The numbers don’t lie: The housing crisis is not caused by a supply shortage | CCPA
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Financialization, not demographics or supply, caused the cost of housing to explode in Canada.

the housing crisis has been created by banking practices that have directed excessive amounts of credit into the property market, and especially residential mortgages. As a result, buyers can bid prices up to ever-higher levels, resulting in a market where people must pay more for the same type of housing. Hence financialization can be defined as an inflationary tendency in the housing market that is induced jointly by banks’ desire to expand mortgage lending and buyers’ confidence that the value of their properties will rise.

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However, the image of a bubble bursting and prices returning to a more rational “equilibrium” level does not seem to apply to the housing market. Because housing is a necessity, people are willing to pay high prices for it. Bidding wars can therefore persist even when relative supply grows, so long as credit markets enable them.

  • sugarfoot00@lemmy.caEnglish
    2·
    22 hours ago

    The irony is that decreasing the value of homes really is the inevitability. Because rezoning encourages redevelopment, that redevelopment generally includes more dense and theoretically more affordable housing types. But developers still want to make money, so they are built to maximize profit, not affordability. So it suggests that if they sell, other houses have less demand, and demand will fall. But that hasn’t been borne out.