Carney's Housing Budget Falls Short on Market Solutions

Canada's new federal budget reveals Prime Minister Mark Carney's inadequate approach to the nation's housing crisis. Despite acknowledging the severity of the problem, his proposed measures rely too heavily on government intervention while ignoring fundamental market-based solutions.

The Scale of Canada's Housing Crisis

Canada faces a staggering shortage of approximately 2.6 million housing units, according to the Canada Mortgage and Housing Corporation (CMHC). This chronic undersupply has driven inflation-adjusted home prices to double since the early 2000s, creating an affordability crisis that demands serious market-oriented solutions.

The root cause is simple economics: too many buyers chasing too few homes. While the Trudeau government previously cut permanent immigration targets by over 20 percent and Carney has further reduced temporary immigration by 25-32 percent, these demand-side measures alone cannot solve the crisis.

Government Programs: Expensive and Ineffective

Carney's centerpiece initiative, Build Canada Homes, allocates $7.28 billion over five years to build 45,000 units of primarily "non-market" affordable housing. This represents only half of the Liberals' original election promise of $2.9 billion annually.

Historical evidence demonstrates the futility of such government-led approaches. The Rapid Housing Initiative promised 12,000 units for $3.84 billion but has completed only 8,981 units at an astronomical cost of $240,000 per unit. Even if Build Canada Homes achieves its targets, it would address merely 1.2 percent of Canada's housing needs.

These programs exemplify the problem with big-government solutions: they are expensive, slow, and produce minimal results while distorting market mechanisms that could deliver housing more efficiently.

Missing Market-Based Solutions

The budget's most glaring omission is its failure to address regulatory barriers that strangle private housing development. Municipal development charges, which have exploded from a few thousand dollars to $81,000 for a two-bedroom apartment in Toronto, represent a massive tax on young families trying to enter the housing market.

While the Liberals previously promised to pressure municipalities to cut these charges in half with $1.5 billion in compensation, Carney's budget reduces this to $1.2 billion and uses vague language about "substantial reductions." This retreat from market-friendly reform is deeply concerning.

More troubling is the complete absence of zoning reform initiatives. Municipal governments continue to restrict density through outdated zoning laws that preserve single-family neighborhoods at the expense of housing supply. Despite federal leverage through infrastructure funding, the government has failed to enforce meaningful reforms.

The Path Forward: Market Solutions

Real housing affordability requires reducing regulatory barriers, not expanding government programs. The federal government should use its constitutional powers to incentivize municipalities to cut red tape, reduce development charges, and allow market-driven density increases.

Housing experts across the political spectrum have criticized Carney's approach. Economist Mike Moffatt called the budget "disappointing," while Eric Lombardi warned that "middle class homeownership is dead" under current policies.

The GST cut for first-time buyers, while politically popular, will likely fuel bidding wars without addressing supply constraints. This represents the kind of feel-good policy that avoids hard choices about regulatory reform.

A Conservative Alternative

Canada needs leadership that trusts markets over bureaucrats. Instead of pouring billions into inefficient government housing programs, the federal government should focus on removing barriers to private development, enforcing municipal accountability, and creating conditions for entrepreneurs to build the housing Canadians need.

The housing crisis demands bold action, but Carney's budget offers only timid incrementalism that protects the status quo while families struggle to find affordable homes.