This articles was published in the Globe and Mail on March 25, 2025

A new poll shows that the Trump psychodrama has replaced housing affordability as the top concern of Canadians. But housing problems have not disappeared. The housing crisis may even be exacerbated by the trade war and will surely be a big issue in this federal election campaign. After all, more than 60 per cent of Canadians believe no level of government is doing enough, according to a recent Abacus poll.

For example, Canada and other countries deregulated rent controls and pulled back from building rental and affordable housing in the 1990s to let private markets play a greater role in providing housing for lower-income households. They also adopted policies encouraging housing financialization. As a result, more than 80 per cent of social and affordable housing in Canada was built prior to the mid-1990s and more than 40 per cent of Ontario condominiums are owned by investors rather than homeowners.

We should not have done this.Unlike other capital, land is immobile, in fixed supply and essential for a wide range of applications: housing, commercial, industrial and recreational. Land ownership confers a spatial monopoly power on something essential for producing and living. There is only so much land with a beachfront or within walking distance of a city core.

The result of treating land as just another capital asset is this:As with any fixed asset providing a privilege, lands generate huge windfall gains. The reason why some homeowners in downtown Toronto saw their housing wealth double over the past decade is not because of their green lawn or new roof, but because various levels of government and other interested parties made the city and its economy increasingly attractive and strong. That has attracted more people competing for a fixed supply of land. Despite not being responsible for these gains, these homeowners are the ones reaping the financial benefits – tax-free.

This wealth yields political power that ensures regulations protect house values, further enhancing the privileged position of homeowners. This generates inequality between the haves and the have-nots. The haves are gaining from higher land and house prices, with minimal effort. The have-nots are working harder to pay higher rental costs. Believing we can solve this without hurting anybody is wishful thinking.

We must make land subject to the same policies used for monopolies or natural-resource ownership: tax, nationalize and increase competition. Countries that have done so have better housing affordability.

Many agree that increasing taxation on the gains from increasing land and house values would be a good thing. It would lower prices and be fairer, as the tax revenue would benefit the have-nots and reduce housing financial speculation.

And then we need more nationalization. Let’s not forget that before the 1980s, neoliberalism movement governments in many countries were heavily involved in housing supply. Governments opened new land, built new transport infrastructure to make more land accessible and invested massively in public social housing. Crown agencies were buying land and contracting the construction of houses.

There is nothing stopping the government or agencies todayfrom directly buying land and buildings in our large cities, developing them and running them as non-profit entities. The gains from increased land values would accrue to taxpayers, and the government could make sure rents remained reasonable and ensured a healthy mix of tenants and housing types.

Studies show that in communities where low-income families rub shoulders with high-income families, people born in poverty are more likely to rise up. In Singapore, where 80 per cent of people live in public housing, and in France, where the share of social housing is three times that of Canada, housing is more affordable.

There is nothing, as well, stopping the government from fostering more competition between landowners: building efficient transit systems that make farther-away land more competitive with “prime” locations. While we need to protect the environment, it is not like we are short of empty land in Canada. Despite having a larger population on a smaller territory, housing affordability is not as big of an issue in Japan in part because of that country’s good transit systems.

However, we need to stop thinking that any transit system should finance itself. If you build a very efficient transit system to nowhere, nowhere will become somewhere desirable in several years. But in the meantime, the system will be in deficit, and we need to be okay with that.

Finally, the government should pressure cities to change zoning laws, as Japan did. Homeowners want regulations protecting their house values, limiting the entry of outsiders who have no power, since they are not yet residents. It is the role of higher-level governments to be their voice.

Doing any of this would hurt current homeowners. But doing nothing could escalate anxiety among young people and feed the fires of revolt by the have-nots, as we have seen many times in history.