From the Fraser Institute

By Steven Globerman, Joel Emes and Austin Thompson

According to our new study, in 2023 (the latest year of comparable data), typical homes on the market were unaffordable for families earning the local median income in every major Canadian city

The dream of homeownership is alive, but not well. Nearly nine in ten young Canadians (aged 18-29) aspire to own a home—but share a similar worry about the current state of housing in Canada.

Of course, those worries are justified. According to our new study, in 2023 (the latest year of comparable data), typical homes on the market were unaffordable for families earning the local median income in every major Canadian city. It’s not just Vancouver and Toronto—housing affordability has eroded nationwide.

Aspiring homeowners face two distinct challenges—saving enough for a downpayment and keeping up with mortgage payments. Both have become harder in recent years.

For example, in 2014, across 36 of Canada’s largest cities, a 20 per cent downpayment for a typical home—detached house, townhouse, condo—cost the equivalent of 14.1 months (on average) of after-tax income for families earning the median income. By 2023, that figure had grown to 22.0 months—a 56 per cent increase. During the same period for those same families, a mortgage payment for a typical home increased (as a share of after-tax incomes) from 29.9 per cent to 56.6 per cent.

No major city has been spared. Between 2014 and 2023, the price of a typical home rose faster than the growth of median after-tax family income in 32 out of 36 of Canada’s largest cities. And in all 36 cities, the monthly mortgage payment on a typical home grew (again, as a share of median after-tax family income), reflecting rising house prices and higher mortgage rates.

While the housing affordability crisis is national in scope, the challenge differs between cities.

In 2023, a median-income-earning family in Fredericton, the most affordable large city for homeownership in Canada, had save the equivalent of 10.6 months of after-tax income ($56,240) for a 20 per cent downpayment on a typical home—and the monthly mortgage payment ($1,445) required 27.2 per cent of that family’s after-tax income. Meanwhile, a median-income-earning family in Vancouver, Canada’s least affordable city, had to spend the equivalent of 43.7 months of after-tax income ($235,520) for a 20 per cent downpayment on a typical home with a monthly mortgage ($6,052) that required 112.3 per cent of its after-tax income—a financial impossibility unless the family could rely on support from family or friends.

The financial barriers to homeownership are clearly greater in Vancouver. But, crucially, neither city is truly “affordable.” In Fredericton and Vancouver, as in every other major Canadian city, buying a typical home with the median income produces a debt burden beyond what’s advisable. Recent house price declines in cities such as Vancouver and Toronto have provided some relief, but homeownership remains far beyond the reach of many families—and a sharp slowdown in homebuilding threatens to limit further gains in affordability.

For families priced out of homeownership, renting doesn’t offer much relief, as rent affordability has also declined in nearly every city. In 2014, rental rates for the median-priced rental unit required 19.8 per cent of median after-tax family income, on average across major cities. By 2023, that figure had risen to 23.5 per cent. And in the least affordable cities for renters, Toronto and Vancouver, a median-priced rental required more than 30 per cent of median after-tax family income. That’s a heavy burden for Canada’s renters who typically earn less than homeowners. It’s also an added financial barrier to homeownership— many Canadian families rent for years before buying their first home, and higher rents make it harder to save for a downpayment.

In light of these realities, Canadians should ask—why have house prices and rental rates outpaced income growth?

Poor public policy has played a key role. Local regulations, lengthy municipal approval processes, and costly taxes and fees all combine to hinder housing development. And the federal government allowed a historic surge in immigration that greatly outpaced new home construction. It’s simple supply and demand—when more people chase a limited (and restricted) supply of homes, prices rise. Meanwhile, after-tax incomes aren’t keeping pace, as government policies that discourage investment and economic growth also discourage wage growth.

Canadians still want to own homes, but a decade of deteriorating affordability has made that a distant prospect for many families. Reversing the trend will require accelerated homebuilding, better-paced immigration and policies that grow wages while limiting tax bills for Canadians—changes governments routinely promise but rarely deliver.

