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The 47 per cent rise in the national average resale home price over the past two years results from a mismatch of supply and demand.

That much we can all agree on. What gets people arguing is whether the imbalance is caused by an insufficient supply of homes, or extreme demand to own property. Into this clash I stepped last week with a tweet of a chart from BMO Nesbitt Burns that carried this headline: “Could we PLEASE Stop with this Supply Myth?”

The chart shows that Canada’s supply of houses is a bit below the average for countries in the Organization for Economic Co-operation and Development (OECD), but in line with the U.K., the United States, Australia and New Zealand.” Yes, we should do all we can to encourage supply,” BMO chief economist Douglas Porter wrote. “But clearly there is more at work here than that.”

Reaction to my tweet was strong on both sides of the debate, but that’s not what struck me. Rather, it’s the clear need that people have to focus blame for the affordability problem in housing.

It’s government, it’s realtors, it’s lenders, it’s investors, it’s the Bank of Canada for keeping interest rates low for so long. All of these players and more were blamed in the Twitter exchange, and all do bear some responsibility because the decline of housing affordability is a huge and complex problem.

But so is human nature, which isn’t getting much attention as a factor in housing. Owning a home is a money maker and everyone wants a piece. The more prices rise, the more demand there is for housing. Right now, demand is very far from normal.

My colleague Rachelle Younglai reported the other day that 15.5 per cent of individual homeowners own 31.1 per cent of all residential properties in Ontario as of 2019. In British Columbia, 15 per cent of individual owners held 29.1 per cent of the provincial housing stock. Buying by individual real estate investors doubled over the first year of the pandemic and represented just over 20 per cent of all purchases across the country in the first half of 2021.

We could sure use more houses to supply all this demand, but let’s get real. Demand levels aren’t normal, just like that 47 per cent price gain in the past two years isn’t normal. As Mr. Porter put it, let’s encourage more home building. But let’s also recognize that we’d be building to supply demand that could decline quickly. That’s the whole idea behind the plus-size interest rate hike last week by the Bank of Canada. Expect a few more of those before the year is out.

Do you have a mortgage question?

Are you mortgage shopping? Not sure whether to go fixed or variable? Wondering whether to get pre-approved? Unclear where to start shopping – a mortgage broker or your bank? An upcoming episode of our Stress Test personal finance podcast for Gen Z and millennials will look at mortgage basics for home buyers. Send your mortgage questions to producer Emily Jackson at

ICYMI (In case you missed it) …

The 2022 ETF Buyer’s Guide: Best Canadian dividend ETFs

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Rob’s personal finance reading list

‘Housing isn’t a problem – it’s an asset class’

A voice of anger about the unaffordability of housing in Canada: “Houses exist to juice the economy and keep the elderly afloat on paper gains well into their retirement years.”

Four dangerous ideas people have about retirement

A reality check on inflation, investing returns and more for those thinking about how prepared they are for retirement.

Best brokers on fees and commissions

A ranking of brokers according to cost – who’s cheapest, and how good is the service?

Kitchen tools that are worth the splurge

The best food processor, chef’s knife, roasting pan and more, as chosen by Food & Wine.

Ask Rob

Q: A reader expressed some concern recently after he was asked by a financial planner for his most recent tax return and notice of assessment, copies of driver’s licence or passport, a void cheque, copies of wills and power of attorney documents. Is it normal to provide these when having a financial plan done?

A: For answers, I asked the planners in my LinkedIn community. Quite an interesting range of views about the need for the driver’s licence/passport and void cheque.

Do you have a question for me? Send it my way. Sorry I can't answer every one personally. Questions and answers are edited for length and clarity.

Today’s financial tool

Tips on identifying e-mails, texts and phone calls that are from people trying to scam you.

The Money-Free Zone

A new cover of Bob Dylan’s I Shall Be Released by the Nitty Gritty Dirt Band and Larkin Poe, a sister act who blew the walls down when I saw them at Folk Fest in Ottawa in the months before the pandemic.

Tweet of the week

In advance of the recent rise in the Bank of Canada’s benchmark interest rate, I asked mortgage brokers how the rate hike will affect variable-rate mortgages. The responses highlight the importance of knowing how your mortgage works. One veteran mortgage broker said many big bank variable rate mortgages keep payments level when rates rise, but more of the payment goes to interest rather than principal. Alternative lenders tend to adjust payments higher as rates climb.

What I’ve been writing about
  • DIY investors, it’s go-time for buying GICs. Yes, GICs
  • It’s time for the banks to reverse a rate grab from 2015 that punishes borrowers to this day
  • Who should worry about the wave of rate increases this year, who shouldn’t and what every stressed-out borrower should do right now

More Rob Carrick and money coverage

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