In recent years, Canada’s real estate market has undergone rapid transformation, and the issue of housing affordability has emerged as a pressing concern for society. Skyrocketing home prices and rents in major cities such as Vancouver and Toronto have drawn international attention. This relentless upward trend has not only placed immense pressure on local residents but has also made it increasingly difficult for young people and middle- to low-income families to find suitable homes—let alone homes they can afford.
For decades, cities like Vancouver and Toronto have been Canada’s economic and cultural hubs, magnets for immigrants, professionals, and students. However, soaring housing costs have now become a key reason why young Canadians and skilled workers are leaving these urban centers in search of better living conditions elsewhere.
Even those with strong educational backgrounds and stable jobs often find themselves priced out of the housing market. Many are forced into long commutes or to abandon major cities altogether. This migration away from economic centers is weakening national productivity and Canada’s ability to retain top talent.
Another layer of vulnerability lies in Canada’s unprecedented household debt levels. As real estate prices soared, so did the size of mortgages. Many families took on massive loans in the hope that prices would continue to rise, especially during a period of historically low interest rates.
However, if global financial markets were to face a downturn or if interest rates continue to rise, many Canadian households would find themselves in financial peril. The sheer volume of debt not only places individual families at risk but also creates macroeconomic vulnerabilities across the entire national economy.
The COVID-19 pandemic fundamentally altered housing dynamics across Canada. Initially, lockdowns and restrictions briefly cooled the market. But soon after, the rise of remote work created a new wave of migration. Many residents, weary of high housing costs and long commutes, began moving to smaller cities or rural areas where they could afford larger living spaces and enjoy a better quality of life.
As demand flooded into these previously affordable regions, prices surged. Housing markets across Canada felt the shock, and supply systems were not equipped to respond quickly enough.
One of Canada’s most significant structural challenges is the inflexibility of its housing supply system. The process of rezoning land, acquiring permits, dealing with community opposition, and completing construction can take many years.
Even when the demand is obvious, the system's sluggish response means that new housing often arrives too late and in insufficient quantities. Regulatory delays, local politics, and opposition from residents (NIMBYism) frequently stall housing developments, leaving supply chronically behind demand.
To address these challenges, the Canada Mortgage and Housing Corporation (CMHC) has conducted extensive research since 2022 to estimate how much housing is needed to restore affordability. Initially, the benchmark goal was to return affordability to early 2000s levels by 2030. But this goal has proven unrealistic given the long timelines required for land rezoning and construction.
CMHC has since revised its strategy, adopting a rolling 10-year horizon and shifting its benchmark to pre-pandemic affordability levels. This timeline allows for a more accurate reflection of housing market realities and planning cycles.
Restoring affordability to pre-COVID levels is a more pragmatic, albeit still highly ambitious, target. The pandemic triggered a structural price reset across Canada, with cities like Toronto and Vancouver experiencing especially pronounced increases. By adjusting its affordability baseline, CMHC can provide more realistic and actionable insights without abandoning the overarching goal of improving access to housing.
Importantly, CMHC’s methodology now incorporates feedback effects. For example, if only one city dramatically increases its housing supply and thereby lowers prices, it may attract residents from other parts of Canada. This population inflow would then generate even more housing demand in that city—demand that wasn’t initially forecasted. This example illustrates how housing policy in one region can have national ripple effects, and why localized planning alone won’t solve a nationwide problem.
The latest projections are stark: to restore pre-pandemic affordability, Canada must approximately double its annual housing starts over the next decade. From a projected average of 250,000 new housing units per year until 2035, the country needs to scale up to around 430,000 to 480,000 units annually, depending on regional assumptions and policy variables. Hitting these numbers will require a transformation in how Canada builds homes.
To achieve this, Canada will need a significantly larger housing workforce, deeper private sector investment, and widespread technological innovation in the construction industry. Modern methods like modular construction, factory-built housing components, and automation must be scaled up to cut costs and speed up delivery. Local governments must also revise restrictive zoning laws and streamline development approvals to allow for higher density and mixed-use housing.
Real-world examples make this crisis tangible. Consider a household earning a combined $100,000 annually—a solid middle-class income. In cities like Vancouver or Toronto, this family still cannot afford a modest townhouse or a two-bedroom condo without dedicating a massive share of their income to housing costs.
Renting offers no relief, with monthly rents often exceeding $2,500 for small units. As a result, many families are pushed to suburbs or even to other provinces. Cities like Calgary, Ottawa, and Halifax have recently seen population increases because they offer more affordable housing options and a better balance between cost of living and quality of life.
Take Calgary, for instance. In recent years, young professionals have increasingly chosen Calgary over Toronto due to its relatively affordable housing and lower cost of living. A three-bedroom rental apartment in suburban Calgary might cost half of what a similar space would fetch in Toronto, with shorter commute times and a growing tech scene to boot. This intra-national migration trend reflects the sacrifices many are willing to make for attainable housing—and it’s reshaping Canada’s demographic and economic landscape.
Several municipalities are beginning to experiment with policy reform. Ottawa has promoted medium-density housing developments in suburban zones. Toronto has introduced “gentle density” initiatives, allowing for low-rise multiplexes in formerly single-family neighborhoods.
Vancouver has expanded permissions for laneway houses and secondary suites to increase urban density without radically altering neighborhood character. While these changes are a step in the right direction, they are not yet sufficient to match the scale of the crisis.
National policy also has a role to play. The federal government must align infrastructure investment with housing growth, modernize mortgage insurance systems, support modular construction, and expand rental assistance programs.
A coordinated approach that spans all levels of government—federal, provincial, and municipal—is critical to addressing the shortfall. Financial institutions, meanwhile, must offer more flexible mortgage options for first-time buyers and low-income households.
Meeting the target of 430,000+ housing starts annually is not just a logistical challenge—it is a political, economic, and cultural transformation. Communities must embrace change and increase density; construction sectors must become more productive; governments must lead with long-term vision and regulatory reform. Most importantly, the Canadian public must recognize that restoring affordability is not only possible but essential to national wellbeing.
Even if Canada falls short of fully restoring pre-pandemic affordability, the process of aiming for it reveals the scale of the problem and lays the groundwork for lasting improvement. The CMHC’s new approach doesn’t offer quick fixes, but it does offer a credible roadmap—one grounded in evidence, responsive to feedback, and anchored in the understanding that housing is not just an asset but a foundation for life.
Ultimately, Canada's housing affordability crisis is more than an economic issue—it touches on generational equity, social inclusion, urban sustainability, and national competitiveness. Solving it requires systemic reform, widespread investment, and the collective will to ensure that Canada’s cities remain places where families, workers, and newcomers alike can thrive.