to me how strongly people feel about the housing market’s performance during the pandemic.

The head of Canada Mortgage and Housing Corp., a federal agency concerned with housing affordability, said he was struck by how one-sided the poll results are. “The mood is one of frustration,” Evan Siddall said. “There’s a certain lack of hope.”

Thanks to low interest rates and a desire to have more space during pandemic lockdowns, the housing market has followed up a decade of steady gains by hitting an even higher gear. The Carrick on Money poll results suggest many people think it’s too much. Almost 84 per cent do not agree that what’s happening with housing is good for the country. Only 6.5 per cent said yes, while the others were unsure.

Faith in Canadian housing market

starts to crack

The Globe and Mail conducted a survey of the readers of Rob Carrick’s personal finance newsletter (March 9). 6,432 readers responded to eight survey questions.

Yes

No

Maybe

On balance, what’s happening with housing is good for the country.

416

5,337

632

The housing market is either approaching bubble conditions

or already there.

4,544

572

1,265

Housing is going up for reasons that make good economic sense.

730

4,984

665

The pandemic is mainly the problem – low rates, desire

for more living space.

1,611

2,788

1,983

I worry that me or someone in my family will never be able

to afford a house.

4,770

1,123

490

Previous generations have had similar challenges to afford a house.

1,107

4,458

822

We should just accept that houses are expensive, as in many

big cities globally.

1,308

3,785

1,288

The capital gains exemption on housing should be reduced or eliminated.

2,231

1,492

2,655

Note: Respondent totals vary as some participants skipped questions.

JOHN SOPINSKI/THE GLOBE AND MAIL

sOURCE: rob carrick’s newsletter

Faith in Canadian housing market

starts to crack

The Globe and Mail conducted a survey of the readers of Rob Carrick’s personal finance newsletter (March 9). 6,432 readers responded to eight survey questions.

Yes

No

Maybe

On balance, what’s happening with housing is good for the country.

416

5,337

632

The housing market is either approaching bubble conditions

or already there.

4,544

572

1,265

Housing is going up for reasons that make good economic sense.

730

4,984

665

The pandemic is mainly the problem – low rates, desire

for more living space.

1,611

2,788

1,983

I worry that me or someone in my family will never be able

to afford a house.

4,770

1,123

490

Previous generations have had similar challenges to afford a house.

1,107

4,458

822

We should just accept that houses are expensive, as in many

big cities globally.

1,308

3,785

1,288

The capital gains exemption on housing should be reduced or eliminated.

2,231

1,492

2,655

Note: Respondent totals vary as some participants skipped questions.

JOHN SOPINSKI/THE GLOBE AND MAIL

sOURCE: rob carrick’s newsletter

Faith in Canadian housing market starts to crack

The Globe and Mail conducted a survey of the readers of Rob Carrick’s personal finance newsletter (March 9). 6,432 readers responded to eight survey questions.

Yes

No

Maybe

On balance, what’s happening with housing is good for the country.

416

5,337

632

The housing market is either approaching bubble conditions or already there.

4,544

572

1,265

Housing is going up for reasons that make good economic sense.

730

4,984

665

The pandemic is mainly the problem – low rates, desire for more living space.

1,611

2,788

1,983

I worry that me or someone in my family will never be able to afford a house.

1,123

4,770

490

Previous generations have had similar challenges to afford a house.

4,458

1,107

822

We should just accept that houses are expensive, as in many big cities globally.

1,308

3,785

1,288

The capital gains exemption on housing should be reduced or eliminated.

2,231

1,492

2,655

Note: Respondent totals vary as some participants skipped questions.

JOHN SOPINSKI/THE GLOBE AND MAIL, SOURCE: rob carrick’s newsletter

There’s also a clear sense of people seeing housing as having pulled away from today’s economic realities. Just 11.4 per cent agreed housing is going up for reasons that make good economic sense, 10.4 per cent said maybe and a little more than 78 per cent said no.

The term bubble is starting to be used in connection with real estate – economist David Rosenberg said recently that the country’s housing market is in a “huge bubble,” with specific reference to prices rising way ahead of incomes. Seven in 10 poll participants see the housing market as approaching bubble conditions or already there, and almost two in 10 said maybe.

The effect of rising prices on affordability can most clearly be seen in the fact that three-quarters of poll participants worry that they or a family member will never be able to afford a house. A recent personal finance column told the story of a Toronto millennial with a good income and a big down payment who has stepped away from the market after losing three bidding wars featuring offers way over the asking price.

Since then, I have received bunches of e-mails from readers in a similar situation. “With the blistering-quick heating of home prices here in Halifax, we’ve admitted we’re blocked out of the market at this point,” a 25-year-old reader said in his note. “We’re not looking to turn a profit, make an investment or plan to retire through our home. We just want a place to raise our children.”

Older generations, especially those who bought homes during the high interest rate era of the early 1980s, experienced affordability problems of their own. But 70 per cent of poll participants were unwilling to equate the challenges of previous generations to the current situation.

Should we just accept that houses are too expensive for many people to ever get into the market as owners, as in many big cities globally? Almost 60 per cent of poll participants said no, with the rest split between yes and maybe.

The most telling indicator of unhappiness about housing may be the degree of open-mindedness apparent in the poll toward reassessing the capital gains tax exemption on homes that are a principal residence.

Thirty-five per cent said the exemption should be reduced or eliminated, 23.4 per cent said maybe and 41.6 per cent said no. It’s unlikely the federal government would take this step, and it’s by no means sure that this is an effective way to cool housing. But the fact that so many people are open to it suggests how frustrated people are with a housing market that has been seen as our greatest financial success story both before and in the pandemic.

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