Wealth and the Problem of Housing 
Inequity across Generations: 
A Solutions Lab  
A number of CMHC employees took part in the lab as independent participants providing 
technical expertise and advice. The views expressed are those of lab participants and should 
not be attributed to CMHC or to the Government of Canada. 
Report published by Generation Squeeze, Vancouver, BC. 
Suggested citation: Kershaw, Paul. 2021. “Wealth and the Problem of Housing Inequity across 
Generations: A Solutions Lab. Vancouver, BC: Generation Squeeze Lab.”
How to use this document: 
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This project received funding under the National Housing Strategy's Solutions Labs Program. 
For more information visit: www.cmhc.ca/SolutionsLabs. 
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Table of Contents
What is a Solutions Lab? 
Acknowledgments
Executive Summary 
Section 1: Problem Brief & Lab Motivation: ‘Everyday’ Canadians are 
entangled or incentivized by public policies to count on high and rising 
home prices, which erode affordability for those who follow 
Section 2: Lab Process
Section 3: Canada needs to decide: does the goal to restore affordability 
for all require average home prices to rise, stall or fall?
Section 4: Specific Examples of Policy Areas that Entangle Canadians to 
Count of High and Rising Home Prices
 Feedback Loop 1: Monetary & Lending Policy
 Feedback Loop 2: Tax Policy
 Feedback Loop 3: No Protective Policy 
 
Section 5: Monetary & Lending Policy Working Group Recommendations 
Section 6: Tax Policy Working Group Recommendations
Section 7: Protective Policy Working Group Recommendations
Section 8: Silver Buckshot
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What is a Solutions Lab
This Solutions Lab was established as a collaboration between Generation Squeeze and the Canada 
Mortgage and Housing Corporation.  Solutions Labs are a program under the National Housing 
Strategy.  
Solutions Labs are also referred to as social innovation labs, change labs, or design labs. Such labs 
aim to tackle complex societal challenges that require systems change, and which have not been 
solved using conventional methods.  The labs are therefore not intended to be academic exercises 
typical of research at universities.  
Rather, labs fuel bottom-up collaborative innovation by bringing diverse groups of people together 
in search of new ways to solve complex housing problems. They provide a safe space for diverse 
perspectives to come together, for assumptions to be questioned and to experiment with housing 
solution.
The challenges that Solutions labs tackle are not black and white—they are layered in complexity, 
often messy and at times daunting or even controversial.  Part of the role a Solutions lab is to 
deepen stakeholder understanding of the specific challenge by exposing them to perspectives of 
other stakeholders. It is presumed that no one group has the answer – but by enabling groups to 
work together, the lab can develop collective, relevant and responsive solutions, as well as identify 
“potential champions” who are best positioned to scale-up those solutions. 
The solutions are developed by stakeholders for consideration by governments, rather than the 
other way around. It is anticipated that lab findings have potential to support decision-making at 
all levels of government. However, there is no direct link between the lab activities and any specific 
government branch or department of government.
Source: CMHC Solutions Lab Fact Sheet
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Acknowledgments
As an exercise in bottom-up collaborative innovation, the ideas generated by this Solutions Lab 
reflect insight shared by many bright minds and generous hearts, including over 70 industry, 
community and academic thought leaders.  We thank all of them for their time, their talent and their 
openness to searching for common ground.
Lab leadership drew from three organizations: the Canada Mortgage and Housing Corporation, 
Watershed Partners, and Generation Squeeze.  Tackling housing challenges that are layered in 
complexity, and viewed by many to be controversial, can be messy, even daunting, work. This is 
especially so when the work is done amid a pandemic that required Lab plans to shift entirely online, 
in a context where Lab leaders have still not all met together in person.  As a result, the road to 
completing this Lab was not always smooth.  We appreciate the goodwill and charity of spirit that 
various leaders within all three organizations brought to the Lab to see it through to a successful 
completion.
Graphics featured throughout this report were created in collaboration with the graphic artist Laura 
Hanek of Swoop Media and Sam Bradd of Drawing Change.
The many strengths of this Lab report reflect the collective wisdom of all who contributed.  
Responsibility for any weakness falls to the report author, Dr. Paul Kershaw, University of BC 
professor in the School of Population & Public Health, and Founder of Generation Squeeze.
The style and tone of the following report reflects the Lab’s commitment to bottom-up collaboration 
among diverse stakeholders in search of common ground to spur innovation. This final report is not 
written as an academic paper or technical report with an extensive literature review or bibliography. 
Instead, it is a summary of the creative ideas that emerged from a diversity of actors exploring 
common ground.  
Many academics and other technical experts participated in this Solutions Lab.  All would encourage 
that the creative exploration of new solutions spaces resulting from the identification of common 
ground in this Lab should continue to be fleshed out in light of further economic modeling and 
the existing academic literature.  Readers will find that discussion of the Lab’s recommendations 
specifically includes reference to priorities for further inquiry to refine and strengthen the ideas co-
created by Lab participants.
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Executive Summary
Problem statement
Canada is experiencing dramatic housing affordability challenges caused by the growing gap 
between local earnings and average home prices, especially for younger generations of renters 
and aspiring owners, newcomers of any age, and seniors who are renters.  This gap is a major 
impediment to achieving the Canada Mortgage and Housing Corporation (CMHC) goal that all 
Canadians can afford a home that meets their needs by 2030.  It also drives wealth inequalities, and 
elevates risks that some Canadians become highly leveraged when borrowing to make a home.
Lab premise 
The Solutions Lab began from the premise that many everyday Canadians are entangled in 
perpetuating an unsustainable, unaffordable housing system – because public policies incline us to 
organize our wealth strategies in ways that count on home prices rising faster than earnings.  
The focus on everyday Canadians was deliberate and provocative.  Dialogue on housing 
unaffordability in Canada tends to focus on what others have done to create and perpetuate the 
problem – foreign investors, money launderers, speculators, etc.  While all of these actors do play 
a part, government initiatives to address their contribution have proven insufficient to restore 
affordability.  
A missing ingredient with which Canadians have not yet grappled is the role that rising home prices 
play in creating wealth windfalls for everyday home owners.  While high and rising home values have 
a negative impact on affordability for renters and aspiring owners, the same high and rising home 
values benefit others by increasing their financial security and growing their wealth. When everyday 
Canadians normalize such benefits, count on them, or pursue them, we reinforce feedback loops in 
the housing system which further fuel unaffordability and wealth inequalities.
The Lab surfaced tensions between these ‘good’ and ‘bad’ aspects of high home prices – as well 
as the policy levers that influence them.  Participants sought – and found – considerable common 
ground on how policies can be adapted to move Canada towards the goal of affordable housing for 
all.
Actions and recommendations
The Lab identified three areas for policy innovation, and three working groups proposed specific 
recommendations in each one.  This Executive Summary includes one-page briefing notes for each 
policy recommendation (see below), and more information is available in the full report. 
1. Monetary and lending policy: Participants recommend aligning the mandates of the Canada 
Infrastructure Bank and CMHC to incentivize lending to scale up green co-op and affordable 
purpose-built rental supply.  
5
Participants also recommend that Statistics Canada review the “owned accommodation” 
component of its Consumer Price Index (CPI) Calculation, and report annually about the influence 
of monetary policy on the growing gap between home prices and earnings.  
2. Tax policy: Participants recommend implementing an annual (deferrable) progressive surtax 
on the 9% of homes in Canada valued at over $1 million, to reduce the tax shelter on principal 
residences that incentivizes Canadians to see rising home prices as a source of wealth 
accumulation. 
3. Protective policy: Participants recommend creating a permanent housing affordability ‘off-
ramp’ program and savings plan, to transition low-density housing into a pool of permanently 
affordable rental units, financed by a diverse pool of capital through a Perpetual Affordable 
Housing Bond.
 
