The Blame Game!

Whose “fault” is it that the price of real estate in Toronto is so high?

I mean, everywhere you look, people complain.  The media absolutely loves to focus on the high price of real estate, but it’s portrayed as a negative, and often as an epidemic.

I don’t know if the simple answer is what people want to hear – that “the free market” of buyers and sellers; supply and demand, is responsible.

So let’s play the blame game, and see who we can pin this problem on…


Fair warning: this blog post is equal parts sarcastic, and snide.  It’s rhetorical, and inciting.

But it’s true.

So why don’t we….

1) Blame The Government

When people use the word “government” in a blanket statement, it often reflects their lack of knowledge of what a government actually is, and what role they’re supposed to play.

“It’s the damn government’s fault that, a, b, c, or d.”

Not a particular member of government responsible for writing policy, or a certain wing of the municipal government, or the provincial government, or the federal government, and not the level of government that is responsible for that particular grievance, but rather “the government” as a whole.

It’s like something out of the X-Files.  “The government is keeping a secret!”

So often in society, when a problem arises, people who are (in my opinion) less informed, often look to “the government” to fix that problem.

Of course, society in general seems to have this mantra, “I want the problem fixed, but I don’t want to pay for it.  I also want more free services, and lower taxes.”

It’s like people forget that the government, in theory, is simply a body of citizens – like the rest of us, who are tasked with taking a small portion of our earnings, and using it for our collective purposes.

But alas, those who lack a basic understanding of the world in practice, let alone economics, look to “the government” to cure every single problem that ails every single one of us.

When it comes to rising real estate prices, some members of the public believe it’s “the government’s” job to fix them.

In Monday’s Globe & Mail, there’s an article titled, “B.C. Pressured To Cool Down Vancouver’s House Prices.”  The first paragraph reads:

“The average price for detached homes within the city of Vancouver has rocketed to a record $2.23 Million as the provincial government faces pressure to cool the scorching housing market.”

You or I might ask, “Is it really the government’s job to cool the housing market?  Who says the market needs to be cooled?”

Well, people who want to be able to afford real estate, but can’t.  And people who firmly believe that the government is a magic cure-all.  Like a building that prints money, and hands out dreams in manila envelopes.

If you’re sick of the high cost of real estate, then simply blame the government for not doing enough.

2) Blame CMHC

Yes, let’s blame CMHC.

They simply haven’t done enough to “tighten mortgage lending rules.”

Ten years ago, we could get 107% financing on houses.  We could but a $1,000,000 house with ZERO money out of our own pocket, and get $70,000 in cash back upon closing.

Since then CMHC has raised the minimum down payment on purchases to 5%, thereby eliminating these “cash back” mortgages.

CMHC has raised the minimum down payment on second properties to 20%, to curb speculation and over-leveraging.

CMHC has reduced amortization periods from 40-years, down to 25-years.

But you know what?

They should do MORE!

It’s clearly CMHC’s fault that the housing market is so hot, and continues to rise.

They should simply raise the minimum down payment on properties to 15%, and somehow find a way to eliminate variable rate mortgages.  In fact, why not take the maximum amortization period down to 20-years.

Isn’t it CMHC’s job to sit down at every dinner table, in every Canadian household, every night, and ensure that we’re not taking on too much debt?

If you’re sick of the high cost of real estate, then simply blame CMHC for not doing enough.

3) Blame The Bank of Canada

What does the Bank of Canada really know about money?

Here they are, up on their high horse, writing Monetary Policy.

Setting the overnight lending rate.

Changing it.

Raising it.

Lowering it.

When all the while, Canadians are finding it tough to afford a home.

If the Bank of Canada was doing its job, houses would be affordable.

If you’re sick of the high cost of real estate, then simply blame the Bank of Canada for not writing the correct fiscal and monetary policies.

4) Blame Lenders

What a paradox!

We all want cheap money, right?  I mean, if we had a choice between paying 3.99% for our 5-year, fixed rate mortgage, and paying 2.59% for the same product, we’d all choose the latter.

But you know what?

It’s these damn lenders and their damn low rates that are creating so much demand for housing!

If lenders weren’t giving out insanely-low, borderline-free-money, then fewer people would be buying real estate, and if fewer people were buying real estate, then prices wouldn’t rise as much.

I mean, John, Jane, and Jimmy still want their 2.59% mortgages, but they also want lenders to stop being so damn aggressive!

If you’re sick of the high cost of real estate, then simply blame lenders for giving away money too cheaply, and helping to create demand!

4) Blame Realtors

Goddam real estate agents.

They’re pariahs.


