Posthaste: Why Canada's housing market slump could make affordability even worse

Rental needs to figure into the solution but these days there is little motivation for developers to build, says a CIBC report. Read more.

But it won’t lead to a friendlier housing market for the average homebuyer.

“The point,” Tal said, “is that the ongoing correction will not solve the housing affordability crisis” as it already existed prior to the COVID-induced housing frenzy.Alongside rising interest rates — the Bank of Canada’s benchmark policy rate is now at 2.5 per cent after being slashed to 0.25 per cent in March of 2020 — Tal cited the rising costs of construction and a severe labour shortage in the building industry as the other main affordability killers.

“We are in the midst of a project delay/cancellation wave, with developers choosing to sit on their hands, rather than engaging in a money-losing proposition,” he said.

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