Prime Minister Justin Trudeau recently admitted that his government’s approach to housing aims to benefit existing homeowners, predominantly baby boomers, at the expense of younger Canadians. In an interview on The Globe and Mail’s City Space podcast, Trudeau emphasized the importance of maintaining high property values, stating, “Housing needs to retain its value. It’s a huge part of people’s potential for retirement and future nest egg.”
This comment has sparked significant controversy, particularly among younger voters who feel increasingly marginalized in the housing market. With the average home price in Canada exceeding $735,000 and topping $1 million in cities like Toronto, many younger Canadians are priced out of the market. Rental costs have also surged, exacerbating frustration.
In response to the housing affordability crisis, the federal government has revised programs for first-time homebuyers, allowing for insured mortgages with 30-year amortizations on preconstruction homes. Additionally, billions of dollars have been allocated for incentives and tax breaks aimed at increasing rental housing availability. Despite these measures, the housing market remains challenging, particularly with the country’s rapid population growth and a backlog in housing supply.
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“Supply can only change gradually, so realistically it’s the demand side that will drive the market over the short haul,” said Douglas Porter, chief economist at the Bank of Montreal. He identified stronger incomes, lower borrowing costs, and lower home prices as key factors that could improve affordability, none of which are expected to change significantly in the immediate future.
The dramatic increase in home values over the past two decades has widened the wealth gap between homeowners and renters. Homeowners have seen their wealth grow substantially, while renters miss out on building equity.
Trudeau acknowledged this disparity on the podcast, “The difference between someone who’s rented all their lives versus someone who is a homeowner in terms of the money they have for retirement is massive, and that’s not necessarily always fair.”
The Prime Minister’s comments have drawn sharp criticism from various quarters. John Pasalis, President of Realosophy Realty Inc., expressed his frustration on X, arguing that the government’s policy is unfair to younger generations.
“It makes it crystal clear that the market for housing is not a free market where market forces set the price. It’s a manipulated market where governments drive home prices up to benefit homeowners,” Pasalis posted.
He further noted the political risk of such statements: “Does one need a Comms degree to know that this will piss off an entire generation who feel like they’ve been shut out of ever buying a home? Hearing our Prime Minister admit he’s trying to keep home prices high? Unbelievable!”
Despite efforts to boost housing supply, new construction has slowed due to high borrowing costs. The Canadian Real Estate Association reported that while home prices have decreased about 10% from their peak during the pandemic boom, they remain 37% higher than in 2019, keeping the market out of reach for many prospective buyers.
Information for this briefing was found via The Globe and Mail and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
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Justin just cemented his loss of the Millennial vote.