Talking to homeowners

They're insulated from the housing market, but they're still worried

A Redditor posted to r/canadahousing: There is no housing crisis!

Everyone in the group is calling the housing situation a crisis. It's only a crisis for the minority non home owners.

For the majority homeowners with voting power, it's the housing lottery.

Therefore, there is no crisis for the government to solve. They are heroes to the majority of Canadians.

It will never change, they are doing everything in their power to keep it going.

It's true that long-time homeowners are insulated from housing being so scarce and expensive. That said, I would make three points:

(1) The housing shortage doesn't affect them directly, but it does affect them indirectly. Where are their kids going to live? How well is the health-care system going to work when nurses and even doctors can't afford to live nearby?

(2) They don't benefit from rising prices unless they sell, and then where will they live? Glaeser and Gyourko 2018:

... housing wealth is different from other forms of wealth because rising prices both increase the financial value of an asset and the cost of living. An infinitely lived homeowner who has no intention of moving and is not credit-constrained would be no better off if her home doubled in value and no worse off if her home value declined. The asset value increase exactly offsets the rising cost of living (Sinai and Souleles 2005). This logic explains why home-rich New Yorkers or Parisians may not feel privileged: if they want to continue living in their homes, sky-high housing values do them little good.

(3) There's a win-win solution here, as demonstrated by Auckland's 2016 upzoning. If you allow more dense housing, what happens is that higher-density housing (like apartments) becomes cheaper, because there's more of it; but lower-density housing (like single-detached houses) keeps their value or even increases, because it can be redeveloped for higher-density housing.

The main barrier to just allowing and building more housing is that Canadians tend to be wary of change, and adding denser housing to an existing neighbourhood requires change. But we've got a choice between two kinds of change: we can either keep the buildings the same and see more and more people pushed out by unbearably high prices and rents, or we can allow the buildings to change so that we add more housing and more people can stay.