Conclusions and next steps
The Lab was successful in helping to shape and refine opinion among leaders of the housing 
system by exposing participants to different viewpoints. It has refined people’s beliefs about policy 
problems, and more importantly, the adaptations to policy that can contribute solutions. 
The Lab succeeded in identifying considerable common ground among diverse housing and policy 
experts – leading to concrete proposals for action.  However, the dialogue also reinforced that there 
is no ‘silver bullet’ to restore housing affordability.  Rather, we need a ‘silver buckshot’ approach that 
addresses the full range of policy tools that shape Canada’s housing system.
Implementation of a strong knowledge mobilization strategy for the policy recommendations 
generated by the Lab is the key next step.  Generation Squeeze intends to mobilize resources to 
move the agenda into action. This will take building coalitions of supporters around each idea in 
order to grow the political cover for elected officials to disrupt the status quo that is failing to deliver 
affordability, and to set our country along a path that can restore affordability forever. 
Stewardship teams have emerged from all of the working groups to nurture efforts to move Lab 
recommendations from ideas to action.  However, new fund development efforts are required to 
sustain this important work.
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Recommendation: Align the mandates of the Canada Infrastructure 
Bank and the CMHC to Incentivize Lending to Scale Up Green Co-op 
and Affordable Purpose Built Rental
The working group recommends aligning the mandate of the Canada Infrastructure Bank (CIB) 
with that of the CMHC to incentivize lending to green co-op and purpose-built rental construction 
projects that simultaneously promote national goals for housing affordability and net-zero carbon 
emissions.
Better aligning the work of these two Crown Corporations could leverage funds to supplement 
the Rental Construction Financing Initiative and the National Housing Co-Investment Fund, which 
CMHC currently implements. Sector leaders indicate these two programs are currently insufficient 
to scale up green co-op and affordable purpose-built rental. There remains an overall gap between 
the total funds available to the National Housing Strategy (approximately $70 billion) and the level 
of investment required to scale up affordable housing to sufficient levels. While there is no firm 
estimate of the additional investment required to fill Canada’s housing gap, anecdotal estimates 
from some in the sector have suggested the figure is $200 billion or more.
Public funds allocated to the CIB or CMHC would need to be used for both granting and lending 
purposes. Grants are necessary to subsidize the ‘affordable’ and ‘green energy-efficient’ aspects 
of new developments, and to attract other investors to provide loans, because these elements 
of projects are often neglected due to market failures and cost constraints. In other words, more 
lending is necessary, but not sufficient, to get the job done. 
As an Impact Investor on behalf of Canada, the CIB is a particularly important investor/lender to 
engage. Not only can it make low-cost financing available to commercial and non-profit developers, 
it offers a longer-term horizon for financing by comparison with most other lenders, without taking 
collateral. For example, energy retrofits/upgrades pay for themselves over time, and the CIB 
welcomes repayments made from the share of energy savings that accrue over time.
The Parliamentary Budget Officer reports that the Canada Infrastructure Bank is expected to fall $19 
billion short of its lending expectations between now and 2027-28. Minimally, some of this shortfall 
could be used to target the following goals identified by the Co-operative Housing Federation of 
Canada.
The Co-operative Housing Federation (CHF) of Canada identifies a need for 90,000 new units of 
co-op and not-for-profit housing over the next 7 years, along with another 60,000 units of low-cost 
private rental housing that could be converted to non-market housing over the remaining seven 
years of the National Housing Strategy. The CHF estimates that $18.5 billion is required as grants to 
subsidize the lending required to build or convert these 150,000 units.
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Recommendation: Task Statistics Canada to review the “owned 
accommodation” component of its Consumer Price Index (CPI) 
calculation, and report annually on the influence of monetary policy on 
the growing gap between home prices and earnings Source: Working 
group calculations based on Statistics Canada Survey of Financial 
Security (2016) data, adjusted for home price inflation to 2020   
The review will require developing a supplementary measure of housing affordability to capture 
changes to “average home values relative to typical earnings.” This adaptation is necessary so that 
official measures of “owned accommodation” and “housing affordability” go beyond: 
• The current focus on monthly interest payments to also examine payments required on principal;
• The current reliance on the New House Price Index in order to monitor trends in prices for 
established housing.
This review by Statistics Canada is important, because CPI measurement has wide-ranging economic 
and policy implications. The Bank of Canada relies on CPI to set its interest rates. Governments use 
the CPI as a target for monetary policy, and to adjust tax brackets, transfer payments and pensions. 
Canadian businesses use measures of inflation when making decisions about wages and investments. 
The Working Group recommended this review to respond to concerns articulated by groups like the 
Business Council of BC, which observes:  
“It can seem hard to reconcile the stellar growth in house prices in recent years in Vancouver and 
some other Canadian urban centres with the modest growth in the consumer price index (CPI). 
Established house prices in Greater Vancouver and Victoria rose 81% and 56%, respectively, over 
the past 5 years, whereas the CPI for BC rose only 7.5%. The disconnect is partly due to the way 
Statistics Canada tracks the cost of “owned accommodation.” In particular, estimates of mortgage 
interest and other costs facing homeowners are based on the New House Price Index rather than a 
broader measure of established house prices. The result is that CPI likely understates trends in living 
costs facing many households in BC and Canada.” 
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Recommendation: Implement an annual (deferrable) progressive surtax 
on home values starting at $1 million
The working group recommends that federal and/or provincial governments implement an annual 
(deferrable) progressive surtax on homes valued over $1 million. This threshold ensures that the vast 
majority of Canadians would NOT pay the tax, as 91% of Canadian households do not own a property 
valued over $1 million. The tax will apply only to the 9% of households living in the most valuable 
principal residences in the country – including 13% of Ontario households, and 21% of BC households. 
Deferrable means that the tax would not need to be paid until the home is sold, or the property 
inherited. This design detail would respond to the principle that policy adaptations should avoid 
imposing risks on individuals with limited income or wealth beyond the home in which they live. A 
competitive interest rate would be charged on any deferred tax payment. This deferral practice is 
already common across provinces when it comes to collecting annual property taxes from seniors.
The proposed annual surtax will reduce the tax shelter that incentivizes Canadians to rely more on 
rising home prices as a strategy for savings and wealth accumulation than they otherwise would. 
Reducing the tax shelter will disrupt feedback loops that fuel rising home prices.  This would slow the 
escalation of home prices and improve affordability; reduce inequalities, including between renters/
owners and younger/older Canadians; and attract savings and credit towards economic activity outside 
of the housing sector, which may produce more jobs and innovation than is often found in real estate.
Government could use revenue collected from the surtax to provide benefits to renters, such as 
portable housing benefits. Revenue could also advance other Lab recommendations, including 
investments in new green co-op and purpose-built rental, and/or initiating the ‘Off-Ramp Program and 
Bond’.
Home Value % of 
households 
Canada
# of 
households 
Canada
Average 
Value
Surtax 
Rate
Avg Annual 
(deferrable) 
Surtax payment
Annual 
Revenue 
(Billion $)
$1 to $1.5 million 5.5 845,108 1,204,184 0.2% $408 $0.35
$1.5 to $2 million 1.8 271,618 1,723,587 0.5% $2,118 $0.58
$2 million + 1.6 246,063 3,121,013 1.0% $14,710 $3.62
Total 8.9 1,362,789 $4.54
Home Value % of 
households 
Canada
# of 
households 
Canada
Average 
Value
Surtax 
Rate
Avg Annual 
(deferrable) Surtax 
payment
Annual 
Revenue 
(Billion $)
$1 to $1.5 million 5.5 845,108 1,204,184 0.5% $1,021 $0.86
$1.5 to $2 million 1.8 271,618 1,723,587 0.5% $3,618 $0.98
$2 million + 1.6 246,063 3,121,013 1.0% $16,210 $3.99
Total 8.9 1,362,789 $5.83
Table 1: Possible Surtax Rates and Revenue
Source: Working group calculations based on Statistics Canada Survey of Financial Security (2016) data, adjusted for 
home price inflation to 2020
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Recommendation: Create a Permanent Housing Affordability Off-Ramp 
Program and Savings Plan
The working group recommends creating two new mutually supporting initiatives: a federally-guaranteed 
off-ramp program to transition low-density housing into a pool of permanently affordable rental units, 
and an off-ramp savings vehicle delivered through a Perpetual Affordable Housing Bond (PAHB).
Off-Ramp Program: 
This arms-length program will purchase existing low-density housing from individual owners across 
Canada, and redevelop lots into 4-6 units. New units will be pooled into a large, diverse and distributed 
stock of higher-density, permanently affordable rental homes.  Rent will be charged at 30% of the 
tenants’ gross household income. Converting existing single-family homes is a focus, but other low-
density housing forms also play a role in scaling the program. The Off-Ramp program would be 
universally available, and would address the problem of “missing middle housing.”
The program would start with a minimum $1 billion federal investment to make funds available to 
purchase properties. For home owners, the sale of their property under the program would be executed 
at appraised market value; pay in cash all net equity owned by the seller, and any outstanding mortgage 
balance to the lender; give the seller the right to continue to live on-site in a home that meets their 
needs. Ownership of off-ramp homes would shift from private to collective, and sit in a legal vehicle 
governed by a number of stakeholders, including residents, community groups, private foundations, 
developers and government. 
While home prices are still rising, the Off-Ramp may attract homeowners via a variety of motivations, 
including a values-aligned desire to support a shift to permanently affordable housing, access to 
accessibility or other improvements via conversion, and financial benefits from the sale of their home 
and from lower monthly costs, etc. Should home prices stall or fall, the program has potential to attract 
and protect those most at risk of being ‘under water’ by providing 100% debt relief for those who join.  
This offer of ‘protection’ is used as an incentive to achieve the program’s primary objective – to scale up 
missing middle permanently affordable rental housing. The Off-Ramp program does NOT propose that 
governments directly subsidize homeowners with under water mortgages.
Off-Ramp Savings Vehicle: 
To achieve scale in the Off-Ramp program, additional financing can be raised through a new Perpetual 
Affordable Housing Bond (PAHB) that delivers a stable and attractive return to investors, guaranteed by 
the federal government for 10 years.  PAHB returns are anchored by the pooled rental income generated 
by the homes converted through the Off-Ramp program, along with a portfolio of supplementary 
community wealth assets built over time (e.g. car share, energy generation, etc.).  This means that new 
permanently affordable ‘missing middle’ housing created under the Off-Ramp program will be paid for 
by a wide range of capital sources – versus just relying on public funds. 
The PAHB would be available to everyone, and could serve as a stable retirement savings vehicle –
reducing the number of Canadians counting on high and rising home values for their financial security. As 
such, the PAHB will contribute to the cultural shift needed to disentangle Canadians from current policy 
incentives that sustain the large gap between home prices and local earnings.
Source: Working group cal-
culations based on Statistics 
Canada Survey of Financial Se-
curity (2016) data, adjusted for 
home price inflation to 2020
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Sources: Average home price data provided by the Canada Real Estate Association
Earnings data from Statistics Canada, Custom table C1010886a
Interest rate data from Statistics Canada, Table: 34-10-0145-01 (formerly CANSIM 027-0015)
The gap reflects the interaction of two systems: one that shapes housing outcomes; another 
that shapes outcomes for earnings and wages.  Our Lab focused exclusively on the former, while 
acknowledging that efforts to reduce the gap may be served by efforts to improve productivity in the 
labour market to accelerate wages, and address the increased levels of precarity found in Canada’s 
growing “gig economy.”
Years for typical 25-34 year old to save 20% down payment
Average home prices
Typical 25-34 year old earnings
Interest rates
Section 1- Problem Brief & Lab Motivation: 
‘Everyday’ Canadians are entangled or incentivized by public policies 
to count on high and rising home prices, which erode affordability for 
those who follow
This Solutions Lab searches for solutions to Canada’s housing affordability challenges that are caused 
by the growing gap between local earnings and average home prices.  
1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Years
Earnings & Home Prices (2020$)
Years to Save & Interest Rate
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
550,000
600,000
650,000
700,000
750,000
800,000
850,000
900,000
950,000
1,000,000
1,050,000
1,150,000
Figure 1: The Gap. Home Prices Relative to Young People’s Full-Time Earnings
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The wide gap between home prices and earnings creates wealth inequalities, especially 
between owners and renters; and between generations that bought homes decades ago compared 
to those starting out in the housing market today (see Kershaw 2018).
A wider gap creates risks that some Canadians become highly leveraged when borrowing to make a 
home.
The wide gap also imposes dramatic unaffordability barriers – barriers especially for younger 
generations of renters and aspiring owners, newcomers of any age, and seniors who are renters.  
Within these groups, the barriers are often particularly great for Indigenous residents and Canadians 
of colour, as signaled by the movements for Truth and Reconciliation and anti-Black racism.
Given all of this, the growing gap between home prices and earnings is a major impediment 
to the Canada Mortgage and Housing Corporation’s (CMHC’s) ambitious goal that all Canadians can 
afford a home that meets their needs by 2030.  
At Generation Squeeze, we think this goal is so important, we have embraced it as our own, and 
encourage all in Canada to do the same.
In pursuit of that goal, Generation Squeeze aims to disrupt a root cause of the growing gap 
between home prices and earnings (without presuming to imply it is the only root cause). 
We start with the recognition that the gap was growing rapidly for years well before the onset of 
COVID-19, and that it continued to grow rapidly during the pandemic.  Given this observation, 
we judge that if even a pandemic-induced recession is insufficient to deflate home prices, then 
we can no longer ignore the probability that our housing system is actually structured, even if 
unintentionally, to grow housing values out of reach for local earnings.    
Indeed, our Lab hypothesizes that many “everyday” Canadians are entangled or incentivized by 
public policies to bank on profits from homeownership to secure our financial future and gain wealth.  
And by being thus entangled, and by responding to such policy incentives, we reinforce feedback 
loops in the housing system which further fuel home prices to leave earnings behind, and generate 
wealth inequalities.  This is the overarching problem that motivates all of the Lab’s work.
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Early Lab deliberations resulted in participants identifying three policy areas of primary interest 
because of their role in incentivizing, or entangling, many “everyday” households:
1. Access to cheap credit:  The historically-low interest rates that have existed since the recession 
of 2008 provide Canadians with access to cheap credit. Low interest rates enable buyers to bid 
up the price of housing because they keep monthly carrying costs low for those who can pay for 
growing down payments. 
2. Wealth gains from principal residences sheltered from taxation: Since 1972, Canadian tax 
policy has sheltered principal residences from taxation in order to help Canadians build wealth. 
This original objective might have been a good idea.  But the way it is currently implemented 
creates a number of significant, unintended problems.  The tax shelter on principal residences 
produces a basic incentive that draws households’ and other actors’ available savings and credit 
towards the ownership of housing. It also draws households’ away from other economic activity 
that may produce more jobs and innovation, while inflating demand and average housing costs, 
thereby contributing to inequalities and unaffordability. 
3. Limited protection for those who bought recently if prices fall: Lower average prices may 
create more affordability for renters and those who haven’t yet entered the ownership market. 
But falling home values could mean that some Canadian homeowners, especially those who 
entered the market recently, end up owing more than their home is worth, which increases the 
risk of default and bankruptcy, while compromising retirement savings. As a result, many new 
entrants to the housing system have reason to want home prices to continue to rise, even if they 
know first-hand how difficult it is to straddle the growing gap between home prices and local 
earnings.  
As Founder of Generation Squeeze, and the initiator of this Lab, my personal story is emblematic of 
the Lab’s hypothesis that many ‘everyday’ households are incentivized by public policies to bank on 
profits from homeownership to secure our financial future.
In the year before the Lab started, BC Assessment reported that my home increased by $300,000.  
That single-year increase is way more than I earn as a professor. Were I to cash in by selling the 
home, the gain would be tax free, whereas I pay tens and tens of thousands of dollars in taxes on 
my income. While I chose not to cash out, I still had lots of opportunity to leverage the additional 
housing equity for home improvements, and other investments in the stock market. I have taken 
advantage of both of these opportunities with the support of remarkably low interest rates available 
amid the pandemic.  My home now has several improvements I had wanted to make, and my 
investments have returned ten times the cost of low-interest charged me for increasing my mortgage 
to free up additional home equity to invest.
So, I clearly benefit from rising home prices.  
But that rising home price is a double-edged sword.  What’s been great for my personal finances 
is hurting some of my other family members, who as renters struggle to afford an apartment with 
enough bedrooms for their kids.  It’s hurting my younger colleagues, who are just as smart as me, 
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and just as hard-working as me, who now cannot afford to live where I do.  It’s hurting my community 
and country, because evidence shows that wealth inequalities and pervasive unaffordability barriers 
make our economy 
less efficient, while 
compromising our 
population’s health.
By putting everyday 
Canadians at 
the centre of our 
Lab, our focus 
is provocative, 
and potentially 
uncomfortable.  
Too often I have 
participated in 
housing dialogues 
where we hear Canadians say that unaffordability is simply the result of others – somebody over 
there: a foreign investor, a money launderer, a speculator, a NIMBY, a developer, a landlord, a realtor.  
And yes, all of these actors do play a part in Canada’s housing unaffordability saga.
But our policy makers have increasingly focused on these “other” actors as “low-hanging fruit,” 
often encouraged by Gen Squeeze to do so. There now exist foreign-buyers taxes, speculation 
taxes, empty homes taxes, new measures to address money laundering, new efforts to resist 
NIMBY’ism, new rent control policies, new expectations for developers, new regulations for realtors, 
and lots of efforts aimed at building more supply of housing. So far, such measures have proven 
to have limited influence to dampen down home prices, or close the frightening gap between 
home values and what local residents earn in our cities.
Which is why our Lab is determined to dig deeper.  To move beyond the low-hanging policy fruit to 
focus on a more disturbing root cause of the problem – the reality that many everyday Canadians, 
myself included, are entangled in perpetuating our unsustainable, unaffordable housing system 
– because public policies incline us to organize our wealth strategies in ways that count on home 
prices rising faster than earnings.  
It has been important to organize the Lab with this 
focus because we observe that the current National 
Housing Strategy – as important as it is – suffers a 
major omission.
Never once does this strategy mention the word “wealth.”
One might judge that is because the National Housing Strategy aims primarily to address the 
housing challenges faced by those with modest incomes who generally have little, if any, housing 
wealth.  This is true.  

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But it still begs the question:  why do many Canadians and our decision-makers tolerate rising home 
prices?  Routinely rising prices make it harder for those starting out in the housing market, along 
with residents of any age who have limited incomes and limited housing equity, to straddle the gap 
between local earnings and rapidly rising home prices for renters and aspiring owners. 
Put bluntly: By failing to acknowledge wealth, the National Housing Strategy risks overlooking that a 
primary reason why our country is struggling to restore affordability is because few Canadians think 
rising home prices are uniformly bad.  Quite the opposite, many people, many regular folks, benefit.  
Many gain wealth and financial security, as my story illustrates.
The “good” and the “bad” of rising home prices – that has been our focus in this Lab – along with 
the competing interests created by tensions implicit in the “good” and “bad” elements of rising 
prices.  Our Lab has aimed to surface these tensions, and surface the policy drivers that give rise 
to them.
Because those policy drivers hold unique potential to redesign the Canadian housing system in 
search of “win-wins” wherever possible, or a better balance of competing interests when win-wins 
are not in reach.
We planned for disagreement at the beginning of the lab.  As we searched for policy innovations, 
our invitation list for Lab participants was designed to engage a diversity of perspectives. 70+ 
leaders representing all parts of the housing system have participated at some point along the Lab’s 
journey.
We planned for disagreement because there is disagreement in the broader Canadian context. 
Recent polling by Angus Reid, shows that 40% of Canadians want home prices to continue to rise; 
60% want home prices to stall or fall.
Our Lab participants mirrored this split in public opinion. 
Which highlighted our challenge: the search for common ground amid the diverging opinions.  
Could we find and grow common ground to a degree where there may be a shared agenda for 
adapting a policy driver or two, or three, to narrow the gap between home prices and earnings? 
That’s been our Lab’s quest. To surface tensions. Identify their policy drivers. Propose adaptations to 
those policies. Seek common ground. Use it to make positive change to reduce wealth inequalities 
and advance the goal that all Canadians can afford a home that meets their needs by 2030.   
Happily, we found a lot of common ground, which is described in more detail in the remainder of this 
report.  
But it would be an overstatement to imply consensus. And a misrepresentation to ignore that some 
of the 70+ participants didn’t continue throughout the Lab’s entire journey. Some likely dropped out 
because they didn’t personally or organizationally align with the common ground that was emerging 
among others.  
The following graphic summarizes the rich range of thematic ideas generated by the 70+ participants, along with key questions to 
which participants sometimes gave diverging answers.
15
16
Section 2:  Lab Process
The engagement process by which our Lab searched for common ground to spur innovation 
followed the journey described in the following schematic.  
The schematic shows that the Lab occurred online via Zoom during the pandemic, starting in 
September 2020, and wrapping up a year later.  The Lab invited participants in the following six 
steps to complete our Lab journey:
1. Step 1 invited two groups of 30+ stakeholders to dialogue about the Lab’s hypothesis:  Many 
“everyday” Canadians are entangled or incentivized by public policies to bank on profits from 
homeownership to secure our financial future and gain wealth. When we respond to these policy 
incentives, we reinforce feedback loops in the housing system which further fuel home prices and 
wealth inequalities. 
2. Step 2 engaged 34 participants from the opening session who volunteered for some homework 
offline to provide insight about the policy areas that may be entangling Canadians in this way, 
along with policy responses available to reduce those entanglements.   
3. Our third step in the Lab’s journey was another online session with dozens of the participants 
from session 1, at which participants identified the policy areas to focus priority attention for 
the remainder of the Lab.  Participants selected three areas:  monetary & lending policy; tax 
policy; and what became labeled as “protective” policy to explore the risks to highly-leveraged 
households should home prices fall substantially from current values.  
 
