Straddling the Gap 2022

Celebrating Stalling Prices for Canadian Homes

Canadians need StatsCan to improve our measure of housing price inflation

DOWNLOAD "STRADDLING THE GAP 2022" REPORT

Why we wrote this report  


Canada is at a housing crossroads. After decades of relentless increases, home prices are beginning to stall or fall moderately, largely thanks to rising interest rates. Some see this as a weakening of the market that risks undermining the financial security of home owners. Others see it as hopeful, a small first step towards restoring affordability for younger people and newcomers to Canada. 

What we decide is the right direction for home prices is critical. Our next steps can challenge a housing system that pits aspiring (often younger) home owners against those who’ve gained wealth windfalls, thanks to the good fortune of buying a home decades ago. Or we can prop up our dysfunctional system by continuing to rely on flawed inflation data, and protecting the home ownership tax shelter.

Our latest analysis of the gap between home prices and earnings confirms that our primary goal should be that home prices stall for many years ahead – or even continue to fall moderatelyTo restore housing affordability Canada needs home prices to stall for many years

Key takeaways


Stalling prices are necessary to begin reversing the harmful erosion of housing affordability for younger people and newcomers to Canada, because the changes required are dramatic. The amounts by which home prices would need to fall, or wages rise, to reconnect housing costs with local earnings are detailed in our report for all of Canada, most provinces and territories, and many cities (👇 or keep scrolling for a breakdown of how housing affordability varies from coast to coast to coast 👇).

We might have triggered stalling home prices sooner IF inflation data had adequately captured the 318% increase in home values since 2000. Without accurate data, it took rising food and gas prices – which are themselves harmful for many – for the Bank of Canada to start making monetary policy decisions that help slow the housing market. Unlike Canadians’ anger about other rising costs, many of us have tolerated rising home prices because of the wealth created for regular home owners, especially those who got into the market before prices spiraled out of control.

 

What we recommend 


All of us have important roles to play in restoring housing affordability, because no single action will fix our dysfunctional system. Our
comprehensive housing policy solutions framework identifies all the levers we need to pull.

House icon We’re asking all Canadians to call for home prices to stall, or fall moderately – loudly enough for governments to hear, so they can align other policies with this goal. We especially need the voices of those who’ve reaped wealth windfalls from the same rising prices crushing affordability for many others.
House icon We need Statistics Canada to remedy its flawed inflation measure to ensure housing costs are monitored on their own terms. Efforts to rein in inflation in the largest cost of living shouldn’t be a side effect of addressing inflation elsewhere.
House icon We need a modest price on housing inequity to fix the home ownership tax shelter that motivates Canadians to bank on rising home prices as an investment strategy. This levy will increase tax fairness, reduce wealth inequities, and raise revenue to pay for things Canadians want, like affordable housing, child care, and medical care.
   

What you can do


Incorporate these talking points into discussions about housing:
  • In the Canada of 1976, it took a typical full-time income earner 5 years to save up for a 20% down payment. Today, it would take 17 years!

  • Young people are often told they'd be able to afford to buy a home if only they stopped spending money on expensive lattes. But you'd have to give up drinking 15 lattes a day, every day, for five years, to save the 20% down payment on an average priced home in Canada. It’s 19 lattes in Ontario; 20 in BC; 24 in the GTA and 26 in Metro Vancouver.

  • Statistics Canada’s measure of inflation is not set up to adequately account for the rising cost of housing. In 2021, inflation rose less than 4% while average housing prices increased by 21%. We need our inflation data to stop camouflaging how the primary cost of living – housing – is being driven up.

  • Average Canadian home prices would need to fall $341,000 – half of their 2021 value – to make it affordable for a typical young person to carry a mortgage that covers 80% of the value of an average-priced home at current interest rates.

    OR Average full-time earnings would need to increase to $108,000/year – 100% more than current levels.
Tweet your housing minister Tweet your housing minister and share this report far and wide:

 

How does the housing affordability gap vary across Canada?

We've crunched the numbers for Canada, all provinces, plus the Yukon and Northwest Territories, and many cities to show you how housing affordability varies from coast to coast to coast. If you don't find your city below, check out our full report for analyses of more cities.

