In March, housing starts in Â鶹´«Ã½Ó³»collapsed by 59 per cent. That’s not a typo, it’s a warning siren. And a 59-per-cent drop in new supply isn’t a correction — it’s a crisis that is the entirely predictable result of years of political choices driven more by optics than by sound economic reasoning.
Let’s rewind to 2016. At that time, British Columbia faced what many places would consider an enviable problem: Too much capital was flowing into our economy, particularly into real estate. Rather than celebrating this influx of global investment, we vilified it, blaming capital for overwhelming our housing market, inflating prices and pushing homeownership out of reach for many locals.
Faced with mounting pressure from a frustrated public, political leaders had two broad options: Increase supply to absorb demand by accelerating permitting, incentivizing construction and unlocking more land for housing; or suppress demand to fit the existing supply, by targeting the people and capital driving investment in housing.
They chose the latter.
Rather than making it easier to build homes, we made it harder to buy them — especially for anyone labelled as “non-local.” We turned our policy focus toward scapegoating. Foreign buyers, real estate investors, Airbnb hosts, developers and flippers were all branded as “toxic demand.” It became politically fashionable to demonize capital, particularly if it came from outside our borders.
But here’s the reality: Housing isn’t built by end-users. It’s built by developers, investors, speculators and, yes, often with foreign capital. The very people we pushed out of the market are the ones who finance and build the homes we now so desperately lack.
A local first-time buyer isn’t going to fund a multi-year construction project. But a developer or investor will — if the policy environment rewards the risk. When you choke off that capital, you don’t get affordability. You get stagnation. Fewer builders. Fewer units. Higher costs. Higher prices. And a construction sector in retreat.
This is the doom loop we’ve created: We punish capital, we get less housing, prices go up and politicians blame capital even more. It’s a cycle of self-inflicted damage.
The proof is in the numbers. With fewer housing starts, we are now producing dramatically less housing than was ever consumed by foreign buyers (who represent just one per cent of purchases) or Airbnb hosts (another one per cent or so). We’ve sacrificed long-term affordability in exchange for short-term political applause.
Meanwhile, home prices remain high. The economy is slowing. Government revenues are under pressure. This is textbook stagflation — economic stagnation paired with persistent inflation. We are producing less and paying more for it.
And yet, we continue to treat housing as different from every other asset class. When gas prices rise, we don’t ban oil exports. When groceries become expensive, we don’t demonize restaurants. When Ontario’s auto sector faces tariffs, no one expects car prices to drop in Vancouver. But with housing, we somehow believe that banning demand will bring down prices — even as supply collapses.
That’s not how markets work. The health of any economy—especially a growing one—is based on how efficiently it can produce high-quality goods and services. In housing, we’ve done the opposite.
To put it in perspective, we now build housing at only half the rate we did in the 1970s, despite having twice the population and far more wealth. If we had simply maintained that historical pace of building, Â鶹´«Ã½Ó³»would never have had a housing crisis.
It’s time to reframe the conversation. There is no such thing as “toxic demand.” Demand is a sign of desirability. We should welcome people who want to live here. But we should also welcome people who want to vacation here, invest here or own a second home here. It’s our job to ensure supply keeps up — not to gatekeep who gets to participate.
Â鶹´«Ã½Ó³»still has a shot at being a great global city. But that future requires us to build boldly. We need to welcome capital, talent and ambition, wherever it comes from. The path to affordability is not through scarcity and protectionism. It’s through abundance and growth.
Dan Scarrow is president and CEO of Macdonald Realty Group of Companies.
