Residential Market Commentary - Affordability Suffering

The Canada Mortgage and Housing Corporation is reporting that affordability challenges are spreading across the country. 

Declining housing affordability, which became very pronounced in 2001, had been centered solely in Toronto and Vancouver.  Activity in these two big, active and expensive markets dragged down the national average.  But since 2020 the problem has expanded. 

In six of the seven major markets CMHC looked at, affordability has dropped to “poor” status since 2020.  Along with Toronto and Vancouver they are: Ottawa, Montreal, Halifax and, even the long-time beacon of affordability, Calgary.  Edmonton continues to show “good” affordability. 

CMHC’s new Housing Affordability Composite Index covers nearly 35 years from 1991 to the third quarter of 2025.  It looks at the cost of homeownership including factors such as mortgage, taxes, utilities and insurance.  Those costs are then compared to a region’s median income, the amount of discretionary income available to cover increasing housing costs, and the number of homes for sale in a region (with an allowance for the price of those homes). 

The index indicates affordability bottomed out in the second quarter of 2022 and has been showing some improvement since 2023. 

There is a "light at the end of the tunnel", said CMHC chief economist Mathieu Laberge, quoted in the Financial Post. 

Laberge added, Canada still needs to get more affordable units – like townhouses and row houses – built to fill in the gaps in the market. 

"It's a big piece of the puzzle, but affordable rental is as well," he said.