Immigration has always triggered anti-immigrant sentiment. The fear of the other taking away what’s mine is at the heart of all hate. That’s why a social media post this week from Canada’s Official Leader of the Opposition stopped me dead in my tracks. 

A tweet from Erin O’Toole’s account on Wednesday displayed an image of a Financial Times headline on Canada’s soaring housing prices, and the message, “Sadly too many Canadians are being priced out of their own country.” (Emphasis mine.)

I wanted to give O’Toole the benefit of the doubt. Perhaps he wasn’t aware that the phrasing “priced out of their own country” is a racist dog-whistle. Perhaps he meant to imply that foreign homebuyers are driving up prices. (They aren’t, at least not yet.) Perhaps it was just a communications misstep from a zealous young staffer. I offered him several chances this week to clarify his comments; he did not respond.  

O’Toole is right about one thing: housing affordability is a real concern. The Canadian Real Estate Association’s national home-price index was 23.1 per cent higher in April than a year earlier, and according to Scotiabank, Canada has the lowest number of housing units per 1,000 residents of any G7 country.

The Canada Mortgage and Housing Corporation has launched a 10-year, $70-billion-plus National Housing Strategy plan to address the challenge. With more than 400,000 permanent residents expected to arrive in Canada each year, this is a legitimate policy problem to try to solve.

But let’s put xenophobia in its place. Canada’s recent housing-price spike has nothing to do with immigration. Just look at the data: housing prices soared during the pandemic, even as immigration levels plummeted, down 46 per cent from 2019. While there was a rebound in the first quarter of this year, they’re still well below their 2019 peak.

What is causing the housing-price spike? The same things that are causing every other speculative-asset boom: Historically low interest rates resulting in lenders offering cheap money; stimulus and a lockdown-driven decrease in spending leading to increased savings; and a stock market that continues to surge, with the S&P/TSX Composite Index up roughly 30 per cent over the past year, as of publication time. 

Low interest rates, increased savings and an equity boom have been a perfect storm for would-be homebuyers.

Take credit-card performance, which is generally a good indication of consumers’ financial health. On average, credit-card balances have declined during the pandemic, and these lower debt levels, combined with fewer missed payments, have boosted credit scores, according to Equifax Canada data released Thursday.

“Credit-card balances are actually the lowest now for at least six years. We’ve seen a huge drop-off in terms of new credit demands,” Rebecca Oakes, Equifax Canada’s assistant vice-president of advanced analytics, told me this week. “People are paying off their debts, with credit-card payments actually exceeding spending,” Oakes added. That’s backed up by data that Toronto-based fintech Borrowell provided to The Logic, which shows credit-limit utilization is down four percentage points since the beginning of the pandemic. That includes all trades classified as “revolving,” like credit cards, retail-store cards and personal and home-equity lines of credit.

And while the Bank of Canada cautioned this month that many households are taking on large mortgages compared with their incomes, affecting their ability to address unforeseen financial shocks like the loss of a job, even the country’s big banks don’t seem concerned anymore. This week, RBC and TD Bank––the country’s two largest––released provisions for credit losses that they had stockpiled since the start of the pandemic to protect against loan defaults. 

All of this makes logical sense. Without travel, entertainment and meals to splurge on, consumers have spent the pandemic paying off debt and investing in their homes. We shouldn’t be surprised that housing prices have surged when people have more money in their pockets to burn, and fewer places to spend it.

So this isn’t about immigration––at least, not yet. 

I can understand why politicians are tempted to stir up the immigration issue. As I’ve written before, it creates intense engagement that gets out the vote. When a campaign is looking for a spark, immigration is the wedge issue that can usually light a fire. But what may be politically expedient in the short term can be socially damaging in the long term.

Opposition leaders should be celebrated for the important role they play in holding the government of the day to account—but they, too, should be held accountable for their actions and their words. We need a real plan for how to absorb much-needed immigration levels to boost productivity in Canada. Political cheap shots aren’t going to get us there.