They all drive fancy cars, yap on their iPhones, and work 20-hours a week.

All they care about are their commissions, and they’ll do anything to make deals – even if it means telling their buyers to pay more for a property than they could, would, or should.

The tactics that Realtors employ are shameless.

“Staging” a house to make it look better than it actually is?  In what other industry would this be allowed?

This “under-pricing” of homes and “holding-back” offers is solely responsible for the insane appreciation of real estate over the last decade.  Trying to solicit multiple offers, rather than looking for the one person who will pay fair market value for the house.

There are no barriers to entry in this business.  Anybody over the age of 18, who is a resident of Ontario, and who can write a cheque to OREA can get their real estate license.  And then that person can go out and sell real estate on behalf of buyers and sellers, who of course, hire that person…

If you’re sick of the high cost of real estate, then simply blame Realtors for driving up the price!

5) Blame Society

If you let your son go to his hockey game without that new Bauer composite hockey stick that costs $300 and might break after one shift, then you’re a terrible father.  Don’t you know the other kids on the team will make fun of your kid?

And if you and your partner simply lived within your means, rather than buying a much larger property than you actually need right now, then your friends with larger properties might think less of you.

You have a $4,000 purse for a reason.  You could put all your stuff in a five-cent plastic bag from No Frills, but you elect not to.

It’s quite simple: you want the most out of life, but you want to put in the least amount of effort.

I went to GoodLife today to get in the first workout I’ve had in ten days (at what point are you considered “fat”?), and one of the girls at the front counter told me, “I saw you on CTV news the other night talking about real estate!”

The girl standing next to her said, “Am I ever going to be able to afford a nice, new home?”

I paused, offered a kind smile, and said, “Probably not.”

Why sugarcoat it?

“A nice, new home,” she asks?

And here’s the part where you can label me an elitist, or a jerk.  But this is a girl who works at the front desk of a gym, probably making minimum wage, and probably working 25-30 hours a week.

I mean, “should” she be able to afford a “nice, new home?”

If she was able to afford a nice, new home, then wouldn’t the market be out of whack?

If this was Kansas in 1950, then working at the local hardware store would probably net you enough money to buy a 3-bedroom home for you growing family.

But this is 2015.  This is Toronto.  This is the 4th largest metropolitan area in North America.  It’s competitive out there!  Working 9-5 doesn’t seem to cut it anymore, and that’s just the city we live in.

“Should” everybody in Toronto be able to afford what they want?

I’m not sure that’s the way an economy works.

Is there a city in the world where people who simply “want” a big house, at a reasonable price, can get one?

If you’re sick of the high cost of real estate, then simply blame society for having lavish tastes, and unrealistic expectations.

6) Blame Buyers

Your mom and dad think you’re insane for buying a $900,000 house with a 5% down payment.

What are you thinking?

You should sit back, save money, and wait until you have more.

Nevermind the fact that a $900,000 house seems to cost closer to $1,000,000 the next year, and then follow the same pattern every year after…

Buyer are cashing in their RRSP’s to buy houses!  But what about retirement?  Can’t you simply put the immediate future on hold for a moment and think about fifty-years down the road?

And where are all these buyers coming from?

Why are there so many people in this city, who all want a place to live?  Wassup with THAT?

If there weren’t so many damn buyers, and so many people “bidding” on properties, prices wouldn’t keep rising.

If you’re sick of the high cost of real estate, then simply blame buyers for out-numbering sellers, and driving up the price!

7) Blame The Free Market

A free market, you say?

So buyers and sellers interact, and a “market price” results.

If there are more sellers than buyers, then there might be a “surplus,” and prices might fall.

If there are more buyers than sellers, then there might be a “shortage,” and prices might rise.

So in Toronto, as noted – the 4th largest metropolitan area in North America, and essentially the true “capital” of Canada, where about 50-60% of all Canadian immigrants end up, and where more people want to live than any other area of the country, there happens to be more buyers than sellers?


Who would have ever guessed that there would be demand for freehold houses in a city where approximately ZERO new ones are being created each year?

Who could have predicted that when there’s 100 new condos being built in the downtown core for every 200 people who choose to move there, that things could get a bit competitive?

It sounds to me like this “free market” has been free to drive up prices, without any third-party intervention.

If you’re sick of the high cost of real estate, then simply blame the free market for responding exactly as it should, as a free market does.

“Should” is a word I don’t understand.

I feel like a lot of folks out there believe they “should” be able to afford a home.

But then I should be able to play in the National Football League, and I should be able to perform magic tricks without any formal training, and I should be able to marry three supermodels with my wife’s blessing.

