In an article that I wrote for Jacobin in January of this year, I discussed the precariousness of the housing market in Canada. I highlighted the fact that housing prices were going up faster than in any other OECD country. I also stressed that the threat of substantial increases in interest rates could well produce catastrophic results. Six months later, the international creep toward global recession and the specter of a stagflation crisis has brought matters to a head.

In March of this year, home prices were still moving up rapidly in Canada, stretching affordability to its outer limits. According to Better Dwelling, Canada is now “second on the OECD house price to income ratio index.” Preliminary moves by the Bank of Canada to push up interest rates have led to a cooling of the housing market, with an almost 22 percent drop in home sales.

In spite of interest rate hikes, the likelihood of an orderly adjustment leading to a stabilized housing market is very remote. At the international level, a major strategic shift is underway that is leading to sharp rate increases that have dire implications for workers and hard-pressed communities. This approach poses the danger of an unprecedented housing crisis in Canada.