 

  • Average home prices would need to fall $341,000 – half of the 2021 value – to make it affordable for a typical young person to carry a mortgage that covers 80% of the value of an average-priced home at current interest rates.
  • Or typical full-time earnings would need to increase to $108,000/year – 100% more than current levels.
  • It takes 17 years of full-time work for the typical young person to save a 20% down payment on an average priced home – 12 more years than when today’s aging population started out as young people.
  • For those locked out of home ownership, the average rent for a 2-bedroom unit in Canada has reached $14,004/year, compared to average rents closer to $10,161/year back in 1981.

Canadian home prices relative to young people's full-time earnings

The numbers in Figure 8 illustrate the gap between average home prices in Canada and what is considered affordable for typical residents between the ages of 25 and 34, based on their typical earnings.

  • Average home prices would need to fall $567,000 – over 60% of the 2021 value – to make it affordable for a typical young person to carry a mortgage that covers 80% of the value of an average-priced home at current interest rates.
  • Or typical full-time earnings would need to increase to $145,000/year – over 150% more than current levels.
  • It takes 22 years of full-time work for the typical young person to save a 20% down payment on an average priced home – 17 more years than when today’s aging population started out as young people.
  • For those locked out of home ownership, the average rent for a 2-bedroom unit in BC has reached $18,792/year, compared to average rents closer to $11,671/year back in 1981.

BC home prices relative to young people's full-time earnings

The numbers in Figure 9 illustrate the gap between average home prices in BC and what is considered affordable for typical residents between the ages of 25 and 34, based on their typical earnings.

  • Average home prices would need to fall $814,000 – over 68% of the 2021 value – to make it affordable for a typical young person to carry a mortgage that covers 80% of the value of an average-priced home at current interest rates.
  • Or typical full-time earnings would need to increase to $186,000/year – more than triple current levels.
  • It takes 27 years of full-time work for the typical young person to save a 20% down payment on an average priced home – 21 more years than when today’s aging population started out as young people.
  • For those locked out of home ownership, the average rent for a 2-bedroom unit in Vancouver has reached $21,888/year, compared to average rents closer to $12,392/year back in 1981.

Metro Vancouver home prices relative to young people's full-time earnings

The numbers in Figure 10 illustrate the gap between average home prices in Metro Vancouver and what is considered affordable for typical residents between the ages of 25 and 34, based on their typical earnings.

  • Average home prices would need to fall $548,000 – 60% of the 2021 value – to make it affordable for a typical young person to carry a mortgage that covers 80% of the value of an average-priced home at current interest rates.
  • Or typical full-time earnings would need to increase to $142,000/year – 150% more than current levels.
  • It takes 22 years of full-time work for the typical young person to save a 20% down payment on an average priced home – 16 more years than when today’s aging population started out as young people.
  • For those locked out of home ownership, the average rent for a 2-bedroom unit in Victoria has reached $18,852/year, compared to average rents closer to $11,397/year back in 1981.

Victoria home prices relative to young people's full-time earnings

The numbers in Figure 11 illustrate the gap between average home prices in Victoria and what is considered affordable for typical residents between the ages of 25 and 34, based on their typical earnings.

  • Average home prices would need to fall $363,000 – 50% of the 2021 value – to make it affordable for a typical young person to carry a mortgage that covers 80% of the value of an average-priced home at current interest rates.
  • Or typical full-time earnings would need to increase to $114,000/year – double current levels.
  • It takes 17 years of full-time work for the typical young person to save a 20% down payment on an average priced home – 13 more years than when today’s aging population started out as young people.
  • For those locked out of home ownership, the average rent for a 2-bedroom unit in Kelowna has reached $17,700/year, compared to average rents closer to $11,191/year back in 1981.

The numbers in Figure 12 illustrate the gap between average home prices in Kelowna and region and what is considered affordable for typical residents between the ages of 25 and 34, based on their typical earnings.

  • Average home prices would need to fall $530,000 – over 60% of the 2021 value – to make it affordable for a typical young person to carry a mortgage that covers 80% of the value of an average-priced home at current interest rates.
  • Or typical full-time earnings would need to increase to $137,000/year – over 150% more than current levels.
  • It takes 22 years of full-time work for the typical young person to save a 20% down payment on an average priced home – 17 more years than when today’s aging population started out as young people.
  • For those locked out of home ownership, the average rent for a 2-bedroom unit in Ontario has reached $17,580/year, compared to average rents closer to $10,401/year in Ontario back in 1981.

The numbers in Figure 16 illustrate the gap between average home prices in Ontario and what is considered affordable for typical residents between the ages of 25 and 34, based on their typical earnings.