The price of a home in Toronto is expensive, I get that.

More people wish they could afford one, I get that too.

But all the media attention seems to portray this invisible “bad guy” that’s responsible for crushing the hearts of Canadians, when in reality, it’s just the result of a free market.

Both media coverage and public sentiment seem to feel that housing “should” be more affordable, and there’s always these two inferred questions: “What’s going to change, and who is going to do something about it?”

Maybe sometimes in life, there’s just nobody to blame…


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  1. condodweller says:

    Something’s gotta give sooner or later. Yes there are high wage jobs in big cities, however at this rate of price increase there will be fewer and fewer people who can afford the prices and eventually we will get to the point where most people will not be able to afford these high prices. IMHO that’s when the market will turn. When the sellers who put their houses on the market expecting higher and higher prices who are willing to wait for that price to be met will want to sell, or god forbid need to sell that’s when the market will turn. You get these two scenarios at the same time and watch out! The million $ question is will this happen tomorrow, next year or 10 years from today……

    Debating whether prices are justified or if anybody can be blamed is futile and pointless. Get back to work to amass your downpayment!

  2. AlexUnder says:

    Quantitative easing ( US and as a result, Canada as well ) and Canadian government trying to keep economy afloat with massive immigration. Two things and if you take one …it will sink. Government stops immigration and it will. Banks raise interest significantly and it will as well. Since no person in their right mind is going to shoot goose with golden eggs – then it is not going to happen until this whole pyramid scheme will collapse because of external or internal factors and international investors will vote with their wallets. You remember summer 2012 policy changes ? It took 6 months to recover. Give market a stronger shock and real estate will be flat or crumbling for some time, but will eventually recover if those mentioned factors are present. And those new immigrants still have cash 🙂

  3. Noel says:

    From your post July 27, 2007 – The truth of the matter is, we are not that far away from an 8.0% interest rate. This could easily happen in the next five years, and the affordability of owning a property will be significantly diminished.

    No one really knows anything.

  4. johnny chase says:

    Dave- Have you read the greaterfool today? I know you you and Garth are tight.

    While I’m a fan of his, his most recent blog post was very relevant to this topic and I believe his comments most accurately reflect the reason for such high prices today.

    1. Appraiser says:

      @ johnny chase; Do you like kool-aid?

      If there is one topic that Barf Turder has the least knowledge of…it’s real estate.

      If there is one topic that good ‘ole Barf has been CONSISTENTLY WRONG about… it’s real estate!

      If there is anyone that has personally lost more money in real estate than ‘Super Barf,’ I’d be astonished. Public records don’t lie!

      Barf Turder is an unmitigated moron, a financial illiterate and a complete charlatan.

      It just proves that…”Some of the people can be fooled all of the time.”


      1. johnny chase says:

        your a tool… Garth had made millions in RE. read the blog post before commenting.

  5. Sabrina says:

    First, stop calling a house or a condo (which they call “an apartment” in Paris) a “home.” Stop with the emotional manipulation. You are buying a property or a piece of property. It has nothing at all to do with who you are; it has to do with how much money you have, where and how you want to live, and whether or not you think you want to put what money you have into buying property.

    We are all to blame, as far as I can see. And, yes, it’s greed and jealousy and all the other things that govern human behaviour and that keep capitalism going.

    But, I’m glad to see that you’re honest about whether or not people are entitled to own property. I was born in Toronto and grew up in a detached, single family dwelling. When I was in my early teens (1970s), I remember hearing and reading about the upcoming scarcity of land and how very few people would be able to afford actual houses in the future. Well, the future is here. We could have stopped it, but we didn’t care enough to do so. See also climate change, antibiotic resistance, etc.

  6. daniel says:

    I agree there is a certain contingent of folks who have an entitled attitude and believe that “everyone deserves a large detached home in an urban neighbourhoood”, which is clearly ridiculous. That said, i think there are some serious affordability problems brewing in the market and this article seems to suggest that the state of the housing market is unavoidable.

    The city needs all manner of people, from maids and janitors to clerks, administrative staff, service industry staff, etc. The affordability challenges for these people are significant. Safe, clean housing that’s reasonably accessible can be very difficult to find at these income levels, particularly for those with children who would ideally like more than a studio or 1-bedroom apartment.

    I suppose you can look at it as these people and say they should just work harder/smarter to better their position in life, however, i would like to live in a city/society where life for even those at the lower rungs of the ladder is reasonably comfortable. Housing for the bottom 20% of Torontonians is a major problem in my opinion and framing the debate about our housing market the way this article does suggests to me ignorance about the realities that the people who serve your coffee and clean your floors face.

