Wealth and Generational Inequity in Canadian Housing

This Solutions Lab hypothesizes that many everyday Canadians are entangled or incentivized by public policies to bank on profits from homeownership. They do this to help secure their financial future and gain wealth. That entanglement and response to policy incentives, however, reinforces feedback loops in the housing system. This further fuels the growing gap between home prices and local earnings.

Wealth and the Problem of Housing Inequity across Generations in Canada will examine that problem and potential paths to housing affordability. Through a series of consultations, it will identify policies that entangle Canadians into counting on high and rising home prices. It will then co-develop several concrete policy solutions to reduce these entanglements through a series of working groups.

Project scope and expected outcomes

Expectations of high and rising home values

There’s a broad cultural desire in Canada for home values to stay high or even continue rising. Government policies also may unintentionally encourage households to rely on increasing prices. This means many Canadians have an incentive to count on home prices rising faster than earnings for their security and wealth.

Such incentives, however, reinforce feedback loops in the housing system that grow the gap between average home prices and local earnings. This results in more housing unaffordability and creates wealth inequalities, especially between owners and renters. It also leads to inequalities between generations that bought homes decades ago and those starting out in today’s housing market.

These wealth inequalities impose significant unaffordability barriers for younger generations of renters, aspiring owners and newcomers of any age. These barriers are often particularly great for Indigenous residents and Canadians of colour.

Methodology

The Lab will occur over 3 phases:

• The Definition Phase will outline the problem through an initial series of consultations. Participants will identify priority areas for further development, focusing on the entanglements that emerge when home values rise faster than earnings.
• The Discovery and Co-development Phase will address the Lab’s core problem by building on insights gained from the first phase. This will be done via two streams of activity: a dialogue series and the establishment of policy working groups.
• The Dialogue Series will bring together small groups of people to discuss home prices and CMHC’s corporate goal. That goal is for everyone in Canada to have a home they can afford and that meets their needs by 2030. The groups will discuss if Canadian home prices need to rise, stall or fall in order to achieve that. Their insights will guide the development of the Lab’s policy roadmaps.
• The Policy Working Groups will explore policies that entangle Canadians to count on high and rising home values. The groups will investigate 3 policy categories that were highlighted during the Definition Phase as priorities for further work. These are: monetary and lending policy, tax policy and protective policy.
• The Prototyping Phase involves the Policy Working Groups co-developing and refining 3 concrete policy solutions prioritized in the previous phase. These will help disentangle Canadians from high and rising home values. Lab participants will be invited to provide feedback on the policy solutions as they are prototyped and refined.

Guiding the implementation of policy prototypes

A final report will be created at the completion of the Lab. It will include a problem brief and an infographic describing prototype policy solutions. It will also include a roadmap on potential next steps for all stakeholders to consider. There is no obligation for any government to adopt proposed solutions.