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Source: Missing Middle Initiative
The Ontario Homebuilders Association and the Missing Middle Initiative have released a big new report looking at the change in housing affordability in southern Ontario over the past 20 years. It’s not good, Bob.
Here are the lowlights:
- Housing affordability remains at crisis levels. Across Ontario, home prices have doubled relative to median family incomes since 2005 (in nominal dollars, those incomes were $64,000 in January 2005 and are $115,000 today).
- In 2005, 21 of 26 Southern Ontario single-family home markets were either affordable or deeply affordable for middle-class families, and none were unattainable. Today, there are no affordable or deeply affordable markets in Southern Ontario, and 11 of 26 are completely unattainable for middle-class families.
- In 2005, there were only 3 of 26 markets in Southern Ontario where a middle-class homebuyer of a single-family home would have to pay 25% or more of their pre-tax income on mortgage payments. Today, this is the case in all 26 markets.
- Adjusted for inflation, home prices have doubled, and in some cases more than doubled, across Ontario over the past two decades, while real wages have only increased by 16%.
- Using our WHAM Score metric, which considers home prices, incomes, and mortgage rates, we find that, relative to prices and incomes, a 2-storey family home in the GTA was as affordable in 2005 as an apartment is today.
- A middle-class two-earner family who wanted to purchase a 2-storey family home in the GTA today would have to pay 68% of their pre-tax income in mortgage payments, a clear impossibility.
- Going back to 1967, we find that GTA home prices are currently far more unaffordable than they were during the mortgage rate spikes of the mid-1970s and early-1980s and more unaffordable than they were during the late 1980s housing bubble.
Highly recommend reading the whole report. The takeaway here is that a typical young couple wishing to raise a family in southern Ontario today basically can’t do it because they won’t be able to afford appropriate accommodations until they are much older and farther along in their careers. The implications go beyond the economic and into the social. What happens to a province when kids don’t feