The Affordability Paradox: The TRUTH on Why Help Drives Prices Higher (CMHC Report)

CMHC Admits the Housing Paradox: Buyer Subsidies Can Raise Prices (Unless Supply Grows) The script explains CMHC research showing that demand-side housing help—tax rebates, lower rates, smaller down payments, longer amortizations—can make housing less affordable by boosting buyer purchasing power immediately while new supply takes years to deliver, pushing prices up. It contrasts demand-side tools (fast, politically popular, visible, protective of existing homeowners’ values) with supply-side solutions (building more homes to reduce competition and enable price discovery). The report models that small, targeted interventions create modest household formation but still raise prices for non-beneficiaries and carry direct and indirect fiscal costs; broader programs benefiting most buyers increase household formation more but worsen the price-to-income ratio and drive larger price increases and costs. CMHC’s conclusion is to either target assistance narrowly or pair it with substantial new construction, emphasizing that the housing shortage cannot be solved through subsidies alone. 00:00 Government Admits the Tradeoff 01:04 Demand vs Supply Basics 02:12 Pent Up Demand Explained 03:04 How Incentives Pull Demand Forward 03:58 Small vs Big Policy Impacts 06:34 Affordability Paradox in the Data 07:03 Why Governments Lean on Demand Tools 08:09 CMHC Two Solutions 09:00 What It Means for the Market 10:20 Build Your Way Out 12:17 Final Thoughts and Questions