Our efforts to prioritize policy areas also resulted in substantial dialogue and disagreement about 
what Canada should hope for from home prices in the future:  should they rise, stall or fall… if we 
want to restore affordability forever? Exploring this disagreement grew in importance for the Lab 
process, because the initiation of the Lab presumed that a slow-down in home prices is necessary 
to restore affordability.   
4. Given the lack of common ground about the future of home prices, our fourth step featured 
a specific dialogue series to develop a rich understanding of participants’ views about the 
underlying premise of the Lab:  “Average home values must stall or fall if we are to achieve the 
goal of ensuring everyone living in Canada can afford a home that meets their needs, as renters 
or owners, by 2030” (the goal of the CMHC). This series featured three dialogues with small 
groups of 8-9 participants – all of whom had participated in one or both of the earlier large group 
online sessions.  The input from these dialogues is summarized later in the report. 
5. While the dialogue series was under way, the Lab launched three working groups of 8-12 
participants – our fifth step.  The groups were tasked with the goal of generating concrete policy 
recommendations to address incentives generated by monetary/lending policy, tax policy and 
(the lack of) protective policy, which entangle many ‘everyday’ Canadians to count on high and 
rising home prices for their financial security, and compromise affordability for those who follow.  
17
Each group recruited additional academic and/or technical expertise to inform working group 
deliberations, the search for common ground, and opportunities for innovation.  Each working 
group met roughly three times over approximately three months, with homework in between 
each online session conducted by individuals or sub-groups. These working group activities 
generated concrete policy recommendations, or “prototypes,” which we describe later in this 
report.   
6. The Lab’s final step invited participants from the dialogue series who explored whether restoring 
housing affordability requires average prices to rise, stall or fall to comment on the policy 
recommendations produced by each of the working groups.  Participants completed surveys 
reporting what they liked, tolerated, couldn’t support, and/or needed more information about.  
This feedback was used to refine the final presentation of the policy recommendations produced 
by the working groups, as shared below in this report.
18
Tax Policy
Recommendations
Monetary/Lending
Recommendations
Protective Policy
Recommendations
Final Report and 
Roadmap
19
Section 3: Canada needs to decide: does the goal to restore 
affordability for all require average home prices to rise, stall or 
fall?
In service of the National Housing Strategy (NHS), the CMHC 
aims for all residents to be able to afford a home that meets 
their needs by 2030, either as owners, renters, in co-ops or 
some other suitable form of tenure.  This is the right goal, and 
an aggressive timeline, given that the NHS observes that over 
1.5 million Canadians are currently in core housing need, and 
many more are squeezed by the high cost of housing relative to 
local earnings. 
However, in pursuit of this 2030 goal, the National Housing 
Strategy is relatively silent about what needs to happen to 
housing prices in the market over the next decade. Can this goal 
be achieved if average home prices continue to rise well beyond 
local earnings? 
Lab Premise
As we designed our Lab, we presumed the answer to this 
question is ‘No, average home prices need to stall or fall by 
comparison with local earnings if we are going to restore 
affordability for all.’  We started with this premise for two 
reasons.
1. The first reason is motivated by Figure 1 above. It reveals that average home prices have 
skyrocketed out of reach from local earnings. When Baby Boomers came of age as young adults 
around 1976, it took the typical young person five years of full-time work to save a 20% down 
payment on an average home in Canada. Now, it takes 14 years. In Ontario, it’s 18 years; 20 in 
BC; 24 years in the Greater Toronto Area and 28 in Metro Vancouver. These data reveal that when 
home prices rise faster than earnings, it imposes much more work on those trying to get a start 
in the housing market – especially for those aspiring for ownership, which has been the norm in 
Canada for decades. 
 
Yes, interest rates have fallen substantially over the last 45 years. Lower interest rates mean that 
the dramatic increase to the sticker-price of homes did not impose as dramatic an increase to 
monthly mortgage payments. Nevertheless, today’s monthly payments required on a mortgage 
equal to 80% of average home prices are higher – even with record low interest rates – than they 
were decades ago when interest rates were much higher, but home prices much lower.  This is 
the case even for 1982 when interest rates peaked above 18% and home prices averaged around 

20
$180,000 in 2020 dollars.  Recall, the higher monthly payments today come on top of years of 
more work required to save a 20% down payment (and thereby avoid additional mortgage loan 
insurance costs). 
 
As home ownership grows out of reach for more people starting in the Canadian housing 
market (either as young people or newcomers), making a home through rental or co-op housing 
is another, important option.  The influence of ownership costs on rents is complex, and not 
necessarily linear.  But the ability to scale up rental and co-op housing is directly influenced by 
the cost of land, which is the primary driver of rising home costs in the ownership market.  So as 
land values rise, the ability to develop rental and co-op housing at scale becomes much more 
challenging. 
2. The second reason we presume homes prices should stall or fall relative to earnings in order to 
promote affordability is because we encourage Canadians, and our decision-makers, to revisit 
the role of real estate in our country’s economic growth strategies. Real estate, rental and leasing 
represents the largest contributor to Canada’s Gross Domestic Product (GDP). At 14% of our 
national GDP in 2021, this industrial sector is bigger than manufacturing; bigger than mining, oil 
and gas; bigger than construction; bigger than health care; bigger than financial services; bigger 
than professional, scientific and technical services; and so on (See Figure 2 below). Real estate 
has also grown as a share of gross domestic product in all provinces over the last two decades, 
and often has been the fastest growing part of provincial economies.
Sources: 
GDP data from Statistics Canada Table: 36-10-0434-02 (formerly CANSIM 379-0031) Employment data from Statistics 
Canada Table: 14-10-0202-01 (formerly CANSIM 281-0024)

21
Anchoring our economic growth on real estate, rental and leasing would be a fine economic 
development strategy – if this industrial sector also was generating a large portion of jobs for 
Canadians. But it doesn’t. Fewer than 2% of Canadians find employment in the real estate sector. No 
other industrial sector has such a big gap between its share of GDP and share of employment (See 
Figure 2).
This highlights a problem. It signals that Canadians have been growing our economy by increasing 
the major cost of living, without generating jobs in that industrial sector in numbers that ensure local 
earnings keep pace, especially in urban centres. The 2% of people who find employment in the 
industry generally attract very large incomes. Existing property owners gain home equity increases, 
which will propel their spending and consumption to drive up GDP . It’s one way to grow an economy.  
But it is not obviously a good way if our country prioritizes hard work paying off so that younger 
people and newcomers to Canada can earn enough to cover their primary cost of living – housing.  
As we aim to #BuildBackBetter after the pandemic, it is timely to revisit the place of the real estate 
sector in our strategies for economic growth. Instead of an economic stimulus strategy that relies on 
driving up the primary cost of living, it is time to imagine an economy that is stimulated by a housing 
system which reconnects the cost of living to local earnings in order to support employment and 
growth in other industries.  Reasonable concerns that stalling home prices may in turn stall GDP 
must be balanced against this alternative vision of how to stimulate the economy.  The commitment 
to “measuring what matters” that grounds the new Quality of Life Framework in the 2021 federal 
budget (p. 410) signals that the Government of Canada is more open than ever to achieving this 
balancing act.  This section of the budget explains that: “The Government of Canada is working 
to better incorporate quality of life measurements into decision-making and budgeting based on 
international best practice, expert engagement, evidence on what shapes well-being, and public 
opinion research on what matters to Canadians.” The framework explicitly identifies housing 
affordability as a key consideration when evaluating whether the economic strategy is promoting a 
high quality of life. 

22
Disagreement about the Lab premise
During our Lab activities, half of our participants signaled that they align with the premise that 
housing prices need to stall or fall to restore affordability for all.  But the other half did not. 
Public polling suggests reflects a similar split. Angus Reid data shows that 40% of Canadians want 
home prices to continue to rise; 60% want home prices to stall or fall.
This lack of common ground about what our country wants from housing prices going forward is a 
societal barrier to restoring housing affordability.  In the absence of clear signals from the public, 
we create political barriers to achieving the CMHC 2030 goal, because the public is not providing 
sufficient political cover for politicians to be courageous enough to diverge from the status quo that 
tolerates a large, and growing, gap between average home prices and local earnings.
Our Lab activities reveal that skeptics about the premise fall into two broad categories (see also the 
following graphic for a summary):  
1. Some accept the premise, but reject the consequences of stalling or falling housing prices as 
being too harmful for some individual households, or the economy more generally. 
2. Others suggest that pathways to affordability for all may be possible even as the gap between 
home prices and local earnings grows larger.  
The intuitions of these two groups provide guidance about key areas of dialogue we need to foster 
with Canadians about future home prices as we pursue the goal of restoring housing affordability.   
1. Trade-offs between objectives 
The first group of skeptics signal the need to discuss possible tradeoffs between competing 
objectives.  This is the case, because they agree that restoring affordability for all will require a 
change of course from the growing gap between home prices and earnings, but reject the idea that 
the goal of narrowing that gap should be prioritized over some other objectives.   
Tradeoff: home owners 
Some of these skeptics implied that concern about impacts for existing home owners may need to 
trump affordability for all, because certain owners could be harmed by stalling or falling home prices.  
When triaging trade-offs, it is unclear the level at which home-owner vulnerability arising from 
stalling home prices may surpass the vulnerability of those currently unable to afford rent or escape 
homelessness.   
Yes, many Canadians count on equity in their homes as part of their strategy to achieve retirement 
security, and there are entire industries designed to help Canadians unlock growing equity in their 
home to use for other spending purposes (i.e. see the CHIP Home Income Plan).  If we judge that 
23
stalling home prices is good for affordability for all, Canadian legislators would need to focus on 
retirement income policy that encourages Canadians to save outside of strategies that presume large 
returns to investments in principal residences.  
While the risks for homeowners from stalling home prices are less obvious, the vulnerabilities from 
falling home prices are clearer, especially for those who have entered the market more recently. 
While lower average prices may create more affordability for renters and those who haven’t yet 
entered the ownership market, it could mean that some homeowners end up owing more than 
their home is worth.  These “underwater” situations trap households who can’t clear their debt 
via sale, increase their risk of default and bankruptcy, and compromise retirement savings.  People 
may reasonably disagree about whether such vulnerabilities are more or less important than 
vulnerabilities suffered by those who are already homeless, or in precarious housing as financially 
squeezed renters.  However, this risk from falling home prices creates vulnerability that merits 
attention. 
Tradeoff: slower GDP growth 
Other skeptics in the “accept the premise, but reject the consequences” group focus more on 
macroeconomic concerns.  The 2008 recession was shaped in part by many homeowners in the 
US defaulting on mortgages. This reveals the harm that can be imposed on economies when 
“underwater” households occur at scale. Such concerns motivate the kind of exploration with which 
we tasked the “Protective” policy group in our Lab. 
But the macroeconomic skeptics also point to a broader concern – that stalling home prices would 
disrupt the contribution of real estate to Canada’s economic growth.  These skeptics emphasize the 
14% of GDP represented by real estate, rental and leasing; but give less attention to the fact that 
Canadians find less than 2% of employment in the real estate sector. As discussed above, there is 
reason to reconsider whether growing the Canadian economy by increasing the major cost of living, 
without generating jobs in that industrial sector in numbers that ensure local earnings keep pace, is 
the optimal growth strategy for Canada to pursue at this time. 
2. Presumptions that affordability for all can be achieved amid rising 
home prices?
The second group of skeptics about the Lab’s premise that affordability for all will require prices to 
stall or fall proposes there may be pathways to achieve the goal in a context where prices continue 
to rise faster than earnings.  This group points to at least three possible affordability pathways that 
could coincide with average home prices increasing in the market.
Market Ownership and Definition of Affordability 
The first speaks to market ownership and the “definition of affordability.” Some participants 
observed that home prices may not need to stall or fall if the goal is monthly affordability via 
continued low interest rates; and/or down payment affordability via looser mortgage rules, targeted 
24
down payment support, or fractional ownership models.
This proposed pathway must address several follow-up considerations.  First, to the extent Canadian 
governments wish to advance homeownership affordability, should the goal be monthly affordability, 
down payment affordability, or total purchase price affordability? What is the relative importance of 
each measure?  Given that much of the market presently focuses on monthly and down payment 
affordability, what existing or new measures should be considered to add attention to total purchase 
price, which is harmed when average prices rise in the market?
Second, this pathway is fragile.  It breaks down if/when interest rates rise from current historic lows.
Third, the pathway doesn’t look sustainable.  Since interest rates are pretty much at their floor, if 
average prices in the market continue to rise there is no room to dampen this harm to affordability 
by reducing interest rates still further.
Fourth, as discussed above, the current gap between home prices and earnings has created 
substantial inequalities in wealth between owners and renters, and older and younger Canadians.  
If we pursue a path to affordability that banks on rising average prices, what do we do about the 
persisting and growing inequalities?
 
Market Rental 
       
Some participants judged that home prices may not need to stall or fall if market rental costs are, or 
could be, decoupled from average home values.  
Supporters of this proposed pathway must address a number of important follow up considerations.  
First, what evidence exists to show it is possible to sufficiently decouple average rents from average 
home values?  Put differently, what evidence shows it is possible to increase rental supply and 
decrease average market rents to the point where everyone can afford to rent a home that meets 
their needs – even as average home values stay high and rise.  
Second, the ability to scale up market rental depends partially on average land costs, which are the 
major driver of average prices in the market. If land costs keep rising, how can we scale up market 
rental at levels that will keep rents in reach for local earnings?
Third, wouldn’t scaling up affordable market rental, and growing the share of Canadians who make 
homes as renters, decrease demand in the ownership market, and thereby dampen down average 
home values? This consideration circles back to the original ‘stall or fall’ premise of the Lab.
 
Non-Market Housing
Some participants suggested that average home prices may not need to stall or fall (i.e. reject the 
premise) if non-market housing could be sufficiently scaled and priced to meet the full need. 
25
Supporters of this pathway face the following considerations.  First, the most recent Census data* 
show that fewer than 5% of Canadians live in subsidized housing or receive rental subsidies. Imagine 
that we doubled it to 10% of Canadians. Or tripled to 15%. Or quadrupled to 20%.  These would be 
massive accomplishments in the Canadian housing system – but 8 in 10 Canadians would still rely 
on the regular market to make a home.  Can the 80% of Canadians relying on the regular housing 
market can afford a home that meets their needs if home prices continue to leave local earnings 
behind, beyond the large gap we already have?  That seems highly unlikely.
 
