If you’re old enough to remember 2008, you probably recall a lot of panic on the news. Banks failing, bailouts happening, and the entire global economy looking a bit wobbly. In the United States, the housing market crashed hard. Foreclosures spread like wildfire. Prices plummeted. It was ugly.
But up here in Canada? Something different happened. Our banking system was more conservative, better regulated, and just plain tougher. No major Canadian bank collapsed. There wasn’t a wave of foreclosures. On the surface, we seemed to skate through relatively unscathed. That sounds like a good thing, right? And in the short term, it absolutely was.
But here’s the twist: that lack of a correction meant Canada never had a “reset” button on housing prices. When the US market crashed, prices dropped, affordability improved (painfully, but it happened), and eventually, the market found a new equilibrium. Canada, by contrast, kept chugging along—prices didn’t crash, but they also didn’t stop climbing.
The real game-changer was interest rates. In response to the global crisis, central banks—including the Bank of Canada—slashed rates dramatically. We’re talking from about 4.5% down to nearly 0.25% in a very short span. Mortgage rates followed, hitting historic lows. Suddenly, borrowing was dirt cheap. And what do people do when borrowing is cheap? They buy things. Especially big, expensive things. Like houses.
So demand surged. But supply didn’t. Zoning, regulations, slow approvals—all those supply-side problems we talked about meant new homes weren’t being built fast enough. Prices started rising. And because our banks were healthy, there was no forced selling or foreclosure wave to cool things down. Prices just kept going up, year after year.
That 2008 turning point set the stage for everything that followed. Low rates persisted for over a decade. Money supply expanded. Homes became financial assets. And the gap between prices and incomes grew wider and wider.
But here’s the good news: we now understand exactly what happened. Hindsight is 20/20, right? Policymakers, economists, and even regular Canadians are much more aware of how monetary policy and housing intersect. That means future decisions can be smarter. We can avoid making the same mistakes twice.
So while 2008 was a turning point we didn’t fully understand at the time, it’s also a lesson. And lessons, when learned well, lead to better outcomes. Canada’s best housing days might still be ahead. Let’s make sure of it.
Links to Michael Ruge, Affordable Apartments and his Initiatives:
Michael Ruge Explains Why “Trickle-Down” Housing Fails (And What Works)
Michael Ruge – A Trailblazer in Business, Entrepreneurship, and Consulting
