Should Canada intervene to make housing affordable?

Is Canada's Housing Crisis Actually Getting Better?

Home prices in Canada are finally falling. After years of relentless increases that pushed ownership out of reach for an entire generation, markets in Toronto and Vancouver are softening — and headlines are calling it relief. But here's the problem: relief and affordable are not the same thing.

The numbers tell a complicated story.

What's Actually Happening

According to TD Economics, home prices are expected to drop 0.3% across Canada in 2026 — a reversal after years of record growth. The Bank of Canada has cut its interest rate to 2.25%, down from a peak of 5% in 2023. And a new CMHC Housing Affordability Composite Index, launched in February 2026, confirms that rental affordability is gradually stabilizing in several markets.

On paper, things are moving in the right direction.

But Statistics Canada data shows median inflation-adjusted wages grew just 20% between 1981 and 2024, while inflation-adjusted home prices grew 163.5% over the same period. RBC's national affordability measure — which calculates what share of household income goes toward housing — sat at 52.4% in Q4 2025. Historically unaffordable. In 2015, when "housing crisis" was already a common phrase, it was 41%.

And the crisis is no longer just a Toronto and Vancouver story. CMHC's new index found Ottawa, Montreal, and Halifax are now under near-historic affordability strain. Markets that were once considered affordable alternatives have caught up — just not in the right direction.

The Debate

Those who say the crisis is improving point to real data: prices are down, rates are down, and rental vacancy rates are rising in some cities as new purpose-built units enter the market. CMHC notes that rental operators in some markets are now offering free months and moving incentives — something almost unheard of in Canada over the past decade. Progress, even if slow, is progress.

Critics argue the framing is misleading. The Canadian Centre for Policy Alternatives published research in early 2026 challenging the dominant "supply shortage" narrative entirely, arguing the crisis is rooted in the financialization of housing — not a lack of units. Canada's housing stock per capita has actually grown since the 1970s. What's changed is who owns the housing and how much debt buyers carry to get it. Nearly 1.5 million Canadian households are currently in core housing need. Almost half of Canadian millennials say they've considered delaying having children because they can't afford a suitable home. Nearly one in three would consider leaving the country.

CMHC estimates Canada needs to build 430,000 to 480,000 new homes per year through 2035 just to restore affordability to pre-pandemic levels. Current build rates sit at roughly half that.

Why It Matters

This isn't just a real estate story. It's a question about what kind of country Canada is becoming. When an entire generation prices itself out of ownership — or out entirely — the downstream effects reach everything: birth rates, consumer spending, mental health, and what "getting ahead" even means anymore.

Simon Fraser University finance professor Andrey Pavlov put it plainly to CBC: recent market developments are still not making homes more affordable. A 0.3% price drop in a market that rose over 355% in two decades isn't a recovery. It's a pause.
Whether that pause becomes real relief — or just a reshuffling of who suffers most — is the question nobody has a clean answer to yet.

So is it actually getting better? Or are we watching a crisis evolve rather than end?