Perhaps, some anticipate that Canada should be able to grow the scale of subsidized housing to well 
beyond 20% of our housing supply. For this option to be considered, champions need to make clear 
how the ability to scale up below-market housing at such high rates is decoupled from average land 
costs; and how the needed scale could be achieved if average prices continue to rise.
More generally, if we grow the percentage of residents who make their home in non-profit housing, 
it would reduce demand in the ownership market, which would be expected to dampen average 
values. Once again, this consideration circles back to the original ‘stall or fall’ premise of the Lab.
In sum, as a society, we need to gain clarity
Our Lab was not designed to provide the “final word” on ruling out whether there are any realistic 
pathways to achieving affordability for all without having home prices stall or fall.  But our dialogues 
have surfaced a number of key considerations that proponents of this possibility must address.
It should be a top priority for our citizenry, housing system leaders, and legislators to gain clarity on 
these options and considerations very quickly.  The Office of the Parliamentary Budget Officer 
reports that even with all the noble investments under the National Housing Strategy (NHS), Canada 
is on a trajectory to see the number of households in core housing need rise from 1.5 million when 
the NHS was initiated to 1.8 million by the middle of this decade.
All things considered, this should not come as much of a surprise, because the gap between local 
earnings and average home prices has grown steadily since the NHS was announced.  By the end of 
2016, just before the NHS was initiated, the Canadian Real Estate Association reported that average 
home prices in Canada were approximately $523,000. As 2020 concluded, average prices were 
$568,000; and they surpassed $600,000 as of the summer of 2021.
*Statistics Canada, 2016 Census Catalogue number 98-400-X2016229, Shelter-cost-to-income Ratio (5A), Tenure 
Including Presence of Mortgage Payments and Subsidized Housing (7) and Household Type Including Census Family 
Structure (9) for Owner and Tenant Households in Non-farm, Non-reserve Private Dwellings
26

27
Section 4: Specific Examples of Policy Areas that Entangle 
Canadians to Count on High and Rising Home Prices
As discussed from the outset, our Lab hypothesizes that many “everyday” Canadians are entangled 
or incentivized by public policies to bank on profits from homeownership to secure our financial 
future and gain wealth.  Rational responses to the incentives inherent in these public policies 
reinforce feedback loops in the housing system which further fuel home prices to leave behind local 
earnings, and grow wealth inequalities.  
While the previous section reveals that some people anticipate pathways to restoring housing 
affordability for all can co-occur with rising average home prices, it’s unlikely that rising home prices 
make it easier to achieve affordability.  And either way, rising home prices risk exacerbating serious 
wealth inequalities caused already by the large gap between home prices and earnings.
In response, Lab participants identified four areas of policy which contribute in worrisome ways to 
feedback loops.  These four areas are:  monetary & lending policy; tax policy; policies that limit 
supply; and the absence of “protective” policy in case home prices stall or fall.
Since the CMHC already has underway an extensive Housing Supply Challenge, this Lab focused 
attention on the other three examples.  In doing so, participants integrated a commitment to grow 
the supply of affordable housing into our treatment of the other three issues. 
Feedback Loop 1: Monetary & Lending Policy 
There is a lot of academic research about the influence of monetary policy on housing prices. Ryan-
Collins (2019) provides one of many useful reviews of the literature.
Focusing on this area of policy, Lab participants identified two layers of problems that they believe 
flow from current approaches to monetary and lending policy in Canada: the first is an outcome of 
the second. 
First, Lab participants observe that a wide variety of factors well beyond housing shape monetary 
policy, and monetary policy decisions must be made in light of objectives that exist well beyond the 
housing system.  Nevertheless, participants also signaled that access to cheap credit over the past 
decade has been an important contributor to rising home values (in addition to tax policy and supply 
constraints). Low interest rates enable buyers to bid up the price of housing because they keep 
monthly carrying costs low for those who can pay for growing down payments.
As prices and debt loads rise, many Canadian homeowners become more financially dependent on 
continued high home values and low interest rates, which reinforces feedback loops that sustain high 
and rising home prices that are increasingly out of reach for what most residents earn. This pattern is 
set to continue, with the pandemic leading many to predict several more years of ultra-low interest 
rates.
28
These feedback loops reflect a second, deeper, problem discussed in the previous section. The 
largest part of the Canadian economy is driven by real estate, rental and leasing (14% of GDP). By 
contrast, Canadians find less than 2% of employment in the real estate sector. No other industrial 
sector has such a big gap between its share of GDP and share of employment (See Chart). This 
is a problem, because it reveals that we have been growing the Canadian economy by increasing 
the major cost of living, without generating jobs in that industrial sector at a rate that ensures local 
earnings keep pace, especially in urban centres. Instead, small numbers of employees gain very 
large returns for their work, while equity increases for home owners in ways that drive worrisome 
wealth inequalities between owners and renters, and between older and younger residents.
This problem with monetary and lending policy implies an opportunity: We can adapt policy to 
disrupt feedback loops that sustain high and rising home prices via a strategy that pursues the 
following three goals:
1. Incentivize a shift in lending & borrowing from mortgage to business loans in order to spur 
economic activity in other areas of the economy that will yield larger gains to earnings for a wider 
share of the population. 
2. Improve the measurement of housing prices in Statistics Canada’s measurement of inflation, and 
report annually on the influence of monetary policy on home prices in order to help monetary 
policy decisions maximize benefits for the economy in general, while minimizing collateral 
damage to housing affordability specifically. 
3. Incentivize a shift in lending within real estate toward a healthy mix of affordable green, energy-
efficient co-op homes, and purpose-built market and non-profit rental housing.

29
Feedback Loop 2: Tax Policy
Since 1972, Canadian tax policy has sheltered principal residences from taxation in order to help 
Canadians build wealth. This original objective might have been a good idea.  But the way it is 
currently implemented creates a number of significant, unintended problems.  The tax shelter on 
principal residences produces a basic incentive that:
• draws households’ and other actors’ available savings and credit towards the ownership of 
housing and away from other economic activity that may produce more jobs and innovation, 
• inflates demand and average housing costs,
• contributes to inequalities and unaffordability, and
• makes homeowners problematically dependent on homeownership-related returns on 
investment.
This problem implies an opportunity. We can adapt policy to disrupt this incentive to advance the 
following goals and principles.  The policy adaptation should:
• Stall home values to allow more opportunity for Canadian earnings to reconnect with home 
prices 
• Reduce income and wealth inequality. 
• Be efficient: it is better when the policy imposes the least cost to the economy: i.e. it should 
distort as little as possible individual economic decisions, including allocation of savings between 
industrial sectors.  In other words, it should reduce tax shelters on wealth/consumption of 
residential land that distort the market by incentivizing investments in real estate. 
• Raise revenue:  in support of an expansion of affordable housing supply. 
• Certainty: it is better when tax payments can be assured: i.e. the tax change cannot be avoided 

30
or evaded through stealth or sophisticated accounting, which are widely seen to be unfair 
• Mitigate risks: Any changes should anticipate, and reduce, risks for Canadians who have limited 
income and wealth outside of their home. 
• Improve equity (vertical): People with more wealth or consumption should contribute more. 
• Improve equity (horizontal): People with similar amounts of wealth or consumption should be 
treated the same. 
• Incentivize more of the right supply: the development of higher-density housing in complete 
(livable) communities. 
• Have simplicity: it is better when the policy is simple to implement; it is also better when the 
policy is simple to understand so that it is relatable to all and can contribute to solidarity.
Feedback Loop 3: No Protective Policy
Canada's skyrocketing housing market creates serious risks, instabilities and inequalities across the 
housing system and larger economy.  The previous two problems focus on what happens if home 
values keep rising in ways that grow the gap with local earnings. The growing gap is associated with 
worsening purchase and rental affordability, inequality, and even greater structural dependence on 
high values as cohorts of new homeowners take on more debt and risk.  

31
But, as discussed above, problems also rise if home prices fall, since some Canadian homeowners 
could end up owing more than their home is worth. These “underwater” situations trap households 
who can’t clear their debt via sale, increase the risk of default and bankruptcy, compromise 
retirement savings, and create macroeconomic and other impacts as these circumstances manifest at 
scale. 
Between these two undesirable scenarios, many hope for a "soft landing" – home values flatline 
long enough for incomes to have a chance to recouple with incomes. However, this kind of scenario 
is extremely difficult to manufacture.
Again, this problem implies an opportunity.  Policy can be changed to create a scalable off-ramp for 
those wanting to disentangle themselves from the market forces that give rise to the growing gap 
between home prices and earnings. While the off-ramp would be available for anyone, it could offer 
protection to those most likely to be harmed by a “soft landing” or steeper fall for home prices. 
This protection could incentivize owners of single (or other low-density) homes to convert their land 
into 4-6 permanently affordable rental homes.  Such conversions could be pooled together to grow 
the supply of affordable non-market housing.  The rental income generated from this new pool of 
permanently affordable homes could fund yields for a new stable retirement savings vehicle. This 
savings vehicle could attract private investment at levels required to build and maintain the off-ramp 
at a scale that could help to disentangle many Canadians from current policy incentives that incline 
them to count on high and rising home prices.
Policy Solutions to Disrupt Each of the Harmful Feedback Loops
Guided by these three examples of policy incentives that entangle ‘everyday’ Canadian households 
to count on high and rising home prices, Lab participants recommended that we form three working 
groups to co-create concrete policy solutions to disrupt each of the problematic feedback loops.  
The next three sections provide three briefing notes that summarize the recommendations 
produced by each of the three Working Groups, along with road maps to implement the 
recommendations. The first road map provides a plan to implement the monetary and lending policy 
recommendations, followed by the recommendations of the tax policy and protective policy Working 
Groups.  
These recommendations can be implemented individually. However, they have also been designed 
for implementation together, because they reinforce one another’s contributions to breaking the 
feedback loops that entangle many households to bank on home prices rising well above local 
earnings.  In addition, the tax policy recommendation would provide funding needed by the other 
two Working Group recommendations.
Each Working Group recommendation is followed by a one-page infographic policy brief.
32
Section 5: Monetary & Lending Policy Working Group 
Recommendations
Members*
• Adnan Haider, IBM’s Financial Services Practice
• Angela Redish, University of BC
• Christopher Ragan, McGill University
• Ed Steel, Mortgage & Title Insurance Industry Association of Canada
• Josef Filipowicz, Canada Mortgage and Housing Corporation
• Lu Han, University of Toronto
• Lynnette Purda, Queen’s University
• Paul Taylor, Mortgage Professionals Canada
• Pedro Antunes, Conference Board of Canada
• Preet Banerjee, MoneyGaps
*Note:  The recommendations presented below were co-developed by the members of the working 
group.  The recommendations on which we landed have the support of the large majority of group 
members as individuals; but do not necessarily represent the positions of the organizations with 
which they are affiliated. 
Policy Recommendation
The Monetary & Lending Policy Working Group prioritized two policy recommendations.
  
1. The first aims to refocus lending within the housing system to simulate growth in green, 
affordable co-op and purpose-built rental (PBR) supply.   
2. The second recommends that Statistics Canada revisit how it measures housing in calculations 
of inflation, and to conduct and publicize additional research about the relationship between 
monetary policy on the growing gap between home prices and earnings.  This recommendation 
is offered as an incremental step to inform discussion among the public and decision-makers 
about the influence of monetary policy on housing prices, which could in turn guide future 
opportunities to incentivize a shift in lending away from real estate and more toward other 
businesses as part of Canada’s plan to #BuildBackBetter. This recommendation is a clear example 
of how Working Group participants encourage additional economic modeling and research to 
build on this Solution Lab’s deliberations. It is not proposing changes to monetary policy at this 
time.   
Road maps for implementing each recommendation are presented below.
33
Road map: Align the mandates of the Canada Infrastructure Bank/
CMHC to Incentivize Lending to Scale Up Green Co-op and Affordable 
PBR
Policy Summary
The working group recommends aligning the mandate of the Canada Infrastructure Bank (CIB) 
with that of the CMHC to incentivize lending to “green” co-op and purpose-built rental construction 
projects that simultaneously promote national goals for housing affordability and net-zero carbon 
emissions.
Better aligning the work of these two Crown Corporations could leverage funds to supplement 
the Rental Construction Financing Initiative (RCFI) and the National Housing Co-Investment 
Fund (NHCIF), which the CMHC currently implements. Sector leaders indicate these two programs 
are currently insufficient to scale up green co-op and affordable PBR. There remains an overall 
gap between the total funds available to the National Housing Strategy (approximately $70 billion 
at present) by comparison with the level of investment 
required to scale up affordable housing at sufficient levels. 
While there is no firm estimate of the additional investment 
required to fill Canada’s housing gap, anecdotal estimates 
from some in the sector have suggested the figure is $200 
billion or more.
Public funds allocated to the CIB or CMHC would need 
to be used for both grants and lending purposes.  Grants 
are necessary to subsidize the “affordable” and “green 
energy-efficient” aspects of new developments, and attract 
other investors to provide loans, because these elements of 
projects are often neglected due to market failures and cost 
constraints. In other words, more lending is necessary, but 
not sufficient, to get the job done.
As an “Impact Investor” on behalf of Canada, the CIB is a 
particularly important investor/lender to engage. Not only 
can it make low-cost financing available to commercial and 
non-profit developers, it offers a longer-term horizon for 
financing by comparison with most other lenders, without 
taking collateral.  For example, energy retrofits/upgrades 
pay for themselves over time, and the CIB welcomes 
repayments made from the share of energy savings that 
accrue over time.  
The Parliamentary Budget Officer reports that the Canada Infrastructure Bank is expected to 
fall $19 billion short of its lending expectations between now and 2027-28. Minimally, some of 
this shortfall could be used to target the following goals identified by the Co-operative Housing 

