Thank you for the opportunity to speak to you today.

I, as an economist, have been tracking and following the housing market for many years, and specifically focusing on housing affordability. This is a report that RBC has been putting out for decades now. It goes back to the mid-1980s. The developments over the past several years are telling us that we are indeed in a crisis, which is a term I don't use very lightly.

As was said before, this was, in some parts of Canada, decades in the making. In fact, in the second half of the 2010s, we were talking about a crisis in the Toronto region or in the Vancouver region. I think what happened since then is that we had a perfect storm that occurred because of the pandemic and the policies that were put in place to get us through it, which made it, unfortunately, a nationwide crisis. When we look at our measures, which specifically look at ownership affordability, the cost of ownership has increased tremendously in every single market across Canada that we study.

This is not an isolated issue. It is pretty much a nationwide issue, which is probably why the committee is looking at this very specifically. Now, the sources behind this, and I think both Mr. Lyall and Mr. Lee did a good job at highlighting some of those factors, although they're very complex and cut across all levels of policy-making and through the industry as well, I narrow it down to very simple terms from an economics point of view. It's been the inability of the supply side to adjust and respond quickly enough to sharp increases in demand.

For those of you who have had an economics 101 course, when you have a stronger demand than supply, the adjustment mechanism is prices. This is exactly what we've seen, especially during the pandemic. When home prices nationwide in the space of 24 months increased by 50%—that's five zero—it really puts tremendous stress on homebuyers.

As Mr. Lee pointed out, it had some impacts across the entire spectrum, pushing a lot of people into the rental space where now today the rental vacancy rates are at the lowest ever recorded by CMHC. Rent has gone up and is increasing incredibly rapidly pretty much across the board in Canada. For those who cannot afford to buy, this puts them in rentals. Many renters now cannot afford market rent and that puts them into social housing. I could only agree with what has been said before me. We need to tackle it as an entire system here, and not just from a punctual point of view.

From a policy perspective, I am encouraged now to see that there seems to be a consensus that the focus should be a lot more on the supply side. This was not the case until we were in this crisis, to be honest, and this is something that economists like me have been talking about for years. We need a much nimbler supply and a quicker supply response to the demand that we have. To me, the shift towards focusing policy on the supply side is a big first step. I think going forward what we need are not only the policy plans and intentions but really delivering on those plans and intentions.

Thank you.