ASSET OR SHELTER? THE SHIFT IN CANADIAN HOUSING PERSPECTIVES
For most of Canada’s history, housing was seen as a foundation of stability—a place for families to build lives and communities. Yet, in recent years, this understanding has shifted, with homes increasingly treated as financial assets. This shift, often referred to as the financialization of housing, has had far-reaching effects, contributing to skyrocketing prices and squeezing renters in many Canadian cities. As homes are bought and sold as investments, the idea of housing as a human need, essential for shelter and community, has been overshadowed. Addressing this trend requires a renewed commitment to policies that view housing primarily as shelter, rather than a tool for profit.
The concept of housing financialization—treating homes as commodities, driven by profit motives rather than essential living spaces—has increasingly shaped Canada’s housing landscape, particularly in urban centers. Recent data from Canada Mortgage and Housing Corporation (CMHC) reveals a steady rise in home prices over the past decade, notably in Toronto and Vancouver, where the price-to-income ratio has become virtually unsustainable1. CMHC’s report indicates that median home prices in these cities now exceed ten times the median household income, making stable housing more elusive than ever1.
One of the primary drivers of this shift has been historically low-interest rates, which have allowed both individuals and investors to borrow affordably, fueling a property buying frenzy. Although recent rate hikes have tempered new mortgage activity, the trend of treating homes as lucrative investments persists. In response to rising interest rates, many Canadians are taking on extended mortgage terms to handle higher payments. This trend underscores a transformation of homes from places of shelter to long-term financial commitments, with Canadians navigating housing costs over decades rather than as stable, affordable lifelong shelters12.
Government policies have also inadvertently encouraged Canadians to treat housing as an investment. Tax incentives for homeowners, including capital gains exemptions on primary residences, have created favorable conditions for investors. Further, the increase in government-backed mortgage securities under the National Housing Act—totaling $29 billion in 2023—reflects how policy can spur investment-driven housing demand1. Though intended to support homeownership, these policies can end up promoting speculative investment and driving up prices, pushing the sheltering function of housing to the sidelines.
A third driver of this financialized approach is the heightened demand from both domestic and international investors. Canadian real estate, particularly in major cities, has become a stable and profitable asset. Investors, sometimes from abroad, purchase properties as speculative investments, contributing to price increases that further constrain supply for Canadian residents seeking stable homes. CMHC data illustrates this, showing that the number of investor-owned properties is rising, especially in high-demand urban areas, reducing the availability of homes for those looking for long-term, stable housing2.
The implications of treating homes as financial assets have been significant, particularly in terms of affordability. As homes become financial instruments, prices climb, making ownership a distant dream for many. This trend forces an increasing number of Canadians to remain renters, while rent itself has risen sharply in response to growing property values. In cities like Toronto, for instance, monthly rents now consume a substantial share of average incomes, leaving renters vulnerable to financial instability. According to CMHC’s latest reports, rising rents and heavy debt loads are increasingly common, creating additional barriers for renters who hope to transition into home ownership and eroding the foundational purpose of housing as a secure refuge2.
Beyond affordability, financialized housing impacts urban planning and community cohesion. Cities designed with profit in mind tend to prioritize high-density developments that maximize returns. While this may benefit investors, it often diminishes the quality of life for residents, sidelining accessible housing, parks, and other community amenities. This shift has severe consequences for neighborhoods, as lower-income residents are pushed to city outskirts. In this context, urban planners face the challenge of balancing the needs of communities with financial interests that often prioritize profit over livability. When neighborhoods are driven by investment rather than livability, the social fabric of cities can fray, diminishing the sense of belonging that defines a home.
Addressing Canada’s housing challenges requires reorienting policies to restore housing’s essential role as a basic human need. CMHC’s National Housing Strategy is one step in this direction, with commitments to expand affordable housing and safeguard vulnerable populations. However, additional measures could better align housing with community needs. Potential actions include taxing vacant properties, restricting foreign ownership in high-demand areas, and incentivizing developments focused on affordable housing. CMHC’s introduction of affordability-linked mortgage products, designed to help Canadians enter the housing market affordably, also represents a promising approach. These policies, if expanded, can help reinstate housing as shelter and foster community-oriented urban planning1.
While Canada’s housing market has transformed into a site for financial gain, prioritizing this approach comes with significant social costs. As homes have become commodities, housing stability and affordability have dwindled, compromising the idea of home as a place of safety and stability. Canada’s housing policies need to emphasize accessibility and inclusivity alongside market interests. In doing so, they can ensure that homes once again serve their primary purpose: providing shelter, security, and a sense of community for all.
Notes
1. Canada Mortgage and Housing Corporation. CMHC’s 2023 Annual Report.
www.cmhc-schl.gc.ca/about-us/corporate-reporting/cmhc-annual-report.
2. Canada Mortgage and Housing Corporation. Insights from CMHC’s Fall 2023 Residential Mortgage Industry Report.