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Think you can sit tight in your home, watch its value skyrocket, and then retire to live the Canadian dream? How very 2021 of you.

But who can blame Canadians for thinking this way?

They witness:

  • A 53-per-cent surge in inflation-adjusted home values since 2013;
  • insufficient disposable income for retirement saving;
  • constant warnings about housing undersupply and overimmigration; and
  • capital gains tax advantages on primary residences.

These facts compel all too many Canadians to simply rely on home appreciation to get them through their golden years.

Why that’s a bad plan

The adage, “Don’t put all your eggs in one basket,” should be Canadianized to, “Don’t put all your eggs in one home.” Or even most of your eggs, for that matter.

If you’ve got a decade-plus before you retire, much can transpire between now and then to alter the real estate supply-demand curve.

Lowest fixed and variable mortgage rates in Canada for September 14 2023

Here are three such things:

1) Brace for a construction boom (eventually).

More homes equals slower price growth, and governments are already getting the hint.

Canadians are so fed up that a majority say they’d support lower home prices, according to a Bloomberg/Nanos poll. And it’s almost universally agreed that building more homes is necessary to achieve that.

That’s why multiple levels of government are pushing policies to spur construction. It’s far too early to say it’s working, but a record 340,000 units are now under construction and we’ve seen the highest two years of housing starts on record, according to BMO chief economist Doug Porter. And that’s critical as we need more housing starts relative to new household formation, he says.

As a result, governments are scrambling to prioritize pro-building policies like densification (policy jargon for “building more condos”), expanding development near transportation hubs, incentivizing people to go into construction trades and converting commercial buildings to residential.

All of this will eventually create additional supply. And by eventually, I’m not talking 30 years from now when robots will be hammering nails instead of framers. (Come to think of it, there’s another reason to be bullish on supply.)

2) Expect a drop in immigration in 2026.

Population growth is soaring at 3 per cent a year while homebuilding is lagging like your old computer. Not sustainable.

The federal government suddenly seems more willing to adjust immigration policy because of political pressure and a realization the current policy is broken. But, complete alignment of immigration and homebuilding may not happen until 2026, when the current policy ends or a new government takes over.

In the meantime, policymakers say they’ll become choosier about who they let in. Immigrants who solve our problems, like homebuilders and trades workers, will get priority. That’ll help because a labour shortage of 80,000 construction workers is a key reason we can’t build enough homes.

One way or another, the politicians who run the show will finally have a wake-up moment. They’ll realize there’s no choice but to balance population growth with homebuilding. When they do, it’ll take considerable pressure off demand. Other things equal, price gains should slow.

3) Canadians can and do get tapped out.

Who can afford an average home in Canada? Not your average first-time buyer, that’s for sure.

For the middle class (those few of you who are left), an extreme cost of living, high tax burden and towering home prices eventually put enough straw on the camel’s back to break it. Or, at least, break it for enough marginal working-class homebuyers to weigh on prices.

That’s on top of the fact that family incomes could slide if we run into a low-growth spell, thus further limiting purchase demand.

Will any of the above happen soon?

Apart from a recession depressing demand, no. Our rulers likely won’t solve Canada’s housing crisis for years.

On Wednesday, CMHC estimated we need 3.5 million new homes by 2030 to accommodate existing demand and two million new households. Housing takes “many years to adjust” to unanticipated demand, it says.

Moreover, not all regions perform the same. High-demand regions where net migration is constantly positive could continue to outperform – as may more coveted non-urban properties, like waterfront recreational homes near activity areas (ski resorts, beaches, attractive small towns, etc.).

Rates were sourced from the Canadian Mortgage Rate Survey on Sept. 14, 2023. We include only providers who advertise rates online and lend in at least nine provinces. Insured rates apply to those buying with less than a 20 per cent down payment or switching a pre-existing insured mortgage to a new lender. Uninsured rates apply to refinances and purchases over $1-million and may include applicable lender rate premiums. For providers whose rates vary by province, their highest rate is shown.

Robert McLister is an interest rate analyst, mortgage strategist and editor of You can follow him on Twitter at @RobMcLister.

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