Carney’s Condo Bailout Is a Band-Aid Solution

The biggest policy failures often start with a faulty diagnosis. Prime Minister Mark Carney and B.C. Premier David Eby’s plan to convert thousands of vacant condo units into rent-to-own housing treats a symptom of Canada’s housing crisis instead of its underlying disease. According to the Canada Mortgage and Housing Corporation, there were 5,849 new and unsold apartments across B.C. in May, with roughly 75 per cent in Metro Vancouver. This is the highest it’s been since the CMHC started recording data 36 years ago.

The basic shape of Carney’s program, announced in Vancouver last month, involved the federal and provincial governments acquiring more than 2,200 of these units through Build Canada Homes and BC Housing. Buying up the surplus and handing it to people who need housing sounded like a common-sense, straightforward solution.

It didn’t take long for the criticism to arrive from every direction. It was a strange moment when parties that disagree about almost everything in housing policy found themselves united in criticizing the same intervention. Federal Conservative Leader Pierre Poilievre called it a “transfer of wealth from the have-nots to the have-yachts.” The NDP came to much the same conclusion from the opposite direction. Housing critic Jenny Kwan questioned why governments were spending public money to acquire distressed condominiums after B.C. had suspended its Community Housing Fund, a program to build affordable housing, and argued the proposal lacked clear affordability targets or meaningful safeguards to ensure taxpayers were getting lasting public value. 

A week after the announcement, Carney clarified the plan, admitting that the government hadn’t done a good job explaining it. He has insisted, repeatedly, that no specific transaction is on the table yet and that the government would only buy “distressed” units at a discount, not at prices close to what developers originally wanted. Eby has gone further, insisting the program won’t apply to city of Vancouver developers at all. He said it’s aimed instead at regions like the Fraser Valley, the Okanagan and Vancouver Island, and that units will be acquired at a price below the cost of construction.

It was ambiguous if either the province or the federal government consulted with any of the affected municipalities and how this plan would fit their local housing strategies. In an interview with the Winnipeg Free Press, economist Mike Moffatt of the Missing Middle Initiative offered a rough test: if governments secure units at a steep discount, say, 40 cents on the dollar against current asking prices, it could be a good deal for taxpayers; if they end up paying close to listing price, it’s a bailout.

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The B.C. housing market is facing an enormous structural problem. The quantity of unsold units is skyrocketing—not just apartments, but duplexes and townhomes too. Carney and Eby have framed this as a simple disconnect between supply and demand: thousands of finished homes are sitting empty while people can’t find somewhere affordable to live. But before buying up thousands of condos, we need to ask why they were never purchased in the first place. Were they priced for a market that no longer exists, built during a five-year run when new condo sales in Metro Vancouver peaked near 19,000 units in 2021 before cratering to around 2,000 this year? Are they barely liveable studios, or $1.5-million three-bedrooms that a middle-income family would never have been able to afford in the first place? Are they in the wrong locations or poorly designed? In metropolitan Vancouver, roughly a third of unsold units are priced above $1 million and, in the city of Vancouver and Burnaby specifically, that figure climbs to about 80 per cent. We need to identify the source of the problem—why investors and residents aren’t buying this stock—rather than slap a band-aid on it by absorbing the units with public dollars. 

An unsold-condo glut and a housing-affordability crisis are related, but they are not identical. A policy built for one will not necessarily fix the other. There is a mismatch between what was built and who needs housing. Typically, a large share of unsold inventory is small-footprint, investor-oriented units concentrated in specific submarkets, while the sharpest unmet need is for affordable and non-market housing for families, seniors and vulnerable populations. A surgical, people-centred approach that starts with their needs and financial capacities, and which works backward to ask which of that unsold stock could plausibly meet those needs, would look very different from a province-wide bulk purchase announced before the basic numbers were settled.

What gets lost in the bailout debate is the much larger and more interesting opportunity sitting inside this surplus. Canada’s stock of non-market housing, including co-ops, land trusts and public housing, sits at 3.5 per cent of total housing, compared with an OECD average closer to 7.1 per cent, and far below the double-digit shares of European countries like Netherlands, Austria or United Kingdom. Starting in the 1990s, the federal government made a deliberate choice to disinvest from non-market housing and bet that the private market could efficiently and affordably house the vast majority of Canadians. It has not. In the federal government’s absence, domestic and foreign capital have driven the supply, making residential real estate beyond the reach of so many Canadian households.

There is a genuine policy opening here that the current plan, as described, doesn’t take. If governments are going to spend public money buying up unsold inventory anyway, why not just decommodify the units permanently, rather than running them through a rent-to-own structure that eventually returns them to the private ownership market? Instead, they could use this leverage to seed community land trusts, where local non-profits own property for co-ops, supportive housing or affordable rentals. This would require critically evaluating which of the unsold housing stock is actually suited to the populations that need housing, perhaps focusing on duplexes and townhomes. Given that roughly a third of Metro Vancouver housing is investor-owned, and that close to half of newly built condominiums in the region are purchased by investors rather than occupants, decommodification isn’t an academic preference. It is a direct response to the actual mechanism that has been driving prices away from local incomes for decades.

There’s another, less quantifiable issue: a deficit of trust. People watch governments announce billion-dollar interventions with the details to follow, watch opposition parties of every stripe call the same plan a giveaway, and reasonably wonder whether anyone in charge actually knows who this is for. The deeper cost of getting this wrong creates yet another data point in a longer story about whether Canadian institutions still have the ability to solve society’s most pressing problems.

The Carney government deserves credit for treating Vancouver’s unsold-condo glut as an opportunity rather than ignoring it. But an opportunity is not the same as a plan. British Columbians deserve a clear answer to the question nobody in Ottawa or Victoria has yet answered: who, exactly, is this for, and does the unsold stock on offer actually meet their needs? Or have the federal and provincial governments completely misdiagnosed the situation? The Canadian housing sector needs to reattach local incomes to housing costs—otherwise it will remain completely unsustainable, socially and economically.

Andy Yan is a professor of urban studies at Simon Fraser University and a fellow with the Canadian Institute of Planners.

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