Everyone agrees that Canada faces a housing shortage. But it’s not a shortage of homes: it’s a shortage of homes people can afford. In Toronto, for example, there is currently a glut of condos on the market. Prices have fallen as investors offload properties: high interest rates mean their mortgage payments exceed the rents they can get.

Homes have become unaffordable because of the disconnect between wages and prices. Why? Because there’s a disconnect between wages and prices. The average price-to-earnings ratio in Canada more than doubled from 3.2 in 1980 to 6.7 in 2020. Vancouver currently has the highest price to earnings ratio, at 12.3, followed by Toronto at 9.3. To put that in perspective, to buy an average house in those cities in July 2024, you need a household income of $208,000 and $226,000, respectively. Not exactly middle-class.