Canada’s homeownership rate is steadily declining, with affordability challenges and supply shortages pushing more people into the rental market.
A new report from Re/Max Canada, The Nation of Renters, highlights factors currently shaping the country’s housing landscape. First-time homebuyers are struggling to enter the market, while renters face affordability and supply constraints of their own.
Christopher Alexander, president of Re/Max Canada, describes affordability as “by far, the greatest barrier to homeownership from coast to coast.” He notes that “with the average price of a home in most Canadian markets more than doubling between 2006 and 2021, first-time buyers are falling through the cracks.”
Alexander adds, “ It’s near impossible for some buyers, even with steady, well-paying jobs. The dream of home ownership is eroding further and faster than their ability to save.”
Affordability and policy barriers
Home prices have swelled over the past two decades, making it increasingly difficult to save for a down payment, particularly in Canada’s largest cities. The Office of the Superintendent of Financial Institutions’ (OSFI) mortgage stress test, which requires borrowers to qualify at rates two percentage points higher than the posted rate, remains a significant hurdle for many. Alexander argues that “the OSFI stress test has outlived its usefulness and is unnecessarily inhibiting capable, entry-level purchasers.”
Beyond mortgage qualification challenges, development charges have reached record highs in cities like Toronto. The Canada Home Builders’ Association Municipal Benchmarking Study found that development costs per low-rise unit in Toronto rose to $189,325 in 2022—an increase of 21 per cent over 2020 levels. Hamilton, with the second-highest municipal charge per unit of $61,431, was up a substantial 49 per cent over 2020 levels, followed by Vancouver at $61,414, which increased 29 per cent. Ottawa rose 11 per cent to $46,320, while Calgary jumped 15 per cent during the same period, climbing to $42,800. Halifax had much lower municipal charges per unit, at $9,629, but that was still up 41 per cent from 2020, when it was $6,823.
Housing supply and the “missing middle”
Re/Max identifies a longstanding supply shortage as a major contributor to rising home prices. According to Toronto Metropolitan University’s Social Housing Supply Mix Strategy 4A Report, the country built 45,000 federally assisted affordable units in 1971, yet it took almost 25 years to build the same number of units between 1995 and 2019.
High land costs, zoning restrictions and lengthy approval processes have slowed new construction. Many of the units coming to market are smaller condominiums aimed at investors rather than family-sized housing.
“The decline in first-time buyers has thrown a wrench into the city’s fine-tuned housing market, which relies on entry-level buyers to support the move-up segment,” the report states.
The buy vs. rent debate
Many Canadians who would traditionally buy a home are remaining in the rental market. According to Ratehub.ca, the cost of carrying a $600,000 home in the Greater Toronto Area—with a 10 per cent down payment and a five-year fixed rate of 4.1 per cent—is approximately $2,665 per month, comparable to the cost of renting a one-bedroom apartment in the city.
While rental prices are beginning to soften in some areas, they remain high. The rent report from Urbanation and Rentals.ca Urbanation found that Vancouver is currently Canada’s most expensive rental market, with one-bedroom units averaging $2,512 per month, followed by Toronto at $2,360 and Halifax at $2,030.
Market outlook and economic uncertainty
Economic uncertainty is also shaping the market. A recent U.S. tariff announcement has raised concerns about a potential recession, particularly in Ontario and Quebec. Although a 30-day reprieve was negotiated, economists suggest that a prolonged trade dispute could impact employment and overall housing demand.
At the same time, Canada’s population growth continues to outpace new housing supply. According to Statistics Canada’s Annual Demographic Estimates, the country’s population increased by 17.4 per cent between 2006 and 2021, adding over 5.6 million residents. Between 2021 and 2024, further double-digit growth was recorded in cities such as Vancouver (+12.2 per cent), Calgary (+15.5 per cent), and Toronto (+9.8 per cent). “If you factor in the accelerated growth that occurred between 2021 and 2024… the strain on the Canadian housing market is palpable, and the pressure is not expected to ease,” Alexander said.“Each percentage point contraction in the national homeownership rate represents thousands of Canadians locked out of the housing market.”
The report suggests that potential solutions could include relaxed lending policies, longer amortization periods, and incentives for first-time buyers.
