How We Got Here: The Anatomy of a Perfect Storm

How did a country with the second-largest landmass in the world run out of space to house its people? It sounds like a bad joke. But for millions of Canadians unable to start families or build wealth, it’s a tragedy.

Contrary to what the politicians say, this didn't "just happen." This isn't a force of nature like a hurricane. The Canadian housing crisis is a man-made disaster, engineered by three decades of cheap money, gatekeeping bureaucracy, and reckless population targets. To solve it, we must first understand the mechanics of the machine we built.

1. The Drug of Cheap Money (Monetary Policy)

If you want to understand asset prices, look at the cost of money. For 15 years, the Bank of Canada kept interest rates at emergency lows (near zero). This period, known as ZIRP (Zero Interest Rate Policy), distorted the fabric of our economic reality.

Imagine giving a teenager a credit card with no limit and telling them not to worry about the bill. That is what our central bank did. By making debt virtually free, they incentivized borrowing on a massive scale. If you could borrow $1 million for $3,000 a month at 1.5% interest, a $1 million house felt "affordable."

The "Monthly Payment" Illusion
Canadians stopped buying "house prices" and started buying "monthly payments." As rates fell, buying power rose. Sellers, knowing buyers could borrow more, simply raised prices to capture that extra capacity. The result? We bid up the price of the same leaky bungalows into the stratosphere, simply because the debt was cheap.

This policy destroyed the incentive to save. Prudent savers earning 0.5% in a savings account were punished, losing purchasing power to inflation. Reckless borrowers were rewarded with massive tax-free capital gains. This moral hazard taught an entire generation that "saving is for losers, leverage is for winners."

2. The "NIMBY" Blockade (Municipal Policy)

While the feds pumped the demand side with cheap money, our cities strangled the supply side. Canada has some of the most restrictive zoning laws in the developed world.

Go to any city council meeting in Toronto, Vancouver, or Ottawa. You will see the same thing: wealthy, largely older homeowners fighting tooth and nail to stop new housing from being built in their neighborhoods. They use words like "neighborhood character," "shadow impacts," and "traffic concerns."

The "Yellowbelt"
What they really mean is "Exclusion." In Toronto, for example, it has historically been illegal to build anything other than a detached single-family home on roughly 70% of the city’s residential land (the so-called Yellowbelt). No townhomes. No fourplexes. No small apartments. Just inefficient mansions for the wealthy.

This forced all new density into two places:

• Shoebox Conods: Tiny high-rise units clustered in small pockets of downtown.
• Urban Sprawl: Paving over farmland 50km away from jobs, forcing young families into soul-crushing commutes.

3. The Population Shock (Federal Policy)

If cheap money was the kindling and zoning was the lack of water, population growth was the gasoline. Between 2022 and 2024, the federal government ramped up population growth to levels unseen since the 1950s—adding over a million people in a single year.

This growth didn't come from natural birth rates (which are declining). It came from a massive expansion of the Temporary Foreign Worker program and International Study permits. Colleges in strip malls began selling "a path to PR" rather than education, acting as visa mills.

I want to be clear: Immigrants are not to blame. They are the victims of this scheme too. They were sold the Canadian Dream and arrived to find a housing nightmare, often living 5 or 6 students to a basement to afford rent. The blame lies with a federal government that completely detached immigration targets from housing capacity.

4. The Financialization of Shelter

Somewhere along the way, we forgot what a house is for. It is supposed to be shelter—a place to raise a family, build a community, and feel safe. Instead, we turned housing into Canada’s premier financial asset class. It became our Bitcoin.

The "Mom and Pop" Investor
It wasn't just BlackRock buying homes (though corporate ownership is rising). It was regular Canadians. Using their home equity lines of credit (HELOCs), baby boomers bought condos for their kids or as rental properties. At the market peak, investors accounted for 30% of all purchases.

This created a vicious cycle. Investors outbid first-time buyers for entry-level homes, turning those potential buyers into tenants. The investors then rented the homes back to the people they outbid, often at prices that barely covered the investors' costs. We replaced "home owners" with "landlords," systematically eroding the middle class.

5. The Political Addiction

Why haven't politicians fixed this? Because deep down, the majority of voters don't want it fixed. 66% of Canadian households own their home. For most of them, their house is their primary retirement savings.

When house prices go up, these voters feel rich (the "Wealth Effect"). They spend more. They vote for the incumbent. When house prices go down, they feel poor and angry. This creates a perverse political incentive. Every party talks about "affordability," but no party is willing to implement policies that would actually lower home values (like banning investors or forcing density).

Is There a Way Out?

Fixing this mess requires undoing 30 years of bad policy. There is no silver bullet. It requires a "wartime" effort:

• Tie Immigration to Housing: Cap population growth to the number of homes we actually build.
• Legalize Density: Abolish single-family zoning across the country. Allow 4-6 units by right on every lot.
• Tax Land Speculation: Implement land value taxes to punish those who sit on empty land.
• Build Non-Market Housing: The government must return to building social housing, as it did in the 1970s.

Until we treat housing as shelter first and an investment second, the crisis will continue.