BMO Economist Argues Against Thesis that Canada’s Housing Crisis is Due to Shortage of New Homes

By Scott Barlow
The Globe and Mail
September 14, 2023
Category: Finance & Economics
Region: Canada, United States

The BMO economics department is virtually alone in arguing against the thesis that Canada’s housing affordability crisis is primarily caused by a shortage of new homes. A well-respected columnist opines in today’s Globe that ‘the supply of housing has slowed to a trickle’ —a trickle, I say. …First, note that said “trickle” saw the most Canadian housing starts in a two-year period on record in 2021/22, and there are a record 340,000 units now under construction. Second, the starts-to-population comparison commits the fatal and basic flaw of comparing a stock (population level) to a flow (housing starts). …The one recent occasion U.S. starts approached current Canadian levels (in 2005) a home price crash ensued. Should we be aiming higher on homebuilding? Absolutely, especially when population growth is booming at 3 per cent year-over-year. But please don’t use the level of population to ‘prove it.’” [to access the full story a Globe and Mail subscription is required]

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