Can the housing crisis be solved without a big drop in home prices?
New federal housing minister Gregor Robertson waded into a firestorm last week when he claimed house prices don’t need to fall to help restore affordability in Canada’s real estate market.
The former Vancouver mayor sparked a frenzied social media debate on Wednesday (May 14) by saying more inventory, rather than lower prices, is the solution to a generational housing crisis across the country.
“I think that we need to deliver more supply, make sure the market is stable,” Robertson told journalists. “It’s a huge part of our economy, but we need to be able to deliver more affordable housing.”
Skyrocketing home prices over the past decade – especially in major cities such as Toronto and Vancouver – have frozen scores of Canadians and first-time buyers out of the housing market.
Those prices, and a massive uptick in rental costs, remain a huge hurdle for younger Canadians even despite a slight decrease in Toronto during the past year. “Particularly in the younger generations, incomes haven’t kept up with property price gains,” Kari Norman (pictured above), an economist with Desjardins, told Canadian Mortgage Professional. “It makes it really hard to save for that downpayment and then be able to afford the monthly payment – so they’re having trouble just getting their foot in the door.
“In Toronto and Vancouver, where the average selling price is over $1 million, even putting down 10% still means you have to save $100,000. How can you do that on a young person’s salary while also spending $2,000 or $2,500 or $3,000 a month on rent and utilities?”
‘We have long delays in homebuilding’
Robertson, a first-term MP named to cabinet last week by prime minister Mark Carney, was criticized by Conservative leader Pierre Poilievre for a “problematic” record on housing as Vancouver mayor.
“He increased housing taxes in Vancouver by 141%, and the result was that housing costs went up by 149%,” Poilievre said.
Carney’s government has pledged to embark on a huge homebuilding program and intends to boost annual construction to about half a million homes each year.
Norman said a massive effort will be required, both to ramp up construction and help first-time homebuyers get their foot in the door. “We need all levels of government rowing in the same direction to bring on more supply and bring it on as fast as possible,” she said.
“We have long delays in homebuilding. If [builders] have to sit on product or wait before they can break ground… they have costs, and those costs are ultimately going to be passed on to the buyers. And when all levels of government put on taxes and fees on homebuilding, those also get passed on to the buyers. So anything that governments can do to… ultimately help decrease the cost of homebuilding [is needed].”
Trade war keeps buyers on tenterhooks despite falling rates
The ongoing trade war between Canada and the US is another obstacle for homebuyers to navigate, threatening to weigh against the Canadian economy and putting thousands of jobs at risk.
Further reductions to the Bank of Canada’s policy rate if that tariff dispute rumbles on are likely to bring some relief on the homebuying front – but even lower borrowing costs probably won’t ease economic fears entirely, according to Norman.
Leah Zlatkin of LowestRates .ca says Ontario’s housing market is cooling fast, with more relistings and price drops in cities like Toronto and Milton. https://t.co/luV6Hk87Ri
— Canadian Mortgage Professional Magazine (@CMPmagazine) May 17, 2025
“Ultimately, if you’re not sure if your job is secure, you’re not going to take the leap into homeownership and get yourself into a $700,000 mortgage or a $1 million mortgage,” she said, “because the risk is just too great.”
But for those Canadians who feel secure in their jobs, the current market – which has seen a double-digit year-over-year slide in sales activity and a steady slide in home prices across many cities – is a big change from that seen in years gone by.
“We do expect affordability to improve slightly through 2025,” Norman said of Desjardins’ outlook. “We expect in 2026 we’ll start to see prices going up again and that will start to erode affordability.
“But for people who have that downpayment gathered and who are secure in their employment, this is probably not a bad time to get your foot in the door.”
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