  • Average home prices would need to fall over $750,000 – 69% of the 2021 value – to make it affordable for a typical young person to carry a mortgage that covers 80% of the value of an average-priced home at current interest rates.
  • Or typical full-time earnings would need to increase to $172,000/year – more than triple current levels.
  • It takes 27 years of full-time work for the typical young person to save a 20% down payment on an average priced home – 21 more years than when today’s aging population started out as young people.
  • For those locked out of home ownership, the average rent for a 2-bedroom unit in the GTA in 2021 was $20,148/ year, compared to average rents closer to $11,671/year back in 1981.

The numbers in Figure 17 illustrate the gap between average home prices in the Greater Toronto Area and what is considered affordable for typical residents between the ages of 25 and 34, based on their average earnings.

  • Average home prices would need to fall over $250,000 – 40% of the 2021 value – to make it affordable for a typical young person to carry a mortgage that covers 80% of the value of an average-priced home at current interest rates.
  • Or typical full-time earnings would need to increase to $102,000/year – up two-thirds of current levels.
  • It takes 14 years of full-time work for the typical young person to save a 20% down payment on an average priced home – 9 more years than when today’s aging population started out as young people.
  • For those locked out of home ownership, the average rent for a 2-bedroom unit in the Ottawa in 2021 was $18,600/ year, compared to average rents closer to $11,294/year back in 1981.

The numbers in Figure 18 illustrate the gap between average home prices in Ottawa and what is considered affordable for typical residents between the ages of 25 and 34, based on their average earnings.

  • Average home prices would need to fall over $445,000 – more than half of the 2021 value – to make it affordable for a typical young person to carry a mortgage that covers 80% of the value of an average-priced home at current interest rates.
  • Or typical full-time earnings would need to increase to $122,000/year – up 135% over current levels.
  • It takes 20 years of full-time work for the typical young person to save a 20% down payment on an average priced home – 15 more years than when today’s aging population started out as young people.
  • For those locked out of home ownership, the average rent for a 2-bedroom unit in Kitchener- Waterloo in 2021 was $16,272/year, compared to average rents closer to $9,406/year back in 1981.

The numbers in Figure 19 illustrate the gap between average home prices in Kitchener-Waterloo and what is considered affordable for typical residents between the ages of 25 and 34, based on their average earnings.

  • Average home prices would need to fall $113,000 – 25% of the 2021 value – to make it affordable for a typical young person to carry a mortgage that covers 80% of the value of an average-priced home at current interest rates.
  • Or typical full-time earnings would need to increase to $70,000/year – 34% higher than current levels.
  • It takes 11 years of full-time work for the typical young person to save a 20% down payment on an average priced home – 7 more years than when today’s aging population started out as young people.
  • For those locked out of home ownership, the average rent for a 2-bedroom unit in Quebec in 2021 was $10,704/year, compared to average rents closer to $8,994/year in 1981.

The numbers in Figure 23 illustrate the gap between average home prices in Quebec and what is considered affordable for typical residents between the ages of 25 and 34, based on their average earnings.

  • Average home prices would need to fall $197,000 – 37% of the 2021 value – to make it affordable for a typical young person to carry a mortgage that covers 80% of the value of an average-priced home at current interest rates.
  • Or typical full-time earnings would need to increase to $84,000/year – 34% higher than current levels.
  • It takes 13 years of full-time work for the typical young person to save a 20% down payment on an average priced home – 9 more years than when today’s aging population started out as young people.
  • For those locked out of home ownership, the average rent for a 2-bedroom unit in Montreal in 2021 was $11,184/year, compared to average rents closer to $9,440/year in 1981.

The numbers in Figure 24 illustrate the gap between average home prices in Montreal and what is considered affordable for typical residents between the ages of 25 and 34, based on their average earnings.

  • Average home prices would need to fall $31,000 – 7% of the 2021 value – to make it affordable for a typical young person to carry a mortgage that covers 80% of the value of an average-priced home at current interest rates.
  • Or typical full-time earnings would need to increase to $67,000/year – 7% higher than current levels.
  • It takes 9 years of full-time work for the typical young person to save a 20% down payment on an average priced home – 3 more years than when today’s aging population started out as young people.
  • For those locked out of home ownership, the average rent for a 2-bedroom unit in Alberta in 2021 was $15,048/year, compared to average rents closer to $13,182/year in 1981.