34
Federation of Canada.
The Co-operative Housing Federation of Canada (CHF) (guided by estimates from the Federation 
of Canadian Municipalities) identifies a need for 90,000 new units of co-op and not-for-profit housing 
over the next 7 years; and identifies another 60,000 units of low-cost private rental housing that 
could be converted to non-market housing over the remaining seven years of the National Housing 
Strategy. The CHF estimates that $18.5 billion is required as grants to subsidize the lending required 
to build or convert these 150,000 units.
Implementation 
Which level(s) of government, and which ministries/departments, would need to be involved in 
implementation? What are key details that need to be worked out? 
While affordable, green housing falls within the definition of “infrastructure” for which the CIB has 
responsibility, its current mandate is perceived to focus primarily on infrastructure beyond housing 
so as not to duplicate work performed by CMHC. Initial meetings of senior leaders at both the CIB 
and CMHC, convened by our Solutions Lab, signal mutual interest in exploring opportunities for 
the two institutions to better collaborate to scale up affordable, green co-op and PBR units.  An 
early implementation step could invite the responsible Ministers to collaborate to revise the mandate 
of the CIB so that it is encouraged to bring its lending power to serve National Housing Strategy 
goals.  
In the absence of the Infrastructure Minister broadening the operational mandate of the CIB, there 
is scope within its current operational parameters to contribute to scaling up green, affordable 
housing. Specifically, through work streams that support (a) energy retrofits, (b) public transit 
infrastructure, as well as (c) the CIB’s general mandate to accelerate growth in the social, economic 
and environmental prosperity of Canada (i.e. GDP indicators plus indicators identified in the 
Government of Canada’s emerging quality of life framework). But restricting action to the current 
operational mandate limits the potential for the CIB to incubate investment at a sufficient level to 
serve as a “game changer” to restore affordability.
There will be challenges in determining which communities to target for investment, and an 
appropriate purchase price for land, etc. Addressing these challenges would benefit from 
collaboration between all three levels of government, with coordination provided by CMHC. 
Emphasis should be placed on building supply that meets a minimum standard for livability, and the 
right mix of units (privileging enough bedrooms for families with children) in order to counter recent 
market trends that privilege building micro and 1-bedroom units (which may be more suitable for 
investors than residents).
It will be important to determine whether new co-op units will require (some) residents to invest 
equity, with the option of withdrawing equity upon transfer. 
Rollout Strategy 
How will the policy be rolled out? 
35
Use the estimated $19 billion shortfall in CIB lending to attract the additional private investment 
required to build the 90,000 new green, affordable co-op and PBR units identified by the CHF, and 
to convert the other 60,000 low-rent units into permanently affordable stock.  
Use funds from the proposed new annual deferrable surtax on properties over $1 million (see tax 
policy recommendation below) to fund grants totaling $2.5 billion/year over seven years to cover the 
non-lending costs associated with scaling up the 150,000 units.
Costs and resources required
What are the direct and indirect costs associated with policy implementation? 
1. Lending for land acquisition, including subsidy. The Cooperative Housing Federation (CHF) of 
Canada estimates that: 
• $15 billion is required to build 90,000 new units. $15B is the total contribution (non-lending) cost 
of projects which use, on average, a capital grant worth 70% of total project cost, and assume 
an average cost of $225,000/unit across Canada.  This amount also assumes a set-aside for first-
stage support, given that many non-profits and co-ops don’t have the funds available to assess 
the viability of a redevelopment or new development.  First-stage support would allow for this, 
and would likely be able to identify both low-hanging fruit (intensification of a co-op that owns 
land and is clear of old operating agreement obligations) and larger, more ambitious projects 
(development adjacent to planned transit 
extension).  
It is worth noting this figure assumes 
a dedicated program for non-market 
housing (co-ops and non-profits), which 
would make it different from the National 
Co-Investment Fund. However, the Co-
Investment Fund could be formulated to 
integrate this dedicated program with 
additional funds at the scale proposed 
above. 
• $3.5 billion in grants (plus access to loans) 
is required to convert the 60,000 low-rent 
units into permanently affordable housing 
stock. This assumes a lower grant to loan ratio than new development, since the properties are 
already operating as tenanted, low cost rental housing
• $50 million is required under the Federal Lands Initiative specifically for the co-operative housing 
sector. This is the cost of making whatever federal body owns the surplus land “whole”, and 
assumes a transfer to a co-op provided at no to very little cost.  
2. Personnel are required for administration at each level of government to collaborate with CIB, 
CMHC and community/industry partners. 
 

36
Revenue and/or other benefits
What are the financial and other gains (or cost recovery), other than the main impact above?
By adapting lending policy to scale up affordable, green co-op and PBR units, this policy change 
should reduce the risk of emigration by highly skilled Gens Y and Z Canadians because it will reduce 
the affordability challenges they are facing as a result of the large and growing gap between average 
home prices, the associated impact on rising rents, and local earnings. Reducing the risk of this brain 
drain yields numerous financial benefits, including tax revenues, access to talent for businesses, etc.). 
The intention to scale new affordable housing units with an explicit commitment to “green” design is 
necessary if Canada is to meet its commitments to achieve net-Zero carbon emissions by 2050, given 
that households represent about one-quarter of Canada’s GHG emissions. 
There are downstream benefits that result from better affordability, increased sustainability in the 
housing system, and less inequality.  These include better quality of life, sense of community, health, 
etc.  
Risks: Political and Other
What are the risks associated with implementing this policy? Unintended consequences? How might 
these be mitigated?
The rationing mechanism for allocation of scarce co-op and PBR housing opportunities needs to be 
defensible if it is to sustain public support. 
The success of this approach will require additional density to be added into metropolitan 
neighbourhoods that currently have low levels of density. Such changes can invoke “Not In My 
Back Yard” (NIMBY) responses.  Presently, freehold-tenure is widely seen as ‘ideal’ in our cultural 
context, so successful take up of the increased supply of rental and co-op units may require a shift in 
“mindset”.  
Co-op members and renters of PBR lose the opportunity to build up housing equity, which may 
deter those hoping to find a stepping stone into home ownership. 
Evaluation (system scale)
How will success be defined and measured? What are the anticipated key system-level results of 
the policy, both positive and negative? 
If the planned increase in the supply of good, green, affordable co-op and PBR options attracts 
demand away from conventional home ownership, it is anticipated that the shift in demand would 
provide a counterforce to the persistent escalation in home prices.  This would help to give local 
earnings a chance to catch up over time. 
The increase in supply will be directly related to the amount of grant funding made available by the 
federal government to help the CIB and CMHC attract additional investors. This observation aims to 
37
correct for a weakness in the RCFI and Co-Investment Fund that, so far, have had insufficient funds to 
achieve the scale of new co-op and non-profit rental supply that is required. 
Indicators
• # of new co-op and PBR units added relative to demand (along with estimates of the amount of 
supply required to slow down home price escalations in the market).
• Amount of funding allocated publicly to the CIB/CMHC for building this supply
• Amount of private capital attracted to the CIB/CMHC for building this supply
• % return on loans
• Relationship between average home prices, average rents and local earnings (with a smaller gap 
evaluated favourably) 
Evaluation (individual scale)
How will success at the individual level be 
defined and measured? 
The alignment of mandates between the 
CIB & CMHC will increase access to co-
op and PBR units in cities across Canada, 
thereby adding supply to meet the growing 
demand for rent (and co-ops) in areas of 
the housing system that provide more 
security of tenure (by comparison with 
rental units offered by landlords who operate non-purpose-built rental units). It is anticipated this 
will dampen down the average rent costs overall.  Consideration could be given to increasing access 
to these co-op and PBR units for people “entering” the housing system (younger Canadians and 
newcomers), as well as for BIPOC communities.
For those who are new to, or entering, the housing system, as well as long-term renters, there will be 
less fear that their paid labour force participation is insufficient to pay for good housing that meets 
their needs, including security of tenure. 
For those who are established in the housing system as owners, there will be less opportunity to 
rely on windfall gains from substantial home price increases for their retirement savings and wealth 
accumulation strategies.  The targeted lending/investment in green co-op and PBR units will attract 
demand away from conventional home ownership, and thereby dampen down the escalation in 
home prices.
There are downstream benefits that result from better affordability and less inequality, including 
better quality of life, sense of community, health, etc.
Indicators:
• Change in proportion of Canadians residing in green co-op and PBR units relative to the size of 
the population.
• Returns on investment for private individuals/organizations that partner with CIB to grow the 

38
supply of green co-op and PBR units.
• Lower % of Canadians in housing stress (measured as 30+% of income paid to housing).
• Trends in home equity, and Canadian household debt levels
• Change in value to pay for a 20% down payment required for an average home (with stalling or 
falling down payments viewed favourably)
Road Map: Task Statistics Canada to review the treatment of housing 
in its calculation of inflation
Policy Summary
The Working Group recommends that the Government of Canada task Statistics Canada to review 
the “owned accommodation” component of its Consumer Price Index (CPI) Calculation, and report 
annually on the influence of monetary policy on established home prices. 
The review will require developing a supplementary measure of housing affordability to capture 
changes to “average home values relative to typical earnings.” This adaptation is necessary so that 
official measures of “owned accommodation” and “housing affordability” go beyond:
• The current focus on monthly interest payments to also examine payments required on principal;
• The current reliance on the New House Price Index in order to monitor trends in prices for 
established housing.
This review by Statistics Canada is important, because CPI measurement has wide-ranging economic 
and policy implications. The Bank of Canada relies on CPI to set its interest rates. Governments use 
the CPI as a target for monetary policy, and to adjust tax brackets, transfer payments and pensions. 
Canadian businesses use measures of inflation when making decisions about wages and investments 
(capital expenditures). 
The Working Group recommended this review to respond to concerns articulated by groups like the 
Business Council of BC, which observes:  
“It can seem hard to reconcile the stellar growth 
in house prices in recent years in Vancouver 
and some other Canadian urban centres with 
the modest growth in the consumer price 
index (CPI). Established house prices in Greater 
Vancouver and Victoria rose 81% and 56%, 
respectively, over the past 5 years, whereas 
the CPI for BC rose only 7.5%. The disconnect 
is partly due to the way Statistics Canada 
tracks the cost of “owned accommodation.” In 
particular, estimates of mortgage interest and other costs facing homeowners are based on the New 
House Price Index rather than a broader measure of established house prices. The result is that CPI 
likely understates trends in living costs facing many households in BC and Canada.” 

39
Implementation
This recommendation would be implemented by the branch of Statistics Canada responsible for the 
production of (a) CPI calculations; and (b) housing affordability metrics. 
Rollout Strategy 
Statistics Canada would: 
• Publish an annual study reporting on the latest evidence about the relationship between 
monetary policy and the growing gap between home prices and earnings. The goal of this 
additional reporting is to inform the public about the degree to which the deployment of 
monetary policy to stimulate the economy generally may be unintentionally inflicting collateral 
damage on housing affordability. 
• Review the merit of counting repayment of mortgage principal in its estimate of “owned 
accommodation” costs, in addition to the current focus on payment of mortgage interest. 
• Build on recent improvements made by Statistics Canada to its measurement of mortgage 
interest costs in the CPI.  As reported by the Business Council of BC, prior to February 2021, 
Statistics Canada relied exclusively on the New House Price Index for its calculation of mortgage 
interest and replacement expenses. This index monitors “contractors’ selling prices for new 
dwellings (including land) collected from builders in more than twenty cities” (Statistics Canada 
2015, 8). By contrast, Canadian Real Estate Association MLS House Price Index and Teranet-
National Bank House Price Index provide data about price trends for established house prices. 
These measures show that the rate of appreciation in established house prices substantially 
outpaces the growth in new house prices. Commenting on these indices, the Business Council of 
BC observes that new house prices in Canada are up 47% since 2005, compared to established 
house price growth of 136%. 
 
As of February 2021, Statistics Canada has adapted its measurement of mortgage interest 
expenses by integrating data about established home prices for the country’s six major census 
metropolitan areas (CMAs):  Montreal, Ottawa, Toronto, Calgary, Vancouver and Victoria.  This 
is an important improvement.  However, since Statistics Canada lacks data about resale home 
prices in the other 21 CMAs, it will continue to rely on the New House Price Index (NHPI) for 
these communities.  This is an ongoing weakness, which needs to be addressed, because data 
show clearly that exclusive reliance on the NHPI risks underestimating housing price inflation in 
the stock of existing homes.  By extension, Statistic Canada’s overall calculation of the CPI risks 
underestimating the actual level of inflation in the country.  Such underestimates fuel feedback 
loops that incline the Bank of Canada to resist increasing interest rates. Low interest rates in turn 
enable buyers to bid up the price of housing because they keep monthly carrying costs low for 
those who can pay for growing down payments. 
Costs and resources required
What are the direct and indirect costs associated with policy implementation? 
There are minor costs associated with the research required to review the treatment of owned 
40
accommodation, and to produce an annual report. Generally, it will require the re-allocation of staff 
time, and/or purchasing time from external expert consultants. 
Revenue and/or other benefits
What are the financial and other gains (or cost recovery), other than the main impact above? 
There are no direct revenue gains from the recommendation that Statistics Canada review its 
treatment of “owned accommodation” in its calculation of inflation.  
There are significant “other benefits.” The proposed annual review of the relationship between 
monetary policy and home prices, and improvements to how Statistics Canada calculates “owned 
accommodation” in the CPI, are anticipated to result in greater information for governments and 
the Bank of Canada to design monetary policy to stimulate the economy, manage inflation, and limit 
collateral damage to housing affordability.
Risks: Political and Other
What are the risks associated with implementing this policy? Unintended consequences? How might 
these be mitigated?
Were the escalation in average home prices captured more accurately in CPI calculations, it is more 
likely that the adjusted-CPI would motivate an increase in interest rates. The increase in interest 
rates would contribute to ‘affordability’ by imposing dampening pressure on home prices, thereby 
lowering down payments. But the increase in interest rates would reduce ‘affordability’ because 
debt service costs would increase. Higher interest rates might also reduce investment, consumer 
expenditures on durables, and consequently, employment. Therefore, additional econometric 
modelling is required to capture the multiple effects of rate increases on housing affordability, and 
the economy more generally.  
That is why our recommendation encourages Statistics Canada to review its treatment of “owned 
accommodation” in the CPI calculations, and to monitor and report annually about the influence of 
monetary policy on the gap between home prices and earnings – rather than proposing a change to 
how the CPI is calculated at this time. 
Evaluation 
How will success be defined and measured? 
Indicators: 
• Statistics Canada makes ongoing improvements to the calculation of “owned accommodation” in 
the CPI.  The revised calculation is evaluated favourably by external sources.
• Statistics Canada publishes an annual report about the relationship between monetary policy 
and the growing gap between home prices and earnings. The report is evaluated favourably by 
external experts.
• Relationship between average home prices, average rents and local earnings (with a smaller gap 
evaluated favourably). 
41

