Canada’s housing affordability just hit a 31-year low

Canada’s housing affordability is officially the worst it’s been in 31 years, according to the most recent RBC Housing Trends and Affordability report.

Housing has become noticeably less and less affordable across large swaths of the country throughout the pandemic. But during the third quarter of this year, RBC measured a 2% drop in Canada’s affordability, which, compounded with other recent drops, brought the measure to a 31-year low.

“After a wild roller coaster ride in 2020, it’s now all about intense market heat,” the report reads. “Homebuyer demand is supercharged and inventories are near historical lows in virtually every market, creating intense competition between buyers and pressured prices up. These conditions have widely eroded housing affordability in the past year.”

Although Canada’s housing affordability as a whole has taken a hit, it hasn’t been evenly distributed. Some of the most unaffordable markets — notably Toronto and southern Ontario — experienced some of the greatest erosion while more affordable markets in the Prairies and Atlantic Canada have worsened less.

“Developments in the past year have generally amplified pre-pandemic affordability divergences across Canada,” the report says.

Intense competition over the limited amount of homes coming on the market has been a major driver of increased prices and subsequent unaffordability across Canada over the past year. And according to RBC, even traditionally slower markets can’t escape the trend.

“This became clearly evident in the past year with bidding wars springing up in places that have rarely or never seen them before, and intensifying in places more accustomed to them,” the report reads. “And until demand and supply return closer to balance, prices will continue to rise.”

Many aspiring homebuyers have been looking to enter the market thanks to historically low interest rates, but RBC predicts that as interest rates rise back up, it could affect the national affordability measure by another 2-3.5% next year.

The number of new homes being built in Canada just dropped


As the limited housing inventory continues pushing real estate prices across Canada sky high, the number of new homes being built has dropped.

A new report from Canada Mortgage and Housing Corporation (CMHC) found that Canada-wide, the number of new homes under construction in October was down noticeably from the previous month. In September, the six-month average of new units starting construction was 270,661. In October, it dropped to 264,264.

“The six-month trend in housing starts declined from September to October, as the retreat in total starts from their earlier 2021 levels continued,” said Bob Dugan, CMHC’s chief economist. “For [seasonally adjusted annual rate] housing starts in Canada’s urban areas, a slight increase in single-detached starts didn’t offset a larger decrease in multi-family starts in October and led to a decline in overall starts for the month.

Despite this drop, Dugan notes that the level of housing developments in Canada is still historically high. In fact, compared to October 2020, the level of housing construction has gone up 4% across the country. Vancouver has seen one of the most significant increases year-over-year, with new home construction up 39% in October. Calgary is up 28%, and Montreal is up 15%, but Toronto, interestingly, saw a 12% decline year-over-year.

The largest change was seen in Ontario’s Kitchener-Cambridge-Waterloo area with a 143% year-over-year increase in housing starts. The Kitchener area has become increasingly popular during the pandemic, with rent prices there skyrocketing as many renters left downtown Toronto.


Canada’s 2021 home sales have already broken an annual record


The year may still be well over a month from done, but Canada’s home sales have already broken the annual record.

The Canadian Real Estate Association (CREA) released its monthly national home sales statistics on Monday, revealing that Canada’s sales have already surpassed those of 2020 — the previous record holder for the most sales in one year.

“Twenty-twenty-one continues to surprise,” said CREA’s Senior Economist Shaun Cathcart. “Sales beat last year’s annual record by about Thanksgiving weekend, so that was always a lock, but I don’t think too many observers would have guessed the monthly trend would be moving up again heading into 2022.”

canadas home sales


According to the report, the number of newly listed homes across Canada rose 3.2% from September to October. The sales-to-new listings ratio also rose, up to 79.5% from September’s 75.5%, illustrating an ongoing tightening of the market.

“A month with more new listings is what allows for more sales because those listings are mostly all still getting gobbled up; however, with demand that strong, the supply of homes for sale at any given point in time continues to shrink,” Cathcart said. “It is at its lowest point on record right now, which is why it’s not surprising prices are also re-accelerating. We need to build more housing.