The numbers in Figure 25 illustrate the gap between average home prices in Alberta and what is considered affordable for typical residents between the ages of 25 and 34, based on their average earnings. Of the four populous provinces in Canada, Alberta has “relatively” affordable housing – an asset for their economy that is worth cherishing and protecting.

  • Average home prices would need to fall $83,000 – 16% of the 2021 value – to make it affordable for a typical young person to carry a mortgage that covers 80% of the value of an average-priced home at current interest rates.
  • Or typical full-time earnings would need to increase to $79,000/year – 20% higher than current levels.
  • It takes 10 years of full-time work for the typical young person to save a 20% down payment on an average priced home – 4 more years than when today’s aging population started out as young people.
  • For those locked out of home ownership, the average rent for a 2-bedroom unit in Calgary in 2021 was $16,260/year, compared to average rents closer to $14,761/year in 1981.

The numbers in Figure 26 illustrate the gap between average home prices in Calgary and what is considered affordable for typical residents between the ages of 25 and 34, based on their average earnings.

  • Average home prices would need to fall $17,000 – 4% of the 2021 value – to make it affordable for a typical young person to carry a mortgage that covers 80% of the value of an average-priced home at current interest rates.
  • Or typical full-time earnings would need to increase to $62,000/year – 5% higher than current levels.
  • It takes 9 years of full-time work for the typical young person to save a 20% down payment on an average priced home – 3 more years than when today’s aging population started out as young people.
  • For those locked out of home ownership, the average rent for a 2-bedroom unit in Edmonton in 2021 was $15,240/year, compared to average rents closer to $13,319/year in 1981.

The numbers in Figure 27 illustrate the gap between average home prices in Edmonton and what is considered affordable for typical residents between the ages of 25 and 34, based on their average earnings.

  • Average home prices would need to fall $174,000 – 33% of the 2021 value – to make it affordable for a typical young person to carry a mortgage that covers 80% of the value of an average-priced home at current interest rates.
  • Or typical full-time earnings would need to increase to $82,000/year – 50% higher than current national levels.
  • It takes 13 years of full-time work for the typical young person to save a 20% down payment on an average priced home – at least 8 more years than when today’s aging population started out as young people.
  • Alas, the CMHC data source on which we rely for rental figures does not have information for the Yukon.

The numbers in Figure 29 illustrate the gap between average home prices in the Yukon and what is considered affordable for typical residents between the ages of 25 and 34, based on their average earnings. Among the less populated parts of Canada, the Yukon stands out for having lost control of housing affordability and housing wealth inequality.

  • Average home prices would need to fall $27,000 – 8% of the 2021 value – to make it affordable for a typical young person to carry a mortgage that covers 80% of the value of an average-priced home at current interest rates.
  • Or typical full-time earnings would need to increase to $56,000/year – 8% higher than current levels.
  • It takes 9 years of full-time work for the typical young person to save a 20% down payment on an average priced home – 4 more years than when today’s aging population started out as young people.
  • For those locked out of home ownership, the average rent for a 2-bedroom unit in Nova Scotia in 2021 was $15,060/year, compared to closer to $9,200/year in 1981.

The numbers in Figure 30 illustrate the gap between average home prices in Nova Scotia and what is considered affordable for typical residents between the ages of 25 and 34, based on their average earnings. As a province with a small share of Canada’s population, Nova Scotia has “relatively” affordable housing – an economic asset that is worth cherishing and protecting.

  • Average home prices would need to fall $130,000 – 28% of the 2021 value – to make it affordable for a typical young person to carry a mortgage that covers 80% of the value of an average-priced home at current interest rates.
  • Or typical full-time earnings would need to increase to $73,000/year – 39% higher than current levels.
  • It takes 12 years of full-time work for the typical young person to save a 20% down payment on an average priced home – 4 more years than when today’s aging population started out as young people.
  • For those locked out of home ownership, the average rent for a 2-bedroom unit in Halifax in 2021 was $16,020/year, compared to closer to $10,641/year in 1981.

The numbers in Figure 31 illustrate the gap between average home prices in Halifax and what is considered affordable for typical residents between the ages of 25 and 34, based on their average earnings. We single out Halifax within Nova Scotia because it has affordability challenges on par with more populous regions like Quebec.