42
Members*
• Elisabeth Gugl, University of Victoria
• Gillian Petit, University of Calgary
• John Dickie, Canadian Federation of Apartment Associations
• Lindsay McLaren, University of Calgary
• Marc Lee, Canadian Centre for Policy Alternatives, BC Office
• Paul Kershaw, University of BC & Generation Squeeze
• Shahar Rotberg, Canada Mortgage and Housing Corporation
• Steve Pomeroy, Focus Consulting Inc.
• Tom Davidoff, University of BC
*Note:  While the recommendation on which we landed has the support of the majority of group 
members as individuals, it does not necessarily represent the positions of the organizations with 
which they are affiliated. 
All group members agreed that it is valuable for Canadian policy makers to revise tax policy in order 
to reduce the tax shelter on principal residences (excluding Purpose-built Rental Buildings) in order 
to send a new, strong policy signal intended to stall the escalation in home prices. 
A majority of group members converged around the policy idea presented below. There remains 
ongoing discussion within the group about whether the proportion of households affected by the 
proposed surtax and/or the surtax rates are sufficient to send a strong enough signal to slow down 
the escalation of home prices. Some members think the rates are not high enough, and don’t 
apply to enough homes. Some think the rates are too high to be politically feasible, unless they are 
phased-in.  Phase-in options are considered below.
While the information below provides enough specificity to begin plans to implement the proposal, 
all working group members concur that further economic modeling will be useful to fine tune the 
proposed surtax rates, as well as develop robust estimates of the anticipated impact on average 
home values across Canada, and in Ontario and BC specifically where average home prices are 
higher than in the rest of the country. 
Policy Recommendation
Introduce an annual (deferrable*) surtax to the taxation of residential properties above $1 million 
(excluding PBR buildings) in order to reduce the tax shelter for high value homes and thereby 
dampen demand for homes above this threshold, while raising revenue to invest directly in new, 
green, affordable co-op and PBR homes.
Section 6:  Tax Policy Working Group Recommendations 
43
*Note: Deferrable means that the tax would not need to be paid until the home is sold, or the 
property inherited. This design detail would respond to the principle that policy adaptations should 
avoid imposing risks on individuals with limited income or wealth beyond the home in which they 
live. A competitive interest rate would be charged on any deferred tax payment. This deferral 
practice is already common across provinces when it comes to collecting annual property taxes from 
seniors.
Policy Summary
Federal and/or provincial governments would implement an annual (deferrable) progressive surtax 
on home values starting at $1 million.  Proposed surtax rates are presented in the Table below.
The recommended $1 million threshold ensures that the vast majority of Canadians would NOT 
pay this tax.  Calculations using Survey of Financial Security data show that 91% of Canadian 
households do NOT own a property that is valued over $1 million. As a result, only the 9% of 
Canadian households living in the most valuable principal residences in the country will be subject to 
the tax. 
Even in the two provinces with the highest average home prices, namely, BC and Ontario, the vast 
majority of residents will not be subject to the surtax. 13% of all Ontario households and 21% of BC 
households own properties that are valued above $1 million.

44
The proposed annual surtax will reduce the tax shelter that has historically privileged principal 
residences as an “investment strategy” by comparison with other sectors of the economy. The 
favourable tax treatment of principal residences incentivizes Canadians to rely more on rising 
home prices as a strategy for their savings and wealth accumulation than they otherwise would.  By 
reducing the tax shelter, the policy change will disrupt feedback loops that fuel high and rising home 
prices. This will yield the following benefits: 
• Slow down the escalation of home prices, and thereby improve affordability for those entering 
the ownership market, as well as many renters because rents are influenced by the prices of 
homes.   
• Reduce inequalities in wealth, including between renters/owners, between younger/
older Canadians, and along other intersecting axes of power related to race, class, gender, 
colonization, etc. 
• Attract savings and credit towards economic activity beyond real estate that may produce more 
jobs and innovation than is often found in real estate. (Note: This objective aligns with themes 
emphasized by the Monetary & Lending Policy Working Group. See the previous section).
Revenue collected from this surtax could be used to provide:  
• Benefits directly to renters (eg. helping low-income tenants pay their rents through direct financial 
assistance like portable housing benefits; or government-supported RRSP investments for renters 
to enhance their future savings, as rising home prices have done for many owners); and/or  
• Investments in new green co-op and PBR units, as recommended by the Monetary & Lending 
Policy Working Group; and/or  
• Investments required to initiate the “Off-Ramp Program and Bond” recommended by the 
Protective Policy Working Group (see description below).
The following Table provides an illustrative summary of possible surtax rates around which the 
majority of working group members converged.  The Table provides two options, with the first 
providing a possible phase-in approach for the proposed surtax over its initial years. 
45
The proposed annual surtax differs from a capital gains tax in several 
important ways 
• A capital gains tax would apply to all home owners, unless a specified value of lifetime capital 
gains was added to exempt some owners. By contrast, the proposed annual deferrable surtax is 
designed to exempt the vast majority of home owners, thereby increasing its political feasibility. 
• A capital gains tax would require a new, complicated system for measuring and auditing the 
“gain”, because investments in any home improvements would need to be subtracted from the 
home’s market value at the time of sale.  By contrast, the proposed surtax is simpler to implement 
because it can rely entirely on existing provincial infrastructure that already measures home 
values for the purpose of calculating annual property taxes. 
• A capital gains tax would need to apply retroactively if it is to tax housing wealth gained 
as a result of home price increases over previous years. Many will question the fairness of 
implementing something retroactively; or raise questions about how far back in time the capital 
gains tax should apply.  By contrast, this surtax option would be implemented only on a “go 
forward basis,” which adds simplicity, increases political acceptability, and reduces concerns 
about fairness.
Home Value % of 
households 
Canada
# of 
households 
Canada
Average 
Value
Surtax 
Rate
Avg Annual 
(deferrable) 
Surtax 
payment
Annual 
Revenue 
(Billion $)
$1 to $1.5 million 5.5 845,108 1,204,184 0.2% $408 $0.35
$1.5 to $2 million 1.8 271,618 1,723,587 0.5% $2,118 $0.58
$2 million + 1.6 246,063 3,121,013 1.0% $14,710 $3.62
Total 8.9 1,362,789 $4.54
Home Value % of 
households 
Canada
# of 
households 
Canada
Average 
Value
Surtax 
Rate
Avg Annual 
(deferrable) 
Surtax 
payment
Annual 
Revenue 
(Billion $)
$1 to $1.5 million 5.5 845,108 1,204,184 0.5% $1,021 $0.86
$1.5 to $2 million 1.8 271,618 1,723,587 0.5% $3,618 $0.98
$2 million + 1.6 246,063 3,121,013 1.0% $16,210 $3.99
Total 8.9 1,362,789 $5.83
Table 1: Possible Surtax Rates and Revenue
Source: Working group calculations based on Statistics Canada Survey of Financial Security (2016) data, adjusted for 
home price inflation to 2020
46
• If a capital gains tax were implemented without applying retroactively, it would continue to 
shelter the wealth that has so far been created by the growing gap between average home 
prices and earnings. It would thereby fail to address many of the wealth inequalities that initially 
motivated Solutions Lab participants to call for a review of the taxation of housing wealth. 
By contrast, the surtax proposal will collect additional tax revenue from the 9% of Canadian 
households with the highest levels of housing wealth – many of whom will have accrued this 
wealth as a result of previous housing price increases. 
• The design of a capital gains tax may invite questions about the number of years in which a 
person has resided in the home as part of efforts to calculate “the gain” and/or to discourage the 
commodification and “flipping” of primary residences.  By contrast, the proposed surtax would 
accrue annually regardless of the number of years in which the owner(s) live(d) in the home.
While the proposed annual surtax on homes over $1 million differs from a capital gains tax in 
these important ways, the two options share an important beneficial characteristic. Both would be 
collected at the time of sale when the owner’s equity becomes liquid and readily accessible. 
The surtax also enables owners to pay the tax annually as it accrues if that is their preference.
Road map: to implement an annual deferrable surtax on homes over $1 
million
Implementation
Which level(s) of government, and which ministries/departments would need to be involved in its 
implementation? What are key details that need to be worked out?
Either federal or provincial governments could implement more annual deferrable taxation of high-
value housing wealth/consumption.  While property taxation is currently the primary domain of 
municipalities, it does not make sense to roll out this recommendation city by city.  
Federal/Provincial Ministries of Finance would be responsible for the policy, which should be 
monitored and evaluated in partnership with Ministries responsible for Housing.
Federal or provincial governments would rely on existing 
provincial organizations that estimate property values 
annually in order to calculate the annual surtax owed.  
Experts in our working group suggest that some provinces 
assess annual home values more effectively than others: 
eg. BC.  This means some funding may be required to 
strengthen the property assessment organizations in each 
province to ensure public confidence in the estimate of land and building values to which the surtax 
would be applied.
Presently, the National Housing Strategy (NHS) does not mention the word “wealth.” By failing to 
acknowledge wealth, the NHS risks overlooking that a primary reason why our country is struggling 
to restore housing affordability is that few Canadians think rising home prices are uniformly bad.  

47
Many ‘everyday’ households benefit from price escalation, and therefore reinforce feedback loops 
that stimulate home prices to rise beyond local earnings. This weakness in the NHS could be 
remedied by framing implementation of an annual deferrable surtax on high value homes as part of 
the broad range of policy adaptations being developed in response to the NHS.  
Rollout Strategy 
How will the policy be rolled out?
Rollout should start by focusing on the federal government.  However, the current federal 
government has said publicly it will not consider a “home equity tax.” So it may be necessary to 
begin by targeting some provinces: eg. BC and Ontario, which have the highest home values.
Either way, the implementation is a straightforward “technical” change to tax policy.  Recent changes 
announced in BC as part of the “School Tax” legislation provide guidance.  With this policy change, 
the province added multiple surtaxes for home wealth above $3 million.  Members of the working 
group encourage further study to quantify the influence of the “School Tax” on BC home prices in 
order to provide evidence about the anticipated impact of their surtax recommendation.
A key question for the rollout strategy is whether the surtax would be “phased in”.  Table 1 offers 
the option of introducing the deferrable surtax with the very low rate (0.2%) on home value between 
$1 to $1.5 million.  For instance, one could phase in this recommendation starting at this low rate, 
and adding 0.1% in each of the next years until after four years the rate for this home wealth range 
would be 0.5%.  That is the same rate proposed for home wealth between $1.5 and $2.0 million.  
Above $2 million, the proposed surtax rate is 1%.
Some working group members also considered whether there is value to having the annual surtax 
apply to a home only after it is next purchased.  However, most in the group rejected this idea out of 
concern that such a phase-in strategy could create many horizontal inequities, and risk leaving many 
existing housing wealth windfalls sheltered from the proposed surtax. The latter would constrain 
the impact of the recommendation to reduce wealth inequalities, and reduce funds available in the 
short-term to invest in new portable renters’ benefits and/or scale up affordable, green housing co-
op and PBR supply.
Regardless of whether a phase-in option is selected, the recommendation could be rolled out in the 
context of a shift towards wellbeing budgeting – now being prioritized by the federal government 
as a part of the Quality of Life Framework discussed earlier.  Wellbeing budgeting measures benefits 
in various sectors like health, the environment, and prosperity with emphasis on reducing inequality 
and promoting sustainability.  Our recommendation will contribute positively to both goals across all 
of these sectors.
The primary rollout challenge is the “framing” required to win the hearts and minds of citizens, and 
to reduce concerns from municipalities about the risks of crowding out their revenue supply.   
48
Costs and resources required
What are the direct and indirect costs associated with policy implementation? 
• This policy change will raise funds for governments; it would be a net gain for finances.  Based on 
current home values, Table 1 projects that annual revenue across Canada would range from $4.5 
to $5.8 billion, depending on the initial surtax rate. 
• There may be minor costs to improve the annual assessment of home values currently led by 
organizations in each province:  eg. BC Assessment; MPAC in Ontario; etc.
• There may be indirect costs to government coffers if, as is intended, this tax policy change 
dampens home prices. This could in turn depress the contribution of real estate to GDP .  
However, if other industrial sectors increase their contributions to GDP , this would compensate for 
the decline. This highlights a connection between our tax recommendation and the work of the 
Monetary & Lending policy group, which considered how to use lending policy to attract more 
investment beyond real estate.  
• Departments of finance may need to consider what showing “deferred tax payments” does for 
their annual reporting of government surpluses/deficits and debts in their balance sheets. A 
competitive interest rate would be charged on any deferred tax payment, a practice common 
across provinces when collecting annual property taxes from seniors.
• There would be minor cost implications for collecting the tax. 
• There would be costs involved for public relations work to “frame” the new tax so that the vast 
majority of Canadians learn right away that they are not subject to it.  
Revenue and/or other benefits
What are the financial and other gains (or cost recovery), other than the main impact above? 
• Using Survey of Financial Security data about current home values, 
validated by BC Assessment data, Table 1 above projects that this tax 
change would raise between $4.54 and $5.83 billion annually across 
Canada, depending on the initial surtax rate. 
 
9% of Canadians have homes above $1 million, or 1,362,789 
households.  Most of these are in Ontario and BC, where we most 
need to slow down the escalation in home prices.  768,348 of those homes are in Ontario (or 
13% of its households); and 428,662 in BC (or 21% of its households). 
 
  Note: the revenue estimate assumes current home values, and does not account for changes  
in values that would be expected as a result of current market forces, or as a result of the      
implementation of the surtax itself. So the estimate would benefit from further econometric and 
theoretical modeling.   
 
Note: the revenue potential of this tax policy change, by comparison with other tax policy 
options, has not been a primary motivation for its prioritization by the working group. Instead, 
we sought to develop a policy signal to reduce the tax shelter currently available for high value 
homes in order to disrupt the common cultural attitude that housing is an especially strong 
investment opportunity -- rather than primarily an affordable place to call home.