Significant price growth has been seen all across the country. Year-over-year price growth in BC is up above 20%, and in Ontario, it’s closing in on a whopping 30%. In Quebec, Greater Montreal’s year-over-year prices are up over 20%, and Quebec City’s are up 13$.

Alberta and Saskatchewan’s growth is slightly smaller, sitting in the mid-to-high single digits. Meanwhile, Manitoba’s is up roughly 10%.

Opinion: Are flipping, foreign buyers and blind bidding really to blame for Canada’s housing crisis?


As Canadians head to the polls to elect a new government later this month, it’s no surprise that housing affordability is a key campaign issue for all parties. As markets across the country continue to experience levels of activity not seen before, multiple polls place housing among the top areas of public concern.

And the parties have taken notice, making promises to make homeownership more achievable for Canadians. But are they focusing on what’s really needed to make a difference.

Here in BC, the topics of flipping houses – specifically shadow flipping, where a property is sold multiple times before completion inflating the sale price – and foreign ownership have long been blamed for the rising cost of homes.

And while these issues have rightfully been and continue to be examined (the Liberals are proposing further crackdowns on foreign ownership and measures to hinder homeowners from flipping properties) they are but small fish in a big pond that is the BC housing market.

Where additional time and attention needs to be placed is on the creation of a National Housing Strategy that makes increasing supply a top priority. To ensure the new government is acting in the best interest of British Columbians, we need to be asking candidates and future government to think more holistically about housing affordability.

In a country where Ontario and Quebec are often heavy influencers of federal politics, this time around BC voters may find themselves wielding far more influence. BC has a high number of swing ridings across the province, which is sure to make us a major deciding factor in the election outcome. The Liberal Party is hoping to win an additional 15 seats to establish a majority government, and with many ridings throughout BC being a two- or even three-way race, BC is an important battleground province.

Many parties have pledged to make home buying easier by increasing purchasing power and flexibility for buyers. But when it comes to housing affordability, the focus needs to expand well beyond obvious measures such as incentives and assistance for first-time home buyers. Increasing support for first-time home buyers without increasing the available housing stock will only exacerbate the ongoing mismatch between supply and demand.

Other measures proposed, like the banning of blind bidding in real estate transactions, are a reaction to recent heated market conditions but do not provide enough detail or data around effectiveness and implementation to be taken particularly seriously.

To their credit, the Conservatives, Liberals, and NDP have also made lofty promises to build more homes. But without a detailed, coordinated, and collaborative national strategy – which identifies roles for all levels of government – the goals are not likely to be met and Canadians will once again be left disappointed.

federal leaders debates

Justin Trudeau/Facebook | Jagmeet Singh/Facebook | Erin O’Toole/Facebook

The federal government has other tools that could effectively help improve housing affordability, and yet, it appears they have yet to consider using them. Take, for example, the nearly $15 billion in federal funding for transit infrastructure announced earlier this year.

We at the BC Real Estate Association strongly endorse tying federal transit infrastructure funding to commitments from local government to increase housing density around new transit stations and major transit corridors. Additionally, municipalities need to be incentivized to speed up development approval times and actually make a dent in the supply deficit in their communities.

While the focus of the election is on the federal government, it’s regional and municipal governments that are key to actually achieving the housing targets needed, and whichever party takes power will need to use existent policy levers to influence municipalities to meet expanded housing goals. The time of three-tiered government with disparate housing agendas needs to end. A National Housing Strategy that coordinates all three levels of government to the singular goal of expanded housing targets is the clearest path to moving the dial on housing affordability.

Canada has endured much over the past year and a half due to COVID-19 but what we’ve also demonstrated is our resiliency. Emerging from this election we have the opportunity to build a stronger, more equitable, and more prosperous Canada by focusing on policies that tackle housing affordability in a holistic way, instead of focusing on soundbites, trends and outright bad or ineffective policy. Housing is in a crisis state in BC and we encourage Canadians to discuss these critical issues with your local candidates.