MY TAKE

HOME OWNERSHIP, AN UNATTAINABLE DREAM?

Is it that prices went up so indiscriminately that even with the so-called cooling, they are still beyond the reach of the average Canadian? Image credit: NEWS CANADA.

By SHAGORIKA EASWAR

Buying houses, upgrading them, then selling for a profit, thereby making neighbourhoods unaffordable for real people...

Sounds familiar?

The above is from On Isabella Street by Genevieve Graham. Except that the book is set in 1968. Review on page 24.

Not much has changed.

Reports on how young people are increasingly being priced out of the housing market are everywhere. Stories abound about how someone scrimped and saved for a down payment on a modest dwelling, only to be told by his real estate agent that he now needed more. Much more.

Which boggles the mind when you juxtapose it with reports of a cooling housing market. So many condos unsold. Prices dropping.

How can both be true?

Is it that prices went up so indiscriminately that even with the so-called cooling, they are still beyond the reach of the average Canadian?

This might be an overly simplistic view of a complicated equation, and might be ignoring the many factors that come into play, but the fact remains, many prospective first-time buyers are wondering when, if ever, they’ll own their home.

Lowered prices come with their own issues. In November 2025, the average home price in Canada dropped to $679,900, a 20.2 per cent dip from the March 2022 peak, wrote Graeme Gordon, The Hub’s Senior Editor, recently. This has had a major adverse effect on housing development outside of rentals.

He quoted Missing Middle Initiative founding director and Hub contributor Mike Moffatt. “The challenge is that prices are so low now that they don’t cover the cost of construction, which is one of the reasons why sales have basically evaporated, because the builders and developers have gotten to a point where they just can’t produce product and make it profitable and get financing.”

Between record levels of immigration and non-permanent residents, as well as a greater proportion of young Canadians in their twenties and thirties unable to afford leaving the rental market for homeownership, Canada has seen a spiking demand for rentals. The average Canadian rental costs $2,137 a month, dipping slightly from 2024, but well above the 2020 August average of $1,718.

And so, new rental units are more than doubling new houses being built in Canada, wrote Gordon.

“The home ownership dreams of both millennials and Gen Zers are being further crushed as housing developers react to Canada’s volatile housing market. If trends continue, 2025 is on track to set a 30-year low in housing starts across the country.”

Homeowner housing starts in 2025 show an average annualized rate of new builds at its lowest since 1995...According to housing start data released by Canada Mortgage and Housing Corporation (CMHC), rental starts are now doubling the rate of homeowner housing starts for 2025.

A neighbour recently shared how her son, in his 30s, has been saving to buy a home.

He has enough for a comfortable down payment on a home in the $500,000 range, but there are very few available for that price. They’d offered to help, to top up the down payment for a higher-priced home but their son said it was prudent not to. The higher-priced home would come with higher mortgage payments, and he didn’t want to be tied to something he wasn’t sure he could afford.

It’s becoming obvious that you’d need two incomes to purchase and run a home. But that would mean daycare costs for people with children, no one could afford to be a stay-at-home parent. But daycare is prohibitively expensive.

Catch 22.

While we shake our heads over the tough situations many find themselves in, a recent report puts the problem in perspective with numbers.

Mortgage payments for a typical home now exceed 50 per cent of after-tax family income in every Ontario urban centre.

To buy a typical home, Ontario families earning the local median income would have to devote more than 50 per cent of their after-tax earnings to monthly mortgage payments in Ontario’s 14 urban centres, and more than 110 per cent in Toronto, finds a report published by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

“There is a perception that housing outside of the GTA is still somewhat affordable, but that's not true,” said Austin Thompson, senior policy analyst with the Fraser Institute, and co-author of Home Ownership and Rent Affordability in Canadian CMAs, 2014-2023. “Even in cities like Windsor and Kingston, buying a typical home would require a family earning the local median income to spend more than half of its after-tax earnings on mortgage payments.”

The study finds that in Ontario’s 14 largest cities, the monthly mortgage payment required to buy a typical home ranged between 50.4 per cent (Ottawa-Gatineau) and 110.2 per cent (Toronto) of the local median after-tax family income – after a 20 per cent down payment on the home purchase.

The study also found that mortgage affordability deteriorated markedly since 2014. In 2014, the share of median after-tax family income needed for the mortgage payment on a typical home ranged from 21.1 per cent (Windsor) to 56 per cent (Toronto).

When thinking about housing affordability, one needs to assess both income and home prices. Crucially, while house prices have increased, Ontario worker salaries have largely stagnated over this ten-year period, which has contributed to the decline in housing affordability.

“Housing affordability is a function of both home prices and incomes, and as wages and incomes have flatlined across Ontario in recent years, housing unaffordability crisis has worsened,” said Steven Globerman, Fraser Institute senior fellow and study co-author. “To make housing more affordable for Ontario families, policymakers should focus on increasing wages and incomes as part of the overall solution.”

Or tamping down on home prices. Not that many years ago a million dollar home was a luxury home. Now the asking rice for every home on your street is probably more.

A chart in the study shows share of average family after-tax income needed for a monthly mortgage payment in Ontario’s census metropolitan areas over 100,000 population in 2023.

Toronto: 110.2

St. Catherines-Niagara: 67.9

Oshawa: 92.2

Peterborough: 67.8

Hamilton: 76.9

Windsor: 63.2

Barrie: 74.7

London: 61.8

Kitchener--Waterloo: 73.9

Belleville-Quinte West: 58.4

Brantford: 70.1

Kingston: 51.2

Guelph: 69.8

Ottawa-Gatineau: 50.4

I am astonished to see the percentage required for Barrie, 74.7 per cent of average family after-tax income. I recall a friend talking about her sister choosing to move to Barrie from Etobicoke.

“She got this mansion for the money she got from selling her small bungalow here,” she’d said. “But she’s not happy, it snows too much!”

Now the prices are much higher in Barrie, too, and it still snows as much!

There’s this old song, beautifully sung by Runa Laila and Bhupinder.

Do deewane sheher mein

raat mein aur dopeher mein

Aabudana dhoondte hain

ek aashiana dhoondte hain.

It’s sad that it could be the theme song for many people here in Canada, so many decades later.

More info at www.fraserinstitute. org.