49
• To put this $4.54 billion annual revenue estimate in context, it is one-quarter of the funding 
that the Co-operative Housing Federation (CHF) of Canada estimates is required over the next 
seven years to subsidize building 90,000 co-op and affordable purpose-built rental homes, as 
well as convert an existing 60,000 low-rent homes into permanently affordable supply.  In other 
words, this annual surtax could pay for the entire subsidy required to meet this ambitious goal of 
adding new affordable supply – with substantial funds left over to contribute to the new Canada 
Housing Benefit that aims to close the gap between some renters’ incomes and their actual rent 
payments. In addition, the surtax would raise sufficient revenue to cover the $1 billion required 
to initiate the Off-Ramp program and Bond recommended by the Protective Policy group (see 
below). 
• Improved housing affordability may (eventually) result in reduced government investments into 
this policy area, with opportunities to re-allocate to other pressing needs/priorities. 
• Reducing housing unaffordability reduces stress, which is the biological mechanism by which 
adverse characteristics of the environment negatively influence human health.  So existing 
evidence gives strong reason to anticipate that improvements to housing affordability, and 
reductions to inequality, will improve population health, quality of life, etc.
Risks: Political and Other
What are the risks associated with implementing this policy? Unintended consequences?
1. Risks tied to anticipated resistance to new taxation:
While new taxes are often unpopular, there is growing evidence that Canadians are open to 
additional taxation of the “wealthy”. Moreover, the emergency response required during the 
pandemic may be shifting public attitudes about the importance of government programs.
However, it is important to note that much of the dialogue about the “wealthy” in Canada refers to 
people with tens of millions in assets.  Our conversation is focusing on home wealth or consumption 
at considerably lower levels – $1 million and up. So we must anticipate resistance. The level of 
resistance is likely to be directly related to the threshold at which the surtax begins. 
There is a tradeoff between the impact of the policy on affordability and inequality on the one hand, 
and the amount of political resistance on the other. Less resistance likely aligns with less impact.  
The rates and thresholds 
recommended above aim 
to find the right balance 
between what will be 
impactful, and what will 
be politically possible. If 
the initial introduction of 
the surtax has insufficient 
impact to dampen price 
increases, then the 

50
threshold at which the surtax applies could be reduced, and/or the rates increased. 
Resistance to the proposal should be reduced substantially if:  
• We can show that the majority of people are unaffected by the new tax. This is easy to do with 
our surtax proposal because it only applies to the top 9% of household values. 
• It is made clear that the new tax on housing wealth 
will contribute to paying for additional benefits for 
renters, or the development of affordable housing. 
2. Jurisdictional risks:  
 
Provinces may claim that property taxation falls under their 
jurisdiction.  In the face of this risk, the recent Supreme 
Court Decision about the federal pricing pollution legislation 
provides a model to follow.  The federal government could 
set a national framework for a property surtax on high value 
homes.  This framework would give room for the provinces 
to implement their own version that meets the minimum 
characteristics laid out by our recommendation above.  Any 
federal money collected in non-participating provinces could 
be delivered back to the provinces.  
 
Similarly, municipalities may worry that this recommendation 
invites senior levels of government to crowd out their 
primary source of revenue (while they also worry that federal and provincial governments have 
been downloading responsibilities in recent years/decades). The risk can be reduced if the 
benefits resulting from new revenue are generally allocated to addressing municipal priorities. Or, 
the policy could explicitly direct some of the revenue back to municipalities.   
 
For example, if local governments received grants for innovative projects that increase density, 
promote energy efficiency, etc., there could be less resistance to creating a mix of rental units 
and owner-occupied housing in any given neighbourhood. Some such projects could also 
include child or senior day care centres, so that there is that additional benefit to the community 
of surrounding home owners. With the surtax collected by a higher level of government, local 
governments don’t have to take the blame for raising property taxes, but they could take credit 
for attracting projects that are financed by these revenues. 
3. Owners of homes approaching the $1 million threshold may be discouraged from investing in 
home repair. 
4. Owners of homes valued over $1 million that include informal rental suites may try to recover the 
surtax by passing some of its cost on to renters.

51
Evaluation (system scale)
How will success be defined and measured?
Anticipated Impacts: What are the anticipated system-level results of the policy, both positive and 
negative? 
Whereas foreign buyers taxes, and speculation/vacancy taxes, etc., impact a very small portion of 
actors in the housing system (often under 1%), our proposal is designed to wield a larger systems-
level impact (9% of households), while still sheltering the vast majority of Canadians from the 
proposed surtax in order to increase political “acceptability”.   
 
The 9% of impacted owner-occupied households are concentrated in Ontario (where 13% of 
residents will be affected) and BC (where 21% of residents will be affected). It is a strength of this 
recommendation that it will target BC and Ontario, where home prices have risen the most, and 
where affordability pressures are especially great.  These are the provinces that require the largest 
disruption to system feedback loops that fuel high and rising home prices.    
Adding progressivity to property taxation adds incentives for redevelopment at higher density. This 
may contribute to upzoning, and more liveable communities with amenities, transit, etc. near higher 
density development, and thereby improve quality of life while reducing GHG emissions. 
 
A new surtax on housing wealth above $1 million can be expected to lower consumption of housing 
at values above that threshold.  A key question to consider is where the people who are no longer in 
the market for $1 million+ homes shift their demand. 
 Note: There is a risk they would bid up the price for more modest housing. Some experts in our 
working group suggest it is likely that more buyers would be attitudinally-driven to target their 
purchases just below the threshold in order to avoid the surtax.  The low rate of the surtax just 
above the $1 million mark, and the application of the tax only to the amount of value in excess of 
$1 million should make the effect modest.  
 
Any behavioural changes that result in people purchasing homes valued just below the threshold 
may, in turn, cause people to advocate for policies that reduce housing price escalation so as 
not to be subject to the surtax. Were the latter to happen, there would be a change in Canadian 
culture about home prices, and potentially greater alignment between the interests of owners 
and renters.  Further theoretical and econometric modeling is required to evaluate these details).  
After-tax inequalities in wealth would be reduced, which could improve health and social outcomes 
in the population.
The allocation of new revenue towards priorities such as affordable housing, medical care, child care, 
pharmacare, etc. would be associated with system impacts proportionate to those investments. 
52
Indicators 
• Average home prices (modelled/assessed relative to the status quo), with stalled or (moderately) 
falling prices (relative to incomes) judged favourably. Any corresponding influence on rents would 
also be monitored.  
• After-tax inequalities in income and wealth (using, for example, the Gini), with reductions in 
inequality judged favourably. 
• Investment/lending shift from owner-occupied residential real estate to other industries 
(reinforcing goals identified by the Monetary & Lending Policy Working Group). 
• An increase in Government revenue  
• Reduction in rates of “home flipping.” 
• Consider how average data about the above indicators could be disaggregated to examine 
impact on renters, as well as those in precarious housing broken down by gender, race/ethnicity, 
income, ability, household composition, etc. Data from the Survey of Financial Security could 
inform this analysis. 
• Longer term: quality of life and health outcomes and their distribution across the population
Evaluation (individual scale) 
Impacts: What are the anticipated individual-level results of the policy, both positive and negative? 
E.g. household, individual businesses. 
The majority of residents would not be directly affected by the proposed deferrable surtax on high 
value homes.  Presently, 91% of households would be exempt from the surtax.
9% of households would be impacted by higher (deferrable) taxes.  See Table 1 above for examples 
of the taxes that would be levied to stall the escalation of high home prices, and raise revenue to 
pay for more housing affordability, and reduce inequalities.
Deferability would ensure that no one is required to pay the progressive surtax until the home is 
sold, or the property is inherited. As a result, low-income, high-housing-wealth individuals would not 
be at risk of needing to leave their homes because they can’t afford to pay the tax while still living in 
them.  This policy detail is likely critical for ensuring the tax change is “acceptable.”
A modest number of individuals owning households over $1 million may be so highly leveraged 
that their mortgage lenders may not permit deferral of the annual surtax.  It will be necessary to 
monitor if this risk emerges, and its consequences.  Governments could explore how to encourage 
53
Lenders to accept a deferral in these circumstances.  If unsuccessful, the recommendation of the 
Lab’s Protective Policy Working Group may offer risk mitigation strategies to deploy in these rare 
circumstances.
New entrants to the housing market will generally face average home prices for ownership that 
are slowed down by this tax -- although there may be price escalation pressures that are slightly 
exacerbated at home values slightly below the threshold at which the surtax is charged. 
The surtax may incline people with homes above the threshold to reduce their liability by turning a 
basement into a secondary unit, etc, which could contribute to rental supply.
Downstream benefits of better affordability and less inequality, including better quality of life, sense 
of community, health, transportation, etc.
Indicators 
• The % of residents who pay no additional tax, but benefit from additional public investment in 
priorities and/or (s)lower average home prices. 
• Disaggregated outcome data (benefits/drawbacks by race/ethnicity, class, gender, ability, etc.) 
• The average new tax bill for those paying the surtax on high value homes relative to their home 
equity -- compared to tax rates applied to income for people in the top income quintile.
54

55
Section 7:  Protective Policy Working Group Recommendation 
Members*
• Aleeya Velji, CMHC
• Anastasia Mourogova, Dark Matter Labs
• Dallas Alderson, Co-Operative Housing Federation of Canada
• Duncan MacRae, Watershed Partners
• Eric Swanson, Third Space Planning
• Jason Allen John, Partna, and independent Mortgage Broker
• Jill Atkey, BC Non-Profit Housing Association
• Kira Gerwing, Vancity Credit Union
• Kristjana Loptson, CMHC 
• Nick Montgomery, Arts in Action Society    
• Thom Amrstrong, Co-Operative Housing Federation of BC
• Vicki Martin, CMHC
*Note:  The recommendations presented below were co-developed by the members of the working 
group.  The recommendations on which we landed have the support of the large majority of group 
members as individuals; but do not necessarily represent the positions of the organizations with 
which they are affiliated. 
Policy Recommendation:  Permanent Housing Affordability Off-Ramp 
Program and Savings Plan
Policy Summary:
The Off-Ramp has two mutually-supporting components:  
• Off-Ramp Program to transition low-density housing into a pool of permanently affordable 
rental units.  The first component is a new federally-guaranteed, arms-length Off-Ramp program, 
which will purchase existing low-density housing from individual households across Canada to 
address the problem of “missing middle housing.” Each low-density lot will be redeveloped 
into 4-6 units, and the new units will be pooled into a large, diverse and distributed stock of 
higher-density, permanently affordable rental homes for which rent will be charged at 30% of the 
tenants’ gross household income. Converting existing single-family homes is a focus due to the 
development 
potential, 
but other 
low-density 
housing forms 
also play a role 
in scaling the 
program. 
 

56
The Off-Ramp program will start with a minimum $1 billion investment from the federal 
government so funds are available to purchase properties from potential sellers. 
 
For individual homeowners who wish to sell their property to the Off-Ramp program, the sale 
would:  
• Be executed at appraised market value,  
• Pay out in cash all net equity owned by the seller, and any outstanding mortgage balance to the 
lender,  
• Provide the seller the right to continue to live onsite in a home that meets their needs after their 
low-density housing is converted to 4-6 permanently affordable units, and  
• Include 100% debt relief for those who 
are underwater. 
 
The home’s ownership will pass from 
private to collective and will sit in a legal 
vehicle to be governed by a number 
of stakeholders, including residents, 
community groups, private foundations, 
developers and government. The legal 
vehicle will be governed according to 
Key Performance Indicators established 
by those directly involved in the Off-
Ramp program. 
 
The Off-Ramp program would be universally available. While home prices are still rising, the Off-
Ramp may attract current homeowners via a variety of motivations, including a values-aligned 
desire to support a shift to permanently affordable housing, access to accessibility or other 
improvements via conversion, financial benefits from the sale of their home and lower monthly 
costs, etc.   
 
Should home prices stall or fall, the Off-Ramp program’s intention to scale up “missing middle 
housing” also has potential to attract and protect those most at risk of being “under water.” It 
does so by providing 100% debt relief for those who join the program to convert their single lot 
(or other low density housing) into 4-6 permanently affordable rental homes.  However, this offer 
of “protection” is used as an incentive to achieve the program’s primary objective -- to scale up 
missing middle permanently affordable rental housing.  The Off-Ramp program is NOT proposing 
that governments directly subsidize homeowners with underwater mortgages. 
2. Off-Ramp Savings Vehicle:  Once the Off-Ramp program is initiated by an injection of 
government funding, the Off-Ramp can be scaled up with additional financing raised by issuing 
a new Perpetual Affordable Housing Bond (“PAHB”) that delivers a stable and attractive return 

57
to investors that will be guaranteed by the federal government for 10 years. The PAHB returns 
are anchored by the pooled rental income generated by the homes converted through the Off-
Ramp program, along with a 
portfolio of supplementary 
community wealth assets that 
are built up over time (e.g. 
car share, energy generation, 
etc.).  As a result, the Off-
Ramp’s transition from 
low-density to permanently 
affordable “missing middle 
housing” will be paid for by a 
wide range of capital sources 
(as opposed to just using public funds). 
 
The PAHB would be available to everyone and serve as a stable retirement savings vehicle, which 
will pay 2% annually (or payments could be indexed to inflation, etc.).  This savings vehicle will 
reduce the number of Canadians counting on high and rising home values in individually-owned 
properties for their future financial security.  As such, the PAHB will contribute to the cultural 
shift needed to disentangle Canadians from current policy incentives that sustain the large gap 
between home prices and local earnings.  
 
The success of the Off-Ramp program will be enhanced if Municipalities are incentivized 
to streamline the redevelopment process for Off-Ramp housing.  However, redevelopment 
applications can also proceed per the status quo. 
Road Map for Implementing the Off-Ramp 
Program and Off-Ramp Savings Vehicle
Implementation
Which level(s) of government, and which ministries/departments 
would need to be involved in its implementation? What are key 
details that need to be worked out?
Initiation: The Off-Ramp program establishes a base stock of 
housing in specific communities (see the Rollout Strategy below), 
after which local owners are free to approach the program to 
initiate the conversion of their own privately-owned home(s) into 
Off-Ramp Housing. This conversion may be motivated by an 
owner’s desire to escape from debt, to pay lower monthly costs, 
to age in place in a renovated and accessible unit, to contribute to 
local housing solutions, etc. 
Buyout: The purchase is executed at appraised market value, and 
includes 100% debt relief for those who are underwater. Owners 

