Posted On Jan 20, 2026

Over the last several years, Canada’s relationship with China has been mostly on pause. That pause wasn’t accidental. It came after serious concerns around security, human rights, and trust.

Recently, it looks like Canada is starting to rebuild or restart that relationship.

I’ll be honest — I don’t love wading into political topics (at least not thru my business channels). And personally, I have reservations about reopening ties with China.

That said, I do understand why the government is choosing this path.

Canada’s relationship with the United States has changed. Trade is less predictable, certain sectors of our economy are struggling, and growth feels more fragile than it used to. China is a massive economy, and in theory, stronger ties could help Canada in both the short and long term.

But understanding why the government is doing this doesn’t mean we shouldn’t talk about the risks — especially when it comes to housing.

 

Why Housing Can’t Be Ignored

As someone in the mortgage industry for a long time, housing isn’t an abstract topic for me. I ‘ve seen how policies and economic decisions show up in real people’s lives — in affordability, stress, and financial stability.

And this is where we need to be careful.

There are two major housing risks we can’t ignore if Canada reopens its relationship with China.

Risk #1: We’ve Been Here Before — and Housing Paid the Price

In the past, closer ties with China coincided with:

  • weak rules around foreign buyers

  • poor oversight of where money was coming from

  • uneven lending standards

  • limited enforcement around money laundering

The result?

Housing prices rose quickly in places like Vancouver and later Toronto — not because local incomes were rising, but because outside money (which was not subject to the same lending rules and scrutiny) was bidding up prices.

Even though foreign buyers made up a small share of purchases (and that's what all the defenders will say), they were active at the edges of the market, where prices are set. That pushed prices higher for everyone else.

Average Canadians paid the price:

  • affordability worsened

  • household debt increased

  • homeownership moved further out of reach

We are still dealing with the fallout today.

Banks weren’t breaking the rules — but the rules were not the same for everyone.

From the inside, it was also clear why banks liked this business:

  • deals were large

  • default risk appeared low

  • files were easier

  • volumes were strong

  • performance numbers looked great

There was no natural incentive for banks to stop.

In my view, this only changed when regulators eventually recognized what was happening and stepped in.

That’s an important lesson — because if rules are loosened again in the future due to economic or political pressure, the same behavior will return.

That doesn’t mean we should never trade with China — but it does mean we can’t pretend housing won’t be affected if capital starts flowing freely again.

Risk #2: The U.S. Relationship Still Matters More

The second risk may be even bigger.

No matter what happens with China, the United States is still Canada’s most important economic partner.

If closer ties with China:

  • strain our relationship with the U.S.

  • reduce trade

  • slow investment

  • or create economic uncertainty

That would directly affect:

  • jobs

  • wages

  • business confidence

And housing is extremely sensitive to all of that.

If the economy stagnates or jobs become unstable:

  • Canadians can afford less

  • builders pull back

  • housing starts slow down

  • affordability gets worse — even if prices don’t crash

In other words, a damaged U.S. relationship could hurt housing even more than foreign buying ever did.

Understanding the Trade-Off

This isn’t a simple “yes or no” decision.

China is a large economy and could help Canada in certain areas. But housing is fragile, supply is already tight, and affordability is stretched.

We can’t afford:

  • lax rules

  • uneven lending standards for foreign buyers that advantage them above Canadians

  • or policies that repeat past mistakes

And we also can’t afford to:

  • weaken our relationship with the U.S.

  • or risk economic stagnation that would make housing even less affordable

The Bottom Line: Move Carefully, With Eyes Wide Open

Canada may choose to rebuild its relationship with China. That decision may be driven by real economic pressures.

But housing must be part of the conversation — not an afterthought.

We haven’t recovered from the last housing shock.
We can’t absorb another one.

If we move forward, we need:

  • strong and consistent rules

  • equal treatment for all buyers

  • transparency around capital flows

  • and a clear focus on protecting affordability

This isn’t about politics.
It’s about learning from experience — and not repeating the same mistakes.

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