Why Canada’s Housing Affordability Crisis Isn’t Over Yet

Introduction

The idea that Canada’s housing affordability crisis is behind us is misleading. While recent interest rate cuts and minor price adjustments offered temporary relief, underlying structural issues continue to keep homes out of reach for most Canadians. As of mid-2025, the affordability gap is still widening in many parts of the country.

1. Housing Costs Still Outpacing Incomes

Mortgage Payments Remain Historically High

Even with the Bank of Canada easing rates, mortgage payments as a share of income are near record levels. For most Canadians, homeownership remains financially unsustainable.

Wage Growth Isn’t Keeping Pace

Average income growth continues to lag behind escalating home prices. This imbalance means affordability will not improve meaningfully without significant housing cost corrections.

2. Demand Growth Outstripping New Supply

Population and Immigration Pressure

Canada’s strong immigration targets are fueling demand at a rate housing construction cannot match. Nearly 400,000 newcomers are expected in 2025, adding more pressure to limited inventory.

Slow Construction Pipeline

High construction costs, labor shortages, and lengthy approval processes slow down housing development. As a result, supply consistently lags behind demand.

3. Policy Mismatch Between Immigration and Housing

Rising Demand Without Matching Capacity

Federal immigration policy has been aggressive, but housing policy hasn’t kept pace. This creates an imbalance that pushes affordability further out of reach.

Long-Term Social Impact

Without aligning immigration with housing capacity, Canada risks worsening economic inequality and deepening the affordability crisis.

4. Rental Market Pressures and Financialization

Disappearing Affordable Rentals

Between 2011 and 2016, more than 300,000 affordable rental units disappeared. The gap has only widened since, leaving renters with fewer affordable options.

Corporate Ownership of Housing

REITs and large investors purchasing residential properties convert homes into profit-driven assets. This trend limits housing access for average renters.

5. Zoning Restrictions and the “Missing Middle”

Limited Medium-Density Options

Most Canadian cities still prioritize single-family homes. The lack of duplexes, townhomes, and courtyard apartments removes affordable alternatives for middle-income families.

Policy Controversies

Even when governments attempt reforms, like Ontario’s Greenbelt adjustments, results have been controversial and have not delivered the affordability Canadians need.

6. Short-Term Measures Fall Short

Foreign Buyer Bans Have Limited Impact

Canada’s foreign ownership ban has had little effect in Toronto and Vancouver, where affordability challenges are primarily driven by domestic demand and supply shortages.

Temporary Price Drops Aren’t Enough

While some forecasts predict a 1–3% home price decline in 2025, the relief is too small to significantly impact affordability. Structural reforms are still needed.

7. Coordinated Action Is Still Missing

Federal vs. Provincial Roles

Housing requires cooperation between all levels of government. Current strategies are fragmented, limiting their effectiveness.

Small Wins, Big Gaps

Programs like GST waivers on new rental construction are steps forward, but they are insufficient to solve the crisis at scale.

Conclusion

Canada’s housing affordability crisis isn’t over. Structural imbalances—ranging from supply bottlenecks and policy misalignments to financialization of housing—continue to drive costs higher. Without bold reforms in zoning, construction, and immigration alignment, affordability will remain elusive for years to come.

If you’re navigating Canada’s challenging real estate market, staying informed is key.
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