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Housing Affordability Crisis Grows in Canada

  //house-home.news-articles.net/content/2025/11/1 .. ousing-affordability-crisis-grows-in-canada.html
  Published in House and Home on Tuesday, November 18th 2025 at 17:41 GMT by The Globe and Mail
      Locale: Ontario, CANADA

Gold, Money, and the Canadian Home‑Affordability Puzzle: A 500‑Word Summary

In an era when the price of a new house can feel like an unachievable fantasy, many Canadians are looking to their wallets, their mortgage rates, and even the price of gold to understand how they can still buy a home. An article published by The Globe and Mail titled “Home Affordability, Gold, and the Value of Money” dives into this intersection of real‑estate economics and commodity markets. The piece offers a thoughtful look at how rising gold prices signal an environment of inflation, how that inflation drives mortgage rates, and what it means for prospective buyers trying to hold onto their purchasing power.

1. The Housing Affordability Crisis in Context

The article opens by describing the current Canadian housing market, emphasizing that the “affordability gap” has grown wider than it has in a decade. Median home prices in major cities such as Toronto, Vancouver, and Montreal have outpaced income growth. While the Bank of Canada has raised its policy rate 0.25 % at a time when the average 5‑year mortgage rate sits around 5 %, the article points out that even a one‑percentage‑point increase in mortgage rates can push monthly payments beyond the reach of many working families. The writer cites data from the Canada Mortgage and Housing Corporation (CMHC), noting a 15 % increase in the average price of new single‑family homes from 2015 to 2023.

While supply constraints and high demand are obvious drivers of price inflation, the article stresses that “inflation is not just a housing‑industry problem – it is a macro‑economic one,” underscoring the need for broader context.

2. Gold as a “Safe‑haven” and an Inflation Hedge

To explore this broader macro‑environment, the article turns to one of the most well‑known assets that has historically protected against currency devaluation: gold. The writer explains that when the purchasing power of the Canadian dollar erodes, investors flock to gold, which has held its value over centuries. A link in the article takes readers to a recent Bloomberg piece that tracks gold’s price over the last decade. That article confirms that gold rose from roughly $1,300 per ounce in 2015 to an all‑time high of $2,000 in 2022, a gain of about 54 %. The surge coincided with the global COVID‑19 pandemic and the subsequent monetary stimulus, which many analysts describe as a “soft‑landing” of the economy that nevertheless led to persistent inflation.

The Globe and Mail article emphasizes that gold’s price moves are often a leading indicator of inflation expectations. “When the market believes the dollar will lose value, gold price goes up. When the market believes the dollar will strengthen, gold price goes down,” the writer notes. In other words, gold price is an almost real‑time gauge of how investors feel about future inflation.

3. The Interplay Between Gold, Inflation, and Mortgage Rates

Because gold reflects inflation expectations, the article explores how that expectation translates into mortgage rates. The writer points out that central banks such as the Bank of Canada raise policy rates in response to rising inflation. These rate hikes, in turn, feed into the short‑term rates on mortgages. The article uses data from the Bank of Canada’s historical rate chart and shows a clear correlation between the two: the average 5‑year mortgage rate has climbed from 1.75 % in 2015 to 4.7 % in 2023. The article cites a link to a research report from the Mortgage Bankers Association of Canada, which attributes the recent rate increases to “inflation‑linked expectations.”

The piece then discusses a phenomenon known as the “gold‑rate paradox.” While gold is often seen as a defensive asset during high‑inflation periods, the article argues that the very inflation that drives gold higher can also push mortgage rates higher, thereby hurting homebuyers. “If you are trying to lock in a mortgage before rates rise, you are in a race against the gold market,” the writer explains.

4. Strategies for Preserving Purchasing Power

The article offers a set of strategies for prospective homebuyers who want to preserve the value of their money while navigating the twin forces of inflation and rising mortgage rates:

1. Invest in Real Estate First‑Time Buyer Programs – Certain provinces (e.g., Ontario’s “Home Buyers' Plan” or BC’s “First‑Time Home Buyer Incentive”) allow buyers to use government-backed loans to reduce their down‑payment or mortgage payments. The article references a link to the Canada Mortgage and Housing Corporation’s “First-Time Home Buyers” page, which lists the eligibility criteria and potential savings.

2. Consider Inflation‑Protected Securities – Treasury Inflation-Protected Securities (TIPS) are government bonds whose principal adjusts with inflation. The writer notes that while these instruments offer lower yields than riskier stocks or gold, they can act as a hedge for those whose money is tied up in cash before a home purchase.

3. Diversify into Gold or Gold‑Based ETFs – For buyers who are not ready to buy yet, the article suggests keeping a small portion (5–10 %) of their portfolio in gold or gold ETFs such as GLD or IAU. This strategy protects against currency depreciation but does not directly help with mortgage payments. The article references a link to a Morningstar review that compares the performance of gold ETFs to that of broad market indices.

4. Shop Around for Fixed‑Rate Mortgages – Locking in a fixed‑rate mortgage early can protect buyers against future rate hikes. The writer encourages readers to compare offers from multiple lenders and to consider adjustable‑rate mortgages if they anticipate a decline in rates.

5. Reevaluate Cash Reserves – The article points out that holding too much cash can be detrimental when inflation is high. By investing in short‑term bonds or an inflation‑adjusted savings account, buyers can earn a better real yield.

5. “Money Value” and the Need for a New Narrative

A significant portion of the article is devoted to a philosophical discussion of the phrase “money value.” The writer argues that when the dollar’s purchasing power erodes, it’s not just a matter of rising prices but also of how individuals value their own money. The article cites an interview with a professor of macroeconomics at the University of Toronto, who explains that “the concept of money value is intimately tied to consumer confidence and the willingness of households to spend.” The piece suggests that as long as the monetary system remains stable, there is a healthy relationship between savings and spending. However, when inflation accelerates, that relationship can break down, leading to a “devaluation spiral” that harms home affordability.

The article closes by urging readers to think beyond the headline rates and to consider the underlying drivers of the market. “Home affordability is a complex puzzle,” the writer writes. “Gold prices, mortgage rates, and the intrinsic value of money are all pieces that need to fit together.”

Final Thoughts

In sum, The Globe and Mail’s article provides a comprehensive look at how the Canadian housing market’s affordability issues are tied to broader macro‑economic forces. By examining gold as an indicator of inflation, the article highlights the subtle yet powerful ways in which the value of money and mortgage rates interact. The piece equips readers with a toolbox of strategies – from government programs to investment diversification – that can help them navigate a climate where the house they dream of is as much a question of timing and financial literacy as it is of price. Whether you’re a first‑time buyer or a seasoned investor, the article encourages a mindful approach to preserving the real value of your money while pursuing homeownership in Canada’s high‑inflation, high‑rate environment.