From Dream to Distant Memory: How Ottawa is Rewriting the Future of Canadian Housing

There was a time—not long ago—when owning a home in Canada was seen as a rite of passage. It wasn’t a luxury or political talking point; it was a goal shared across generations, a cornerstone of financial independence and family stability. But that Canadian dream is becoming harder to attain, and for many, it’s already out of reach. Sadly, if the current federal housing policy continues, homeownership may become something our children can only read about in history books.

As a long-time mortgage professional and municipal leader, I’ve seen firsthand how policy decisions made in Ottawa are playing out in communities across Canada. In 2018, the federal government introduced the mortgage stress test—a rule that requires all borrowers, even those with 20% or more down, to qualify for a mortgage at rates significantly higher than what they’ll actually pay (contract rate plus 2%). While intended to protect Canadians from overextending themselves, the reality has been quite different – one only needs to look at what happened to many who found themselves stuck in a variable rate mortgage at a time when rate hikes were often and significant.

Despite qualifying at a higher rate initially, many still felt the price shock.  Why? Because a fictitious rate used at the time of qualifying was not what was used to determine the average Canadian’s budget.  Most, if not all, used their actual mortgage payment to determine their monthly budget and this is just once aspect of the stress-test that the government miscalculated.

Instead of building resilience, the stress test has sidelined responsible buyers—especially first-time homeowners, self-employed individuals, and middle-income families. In markets like the Okanagan, where housing prices are already high, the average buyer has lost upwards of 20% of their purchasing power. That often makes the difference between owning a modest starter home or being locked out of the market entirely.

The unintended consequence? A generation of Canadians is being forced into permanent rental status—not because they can’t afford to own, but because federal policy says they shouldn’t. Meanwhile, demand for rentals is surging, pushing up prices and compounding the affordability crisis. And it is here we have a conundrum – many are experiencing equal or greater monthly housing costs due to increased demand and limited supply in the rental market.

So, for most, paying $3,000 for a mortgage payment where you can build equity is a much better proposition than spending the same amount on a home that isn’t yours.  It is hard to rationalize how we got here and how perplexing it is to tell would-be homeowners that they can’t own because the policies have limited their options.

Fast forward to the current Liberal campaign trail, where we’re seeing a new narrative emerge—one that further shifts control of housing away from individuals and the private sector, and into the hands of the federal government. The Liberal Party has pledged to build 500,000 new “affordable” rental units across the country, with government playing a central role in planning, funding, and overseeing construction.

On the surface, it may sound like a bold solution. But let’s be clear: this is not a market-based approach. It’s a fundamental shift toward centralized planning of what was once a private sector-driven initiative. The same federal government that imposed restrictions on mortgages, overregulated development, and contributed to the affordability crisis now claims it can build its way out—with taxpayer dollars and bureaucratic control.

We should all be asking: at what cost?

Government intervention has its place—but not when it comes at the expense of private enterprise, individual choice, and long-standing pathways to prosperity. By focusing almost exclusively on subsidized rentals, Ottawa is effectively redefining housing policy in Canada: no longer as a way to help citizens build equity, but as a managed service that people should rent, not own.

This isn’t just bad economics—it’s bad for communities. Renters deserve stability and dignity, but they should also have a clear path to ownership. That means rethinking federal policies that are doing more harm than good:

• Reform or phase out the stress test for well-qualified buyers,
• Reintroduce longer amortization options for first-time homeowners,
• Rein in federal overreach and empower provinces, municipalities, and the private sector to lead housing solutions.

The dream of homeownership is not an outdated ideal—it’s a lifeline. It fosters stronger communities, builds intergenerational wealth, and gives Canadians a real stake in the future of their cities and towns.

It’s time to stop managing decline and start restoring the path to ownership.

Because housing should be more than a place to sleep—it should be a place to grow, invest, and call your own.

These are only my thoughts and opinions on a subject matter that I know a little something about.  There is always a place for government involvement but if they truly want to tackle this “crisis” then they need to get out of the way.  They need to build incentives for the private sector as they are far more capable of building faster, better and with a targeted market-focus.

Stay tuned as I bring forward ideas that could be harnessed if governments were serious about the housing market.  These aren’t some radical concepts I will share.  They are bringing forward a new modernized approach based on old concepts to.

Kari Gares

Mortgage Broker/Owner