Steven Globerman

Senior Fellow and Addington Chair in Measurement, Fraser Institute

Joel Emes

Senior Economist, Fraser Institute

Austin Thompson

Senior Policy Analyst, Fraser Institute

From the Fraser Institute

By Jake Fuss and Austin Thompson

House prices in Toronto are declining. But the city’s affordability crisis is far from over—and government policies will likely make it worse.

While most Torontonians know there’s a crisis, the numbers make it clear. According to our new study, in 2023 (the latest year of available data), a family earning the city’s median after-tax income ($60,510) had to save $216,240 (the equivalent of 42.9 months of its after-tax income) for a 20 per cent downpayment on a typical home of any type (single-detached, semi-detached, condominium). But even if that family could somehow clear this monumental hurdle, it then had to dedicate 110.2 per cent of its after-tax income for monthly mortgage payments ($5,557)—a financial impossibility, unless the family can share housing costs (e.g. live-in tenants) or rely on financial support from elsewhere.

At this point, some long-time Toronto residents might recall their own difficult home purchase and think, “Hasn’t it always been this bad?” But just a decade ago, the hurdles weren’t nearly as high.

For example, in 2014 in Toronto, a 20 per cent downpayment cost 26.4 months of median after-tax family income—not 42.9 months. And the monthly mortgage payment on a typical home purchase required 56.0 per cent of median after-tax family income—not 110.2 per cent. So yes, typical homes have been broadly unaffordable for median-income-earning Toronto families for years, but it’s way worse now.

For Torontonians priced out of homeownership, renting has not offered much relief. In 2023, Toronto had the least affordable rents in Canada. The monthly cost of the median rental unit was $1,750, equal to 34.7 per cent of the median after-tax family income. That’s up from $1,110 (or 27.7 per cent of after-tax income) in 2014.

Fast-forward to today, and Torontonians should view reports of “crashing” home prices in the proper context. Typical home prices peaked at $1.27 million in the first quarter of 2022. By the second quarter of 2025, they had fallen to $1.00 million. That’s a marked decline, but prices remain well above pre-pandemic levels and far beyond the reach of most typical families.

And while the fall in house prices hasn’t been enough to restore affordability, it has caused a steep contraction in homebuilding as builders take a more cautious approach to development at a time when the city still needs more new homes to improve affordability.

This unhealthy dynamic, where price declines weigh heavily on housing construction, is made worse by government policy. Despite hundreds of millions of taxpayer dollars spent on housing initiatives by the federal government, the Ford government and Toronto City Hall, key provincial and municipal policies continue to impose needless costs and restrictions on new housing.

For example, Toronto homebuilders must endure costly wait times of more than two years for municipal approvals—more than three times longer than in Vancouver and seven times longer than in Edmonton. New high-rise developments in Toronto face municipal charges of $134,900 per unit compared to $38,100 in Ottawa and $6,900 in Edmonton. Meanwhile, the Ford government has backed away from several critical recommendations from its own Housing Task Force, which would make it easier to build more and denser housing, such as allowing fourplexes provincewide without special approval.

Of course, federal immigration policy, particularly over the last five years, has increased demand for new homes in Toronto and across the country. But even so, if not for lengthy approval processes, sky-high fees and restrictive land-use policies, many more new homes would be built in Toronto today despite declining prices. Homes only get built when buyers can cover the cost of construction plus a reasonable return on investment for developers. But when governments drive up costs, increase uncertainty and claim a significant share of the final sale price through fees and charges, projects that might otherwise proceed can become financially unviable. The result is less new housing, fewer options for buyers and a slower path to improved affordability.

To help improve housing affordability, Toronto needs a steady flow of new homebuilding. Torontonians should demand faster approvals, lower fees and more sensible rules on what types of homes can be built.

Jake Fuss

Director, Fiscal Studies, Fraser Institute

Austin Thompson

Senior Policy Analyst, Fraser Institute