Housing has become too expensive for middle-income families in many Canadian cities

The Parliamentary Budget Officer (PBO), the financial and economic analysis arm of the Parliament of Canada, released a detailed report on the real estate market on February 17.

The average price of housing in Canada has increased by 97% over the past seven years. Apartments and houses in big cities like Toronto, Ottawa, Halifax, and Hamilton have risen especially sharply. The PBO estimates that housing costs in these cities exceed what most people can afford by more than 50%, and this started even before the pandemic.

Affordable real estate, as defined by the PBO, is real estate that a person can purchase with a mortgage and spend the same or a smaller percentage of their income that they would have spent in 2012-2014. PBO analysts calculated the percentage difference between actual home prices and affordable prices for the average family. See the table below.

Because of these rising prices, fewer and fewer young people are buying homes, even though recently buying their own apartment or house was one of the most important stages of growing up. There has been a debate for several years about what the government should do about this situation, and something is changing. The province of Ontario just recently changed its housing laws to attract developers: the zoning rule was abolished, and now multi-unit and multi-storey houses are allowed to be built anywhere. But this has exacerbated one serious problem: At least 20% of the housing stock is bought up by firms who then rent apartments and houses, and there is even less choice for people buying homes for themselves.