58
with an equity surplus have the option of receiving a 100% cash payout (or X% in Off-Ramp bonds 
and/or rent credit).
Densification: Municipalities are encouraged to pass citywide upzoning provisions for Off-Ramp 
housing (e.g. 1-4 or 1-6 conversions in keeping with Vancouver’s “Making Home” proposal, but 
geared to rental), perhaps with a list of pre-approved designs. The benefit to the local government is 
an influx of funding and affordable housing. Development fees are used to cover local costs.
Availability: The Off-Ramp is available to all potential sellers, and the resulting increase in housing 
supply is available to all Canadians. Waitlist details TBD. 
Service agreements: The development and operation of Off-Ramp housing is done by an 
ecosystem of local service providers (developers, builders, not-for-profit housing agencies, etc.), the 
activities of which are guided by service agreements that set key performance indicators (“KPIs”) 
such as energy efficiency, etc. Developers’ roles are less about timing the market, and more about 
the efficient delivery of quality homes and KPIs. 
Monthly rent calculation: Tenants pay 30% of their household’s gross income (opting to use 
previous year’s income OR an estimate of current year’s income). Monthly rents cannot drop below a 
“rent floor” of X (still to be determined), nor rise above a “rent max” defined by 30% of the local top 
quintile median income, set in perpetuity and adjusted for inflation. Rent payments administered via 
digital smart contracts.
Rent insurance: If taking 30% of a tenant household’s income produces an amount higher than 
the “rent max,” this additional income (or a portion thereof) will be taxed via a special federal levy 
every year and deposited in a rental insurance fund/policy that covers Off-Ramp tenants who are 
temporarily unable to pay the rent floor.
Bond details: The bond is a perpetual bond (no maturity date), with a notional yield of 2% (could 
also be designed to float with interest rates), guaranteed by the federal government for 10 years, 
and available to everyone. 
Governance: The activities of Off-Ramp are governed by an entity with representation from the 
federal government, service providers and local communities. Exact governance structure TBD.
Rollout Strategy 
How will the policy be rolled out?
Program established with initial $1 billion investment.
Bond issued.
Base stock of Off-Ramp housing is attracted by inviting municipalities to opt in to the Off-Ramp 
program via facilitative upzoning.  
59
Contract with developers/builders to construct base stock of new multi-family homes in participating 
communities, reserving X% of units for owners attracted to participate in the Off-Ramp program 
while their homes are being redeveloped. 
Build out base stock in other communities as needed.
Rents from the growing stock of permanently affordable housing are pooled together to pay bond 
yields.  The bond attracts more private investors.  Their funds are reinvested to scale up Off-Ramp 
housing.
Costs and resources required
What are the direct and indirect costs associated with policy implementation? 
• An initial public capitalization for Off-Ramp Funding (e.g. $1 billion to leverage $10 billion of 
private capital, or $10 billion to leverage  ~$100 billion) to initiate the conversion of low-density 
homes into more units of permanently affordable rental units; and to anchor the Permanently 
Affordable Housing Bond (PAHB).  
• Federal guarantee of the bond  
• A dedicated team of staff to manage The Off-Ramp Program  
• A governance and outreach team to onboard and work with service providers
Revenue and/or other benefits
What are the financial and other gains (or cost recovery), other than the main impact above?
Public returns on the Perpetual Affordable Housing Bond are proportional to public investment in 
them.
Operation of the Off-Ramp program could be paid through direct cost recovery from the pooled 
supply of rental income generated by the conversion of low-density homes into more units of 
permanently affordable rental supply.
Indirect public financial benefits through avoidance of social and economic costs caused by housing 
indebtedness, insecurity and unaffordability. 
Many mortgages are federally insured already. The scaling of this program could see a reduction in 
those costs long-term.
Risks: Political and Other
What are the risks associated with implementing this policy? Unintended consequences? How might 
these be mitigated?
The protection offered “underwater homeowners” could create inflationary pressure on prices and 
60
lead to even greater risk-taking.
Too few current homeowners may be attracted to sell to the Off-Ramp program.
Too few private investors may be attracted to invest in the Perpetual Affordable Housing Bond to 
scale up the necessary funds to build and maintain the Off-Ramp.
Success of the program depends significantly on municipal approvals.
Developers need to see this model as profitable (with profit coming from efficient service delivery 
vs. speculative gains). Some/many developers may not be attracted to partner with the Off-Ramp 
program.
Evaluation 
Impacts: What are the anticipated key system-level and individual-level results of the policy, both 
positive and negative?
Positive system impacts
✓ Macroeconomic risks of housing-debt-induced recession(s) or downturns are mitigated.
✓ Accelerated scaling of non-market, permanently affordable housing.
✓ Fewer households in core housing need, and the associated downstream benefits to population 
health and economic productivity.
✓ Provides a counter-cyclical development mechanism that helps normalize the supply of housing, 
labour and construction costs and better matches it to demand for actual homes.
Negative system impacts
X The protection for underwater homeowners could create inflationary pressure on homeownership 
costs 
X As the model scales it could become disruptive to the scaling of other housing models (including 
non-profit models that leverage ownership).
Positive individual impacts
✓ Underwater owners are no longer trapped by debt.
✓ Affordable, secure housing and all the individual benefits that come from that.
✓ Many will save on monthly costs.
✓ Psychological benefits from being unplugged from the volatility of the private market (avoiding 
the fear, insecurity, etc.) 
Indicators:
• Number of new permanently affordable homes created.
• Decrease in the # of Canadians in core housing need.
• Number of households ‘rescued’ from being “underwater”.
• Performance of the bond and Fund.
• Social impact return on the pooled assets (TBD).
61

62
Section 8:  Silver Buckshot
There is no silver bullet to restore housing affordability in Canada.  Many factors are at play. But 
a “silver buckshot” approach can work, if we pursue the full range of policy tools that shape our 
housing system.
In order to bring the full range of policies into the mix, we will need to engage more people in the 
provocative, difficult conversation advanced by this Solutions Lab. Our work invites many ‘everyday’ 
Canadians, especially owners, to consider how we may be reinforcing feedback loops that sustain, or 
drive, home prices further out of reach for local earnings by responding to incentives in the market 
that attract us to organize our wealth accumulation strategies to bank on high and rising home 
prices. 
This does not discount that ways in which unaffordability is shaped by a range of more commonly 
discussed actors in the housing system, including foreign investors, money launderers, speculators, 
NIMBYs, etc.  But our policy makers have taken a variety of actions to address these contributors 
to Canada’s unaffordability saga, as Gen Squeeze and many others have encouraged.  There 
now exist foreign-buyers taxes, speculation taxes, empty homes taxes, new measures to address 
money laundering, new efforts to resist NIMBY’ism, new rent control policies, new expectations 
for developers, new regulations for realtors, and lots of efforts aimed at building more supply of 
housing. Unfortunately, the persistent, growing gap between home prices and earnings – including 
throughout the pandemic – shows that the measures we have taken so far are insufficient to stall 
home prices, or to close the frightening gap between home values and what local residents earn in 
our cities.  
This reveals that housing unaffordability isn’t just a problem caused by someone else – an easy 
“villain” for the rest of us to root against.  The reality is more complicated.  Many everyday 
households, myself included, respond to policy feedback loops that accelerate housing costs 
beyond what people earn.

63
The Lab focused on three policy areas that contribute these harmful feedback loops: monetary 
& lending policy; tax policy; and the absence of what Lab participants came to call “protective” 
policy.  Groups of Lab participants in turn developed proposals to adapt policy in these areas to 
disrupt the feedback loops (while also encouraging ongoing research and modeling to support their 
refinement).
These policy recommendations developed by the Working Groups are innovative, and important. 
However, we are the first to acknowledge that they do not represent the entire answer to restore 
housing affordability in Canada. Our proposals add key pieces to the silver buckshot; but more 
ingredients are still required.
To understand how these policy recommendations fit in the mix of policy changes required to ensure 
all Canadians can afford a home that meets their needs by 2030 – the bold CMHC goal – it is useful 
to examine them in the context of the comprehensive policy framework that Generation Squeeze has 
co-created with experts in the Balanced Supply of Housing community-university partnership.  See 
the following figure.

64
Align CIB/CMHC to 
scale up green co-ops 
and PBRs
Stat Can reports 
annually on 
relationship between 
monetary policy and 
housing prices
Annual progressive 
surtax on homes $1 
million+
Off-Ramp program 
and Bond
Figure 3: Comprehensive Policy Framework to Restore Housing Affordability 
(Source: Generation Squeeze and Balanced Supply of Housing University-Community Partnership)
How Lab Recommendations 
Fit in the Framework:
65
At this interactive version of the Policy Framework, readers can click on each box to learn more 
about the many adaptations we still need to make in Canada’s housing system to achieve the 
CMHC goal. The Game Plan is guided by three overarching principles.  Housing is a human right. 
Housing should first be for homes, and only secondarily for investments. And we need to make 
room for everyone, overcoming attitudes commonly associated with “Not In My Back Yard” (NIMBY) 
sentiments articulated by some who resist adding more density in their neighbourhoods, especially 
rental supply.
Guided by these principles, the Game Plan features three pillars of activity.  Actions to scale up 
the non-profit sector, because the market is failing to deliver housing that is in reach for wages 
paid by local labour markets.  Actions to fix the regular market, because the majority of Canadians 
will continue to rely on it to make a home, even if the non-profit sector is doubled, tripled or even 
quadrupled in size.  And actions to break the cultural addiction to high and rising home prices, 
because this addiction reinforces feedback loops in the housing system that fuel home prices 
beyond earnings, making it much more challenging to succeed at the work required by the first and 
second pillars.
Collectively, the recommendations of the three working groups in this Lab respond to many 
elements of this comprehensive policy framework to restore housing affordability.
The recommendation to align the mandates of the Canada Infrastructure Bank and the CMHC to 
scale up energy-efficient co-ops and purpose-built rental homes responds directly to the “Make 
Room for Everyone” principle by proposing novel financing to grow 150,000 new affordable units 
across Canada.  The success of this recommendation will require resisting the NIMBY’ism that 
can obstruct the development of new co-op and rental supply in neighbourhoods that have less 
experience with these tenures. If successful, the recommendation would scale up substantially the 
supply of new and renovated non-market homes, which would in turn have reverberations in the 
regular market by shifting demand patterns.
The recommendation to task Statistics Canada to review its treatment of “owned accommodation” 
in the calculation of the CPI, and to report annually on the influence of monetary policy on home 
prices, responds directly to the “Homes First, Investments Second” principle that aims to disrupt 
and reduce the over-commodification of housing.  The additional evidence, and increased public 
dialogue, sought by this recommendation aim to create opportunities for policy makers to dial down 
inflationary demand for housing fueled by low interest rates, even as pandemic recovery may require 
macroeconomic stimulus provided by low interest monetary policy. The same research should also 
lay a foundation to explore new ways in which monetary and lending policy could support Canadians 
to invest and save in areas of the economy with greater potential to fuel wage increases for a 
broader share of the Canadian labour market than does the real estate, rental and leasing sector, 
where Canadians find less than 2% of employment despite it representing 14% of GDP .
The proposal to implement an annual (deferrable) progressive surtax on homes over $1 million 
also responds directly to the “Homes First, Investments Second” principle, because it would add 
a dampening influence to slow down home prices at the most expensive end of the market, while 
inviting those especially likely to have benefitted from wealth windfalls produced by rising home 
66
prices to contribute a little more toward the construction of affordable homes. In this way, the 
proposed surtax contributes importantly to the “Break the addiction to high home values” pillar, 
because it would reduce the tax shelter on returns from real estate investments, and thereby nudge 
people to consider investment strategies in other industrial sectors.  It also provides opportunities 
for governments to consider cutting taxes on incomes for middle- and lower-earners. This would 
help the disposable income side of the housing affordability gap, because the revenue would be 
compensated for by additional taxation of the 9% of households that own the most expensive 
residential properties in the country.
Finally, the proposed Off-Ramp Program and Bond also aim to temper the over-commodification of 
housing, as urged by the “Homes First, Investments Second” principle. In doing so, these measures 
seek to incentivize and finance efforts to scale up the supply of non-market homes, while also 
cushioning the impact of any substantial price decline in the housing market. The latter may improve 
affordability for those entering the housing system, but harm those who have made their initial 
purchases in the market recently while prices are currently very high.
Next Steps
This report marks the end of the Solutions Lab. It offers a summary of our engagement activities, 
deliberations and policy recommendations.
But the report does not mark the end of the work.  The Lab was not initiated to produce a final 
document that grows stale in some inbox, file folder or archive.  We brought together diverse 
stakeholders to fuel bottom-up collaboration to identify concrete actions that we can collectively 
take to address elements of the housing system that had been receiving limited attention in 
government circles, and in public discourse.  The Lab has helped to shape and refine opinion among 
leaders of the housing system by exposing participants to different viewpoints.  It has helped to 
refine people’s beliefs about policy problems, and more importantly, the adaptations to policy 
that can contribute solutions.  The result is three policy innovations that can be added to Canada’s 
agenda for policy reform on route to implementing the comprehensive Game Plan to restore 
housing affordability for all by no later than 2030.
Generation Squeeze intends to mobilize resources to move the agenda into action. This will take 
building coalitions of supporters around each idea in order to grow the political cover for elected 
officials to disrupt the status quo that is failing to deliver affordability, and to set our country along a 
path that can restore affordability forever. Stewardship teams have emerged from all of the working 
groups to nurture efforts to move the Lab’s recommendations from ideas to action. New fund 
development efforts are needed to sustain this work, and we are hopeful that we can secure the 
necessary resources.
Meanwhile, we work with what we have to initiate change.  The Lab has already facilitated stronger 
connections between leadership at the Canada Infrastructure Bank and the CMHC.  The Off-Ramp 
proposal has already been presented to select CMHC team members.  
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By contrast, tax policy is a red herring politically.  Several actors already politicized the fact that our 
Lab was exploring tax policy to signal (incorrectly) that the Government of Canada is considering a 
capital gains tax on principal residences. It is not. The federal government has explicitly ruled out this 
idea, as has the official opposition.  Nor does our Lab have any dialogue underway with government 
representatives about the proposed annual (deferrable) surtax on the 9% of most valuable homes in 
the country – except in the case of official opposition MPs who called on Lab organizers to appear 
multiple times before the federal Standing Committee on Finance to speak about Lab deliberations.
The fact that tax policy is such a red herring is part of the problem that prevents achieving the goal 
of affordability for all. It obstructs dialogue about policy incentives that entangle Canadians to 
pursue wealth via their search for, or at least celebration of, real estate windfalls that grow wealth 
for owners, but erode affordability for those who follow.  Accordingly, Gen Squeeze will prioritize 
knowledge mobilization activities that aim to shift the cultural mood to be more accepting of a “tax 
shift” – potentially lower taxes on earnings, especially for middle- and lower-income households, 
paid for by higher taxes on high value homes – all done to slow down home prices and generate 
resources to make better investments for young and old alike. We need to shift the hearts and 
minds of the Canadian public on this issue enough to make it politically safe for politicians to act 
courageously in response to the evidence. 
There is no time to lose – either for action on the ideas developed in this Lab, or for other 
actions identified as necessary by the comprehensive Game Plan to restore affordability. There 
is no time, because the Office of the Parliamentary Budget Officer has already reported that our 
country’s current trajectory is not on pace to achieve the CMHC 2030 goal.  Despite the important 
investments of the National Housing Strategy (NHS) to date, the PBO estimates that the number of 
households in core housing need will rise from 1.5 million when the NHS was initiated, to 1.8 million 
by the middle of this decade.
Canada can and should do better.  We all have a role to play. This includes exploring how many of us 
may be implicated, unintentionally or otherwise, in reinforcing feedback loops that have generated 
a massive gap between average home prices and local earnings – a gap that yields wealth for many 
lucky enough to own residences, while compromising affordability for those who do not.  
Our Lab has jumpstarted this work. Let’s carry it on together.  Onwards.