    Just because there are no easy solutions does not mean there are no solutions or that we shouldn’t try to find them (ideally solutions that improve housing availability for the masses and let me continue to make 10% per year on my house:-)

    Have at it trolls!

  7. o says:

    Lets not forget the sellers….we told out agent we wanted x amount for our house 10 years ago and he nearly had a heart attack…he specialized in our neighbourhood (which attracted a specific type of buyer) and did very well moving lots of units…then we came and said we felt our house was worth more and he tried to tell us to lower the price or “his other buyers will kill him” for making the prices too high. I said: Your buyer wants this house? This is the price. We got it minus a few thousand. It was bought by the guys rich mother.

    I am of the opinion that many Canadians are very “careful” with their money. If a seller feels their house is worth a certain amount, they will not take a hit. They will just wait out any dips and cut back in other areas to keep their homes. That’s what we are doing. Frozen pizzas, trips to the park instead of Ripleys Aqaurium…but we are paying our bills and holding on.

    So my message to all the people waiting to”swoop in” and “steal a house” at 50% off? Keep dreaming.

  8. jeff316 says:

    Real estate is a lot like pensions. The blame game is a symptom of an increasing generational gap between the lifestyle, opportunities and expectations that people grew up with but that are, right now, just out of reach.

  9. Jim Ester says:

    To be fair though, it is not a free market while the CMHC is operating. If the CMHC closed you would have something getting close to a free market and I would be in favor of that even if it did bring down prices a bit. I don’t like government interventions one way or another.

    1. jeff316 says:

      There is no such thing as a free market, with CMHC or without.

      1. Boris says:

        Well there is. We just havent seen it in this bastion of corporatism/socialism/statism.

  10. I already own says:

    The one thing about Toronto is people who are purchasing homes can afford to do it – the number of 100k plus jobs is increasing pretty dramatically in this city. As long people earning in the city can afford to live in the city I don’t see s major issue. People may not like that it’s bankers/tech/medical/law/ engineers making big money but the fact is people are. Because this is a headquarter type city companies will still be attracted to setting up shop here – we will lose some to cheaper areas of NA but generally this city will be fine.

    Problem is Vancouver – no one wants to set up a company there because you need to pay your staff more than they are worth. Our company moved our west coast office from Vancouver to Portland because you could pay people a little less, but purchasing power goes a lot further in that city. So they can buy a decent house close to work and live in a great town. Government, yes government needs to figure out of it wants Vancouver to be a real city like Calgary or Toronto or a investment / secondary / rich person city like Miami or Cape Town. Currently Vancouver is struggling to attract large companies to set up shop there at a large scale and a lot of it is because of house prices.

    1. Chroscklh says:

      Chroscklh may beg differ you. Is only this man experience but my firm (and other financial firm) pay less in Vancouver than Toronto. No care cost of live. Also, long list of people willing transfer in my firm to Vancouver if spot ever open, for lifestyle. Also, I have sneaky friend make hedge fund Vancouver – he have no problem recruit professional to move, for less money. Is mostly ex-pat Vancouver but still. I think BC people accept spend more money on house than other. No different Moscow, Paris, London, NY – even barista know must pay 2,500 euro/mth for apartment. Just accept, no take to street protest govt

    2. AndrewB says:

      Vancouver will always be a “rich” city because it has what most in Canada consider the best climate and the physical limitations of the ocean and mountains means there’s physically no space to barely build anymore. Even the suburbs there like Surrey and Burnaby are quite expensive and people don’t want to commute “across the bridge” for jobs.

      1. Boris says:

        If you like rain 4/7 days, then yes.

  11. Libertarian says:

    It’s the herd mentality. Most people own property, so everybody else wants to as well. Parents were able to do it, so their kids should too. Society should accept the fact that most people are not cut out to be homeowners. There is more to life than owning a home. Perhaps this could lead to real estate no longer being the obsession it is today.

  12. Chroscklh says:

    Sometime I no understand some folk in this country – not most, most people very open mind – but some folk feel entitle. Back home my country, i no feel entitle to nothing. Govt no let me feel entitle (we eventually overthrow/execute but that diff story). So, I leave country. Maybe is easier spoke then done but where I grew up, I slept on ground, lull to sleep by bomb. I no complain, I no expect govt to save. I adapt. I learn trade commodity as young man (and learn disarm bomb but diff story) i come here and invest in house when cheaper and am millioinaire. Understand no all can do but I feel is easier for born Canadian to go to school, get educate, get career -but must work hard, maybe get big loan. I guess is risk, no can guarantee but if someone say should be able afford detach house on Warehouse wage were it not for foreign buyer – I say buddy, flipt script – go to my country, buy mansion 80k$ (may or may not have bear) live out dream. Why not?