  • Average home prices would need to fall $47,000 – 14% of the 2021 value – to make it affordable for a typical young person to carry a mortgage that covers 80% of the value of an average-priced home at current interest rates.
  • Or typical full-time earnings would need to increase to $54,000/year – 16% higher than current levels.
  • It takes 10 years of full-time work for the typical young person to save a 20% down payment on an average priced home – 7 more years than when today’s aging population started out as young people.
  • For those locked out of home ownership, the average rent for a 2-bedroom unit in PEI in 2021 was $12,660/year, compared to closer to $9,097/year in 1981.

The numbers in Figure 32 illustrate the gap between average home prices in Prince Edward Island and what is considered affordable for typical residents between the ages of 25 and 34, based on their average earnings. As a province with a small share of Canada’s population, PEI has “relatively” affordable housing – an economic asset that is worth cherishing and protecting. But the trend since 2017 is worrisome.

  • It takes 7 years of full-time work for the typical young person to save a 20% down payment on an average priced home – 3 more years than when today’s aging population started out as young people.
  • For those locked out of home ownership, the average rent for a 2-bedroom unit in Saskatchewan in 2021 was $13,404/year, compared to average rents closer to $9,165/year in 1981.
  • Average home prices in Saskatoon are now $50,000 higher than the provincial average. Average prices in Regina are 25,000 higher.

The numbers in Figure 33 illustrate the gap between average home prices in Saskatchewan and what is considered affordable for typical residents between the ages of 25 and 34, based on their average earnings. As a province with a small share of Canada’s population, Saskatchewan has “relatively” affordable housing – an asset for their economy that is worth cherishing and protecting.

  • Average home prices would need to fall $20,000 – 6% of the 2021 value – to make it affordable for a typical young person to carry a mortgage that covers 80% of the value of an average-priced home at current interest rates.
  • Or typical full-time earnings would need to increase to $52,000/year – 6% higher than current levels.
  • It takes 9 years of full-time work for the typical young person to save a 20% down payment on an average priced home – 5 more years than when today’s aging population started out as young people.
  • There is little difference between the average home values in Winnipeg and the rest of the province.
  • For those locked out of home ownership, the average rent for a 2-bedroom unit in Manitoba in 2021 was $15,192/year, compared to closer to $9,131/year in 1981.

The numbers in Figure 34 illustrate the gap between average home prices in Manitoba and what is considered affordable for typical residents between the ages of 25 and 34, based on their average earnings. As a province with a small share of Canada’s population, Manitoba has “relatively” affordable housing – an economic asset that is worth cherishing and protecting.

  • It takes 7 years of full-time work for the typical young person to save a 20% down payment on an average priced home – 3 more years than when today’s aging population started out as young people.
  • There is little difference between the average home values in Fredericton and the rest of the province.
  • For those locked out of home ownership, the average rent for a 2-bedroom unit in New Brunswick in 2021 was $11,628/year, compared to average rents closer to $8,650/year in 1981.

The numbers in Figure 35 illustrate the gap between average home prices in New Brunswick and what is considered affordable for typical residents between the ages of 25 and 34, based on their average earnings. As a province with a small share of Canada’s population, New Brunswick has “relatively” affordable housing – an economic asset that is worth cherishing and protecting.

  • It takes 8 years of full-time work for the typical young person to save a 20% down payment on an average priced home – 4 more years than when today’s aging population started out as young people.
  • For those locked out of home ownership, the average rent for a 2-bedroom unit in the province in 2021 was $11,112/year, compared to average rents closer to $9,131/year in 1981.

The numbers in Figure 36 illustrate the gap between average home prices in Newfoundland & Labrador and what is considered affordable for typical residents between the ages of 25 and 34, based on their average earnings. As a province with a small share of Canada’s population, this region has “relatively” affordable housing – an economic asset that is worth cherishing and protecting.

  • It takes 7 years of full-time work for the typical young person to save a 20% down payment on an average priced home – 3 more years than when today’s aging population started out as young people.
  • For those locked out of home ownership, the average rent for a 2-bedroom unit in the province in 2021 was $21,720/year according to CMHC. That is on par with Vancouver, and higher than in Toronto.

The numbers in Figure 37 illustrate the gap between average home prices in the Northwest Territories and what is considered affordable for typical residents between the ages of 25 and 34, based on their average earnings. As a territory with a small share of Canada’s population, this region has “relatively” affordable housing for prospective owners – an economic asset that is worth cherishing and protecting. Rental is very expensive by comparison with many other parts of Canada.

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