  13. Joe Q. says:

    “Blame” is a loaded word, which is of course the point of David’s post. I agree with his conclusion that trying to find “someone to blame” is a fruitless exercise.

    With that said, I think that seeking to explain what has led the housing market to its current point (in a comprehensive and quantitative way, to the extent that is possible) is a worthwhile endeavour. Limiting your approach to “blaming and shaming” is kind of a cop-out, and on the other side, just saying “it’s the free market at work”, “too bad you didn’t buy earlier” (or more like “too bad you weren’t born earlier”) and is also a kind of a cop-out. IMO.

    1. Appraiser says:

      @ Joe Q. I find it difficult to comprehend why you have equated the free market with taunting phrases. I don’t see anyone suggesting that mocking someone goes hand in hand with understanding economic fundamentals such as supply and demand.

  14. Kyle says:

    @ David

    I think you missed a few. Just to round out the list: Let’s also blame: flippers, foreigners, developers, parents who help their children, Liberals and their supporters, boomers, first timers, the media cheerleaders, real estate boards with their propaganda stats, terrorists, and Brad Lamb. Because to some people the “problem” isn’t ever about wanting something they can’t afford, the “problem” is they can’t afford something they want, and therefore it must be “fixed”.

    1. jeff316 says:

      Don’t forget people moving up from their starter homes!

  15. Kyle says:

    Let the count down begin. Disillusioned buyers unable to come up with legitimate come backs to this brilliant post, will attack David because he is a Realtor in 3, 2, 1….

  16. Marina says:

    David, you are not being fair! Nobody is fair!
    Here is what should happen. – A Lender should allow me to lock in a 2.59 rate.
    – Then the government, CMHC and BoC should stem the flow of immigrants, raise the down payment required, and raise interest rates by 800 basis points overnight.
    – At that point Buyers will disappear. Except for me because I’m so smart and I knew the bubble would burst and have my rate locked in.
    – Now Realtors will clamor to lower prices for me and I can get the 3000 square foot home in Lawrence Park that I have always wanted.
    – Finally, society will put down their $4000 purse and marvel at the glory of my genius.
    Now that’s the Free Market working for me!

  17. I like logic says:

    I blame Zoocasa for the high prices

  18. Appraiser says:

    Not only is there plenty of blame to go around, there is an abundance of simple-minded solutions as well. One specific buyer that is bashed constantly, is the mythical wealthy foreigner who is snapping up ‘our’ real estate at any price, thereby preventing Canadians from becoming homeowners. These outsiders are often portrayed as sketchy crooks laundering their dirty money in our safe-haven nation, with the tacit permission of the evil and conspiratorial Canadian ‘government.’

    Naysayers complain that Canada should implement restrictive ownership rules and punitive real estate taxes for foreign buyers, just like Australia did in 2010. Surely such measures will put and end to the spiralling out-of-control prices and permit real Canadians to enter the market at a reasonable price, right?

    Well let’s take a closer look. According to CoreLogic (, since 2012, Sydney house values have risen 38.8 per cent and Melbourne is up 23.6%.

    1. Joe Q. says:

      The unanswered question, Appraiser, is what those Sydney and Melbourne price increases would have looked like in the absence of the 2010 rules on ownership.

      1. Appraiser says:

        @Joe Q. You raise a reasonable, if hypothetical point, one that is impossible to answer of course. However, if Canadian policymakers are searching for ‘solutions’ to any perceived affordability issues regarding home ownership, I would suggest that the Australian model is not the answer.

        If anything can be learned from the Australian experience, it is that blaming foreigners simply did not work. Their policies may have temporarily placated the anti-immigrant crowd and filled the coffers of government tax collectors, but it did little to alter the forces of the invisible hand of the market.

        1. Joe Q. says:

          Appraiser, in the Canadian context, my impression (and this comes mostly from reading about Vancouver) is that the issue is not really “foreign owners” but rather “speculative owners”, who purchase real estate and leave it vacant, effectively removing it from the housing pool while holding it for capital appreciation. There is a lot of overlap between the two types of owner, and as “foreigners” are easier to identify, they become the target of the public’s ire.

          1. Appraiser says:

            @ Joe Q. Adding speculators to the blame-shifting category does little but elongate the list, I’m afraid. Did you ever notice that speculators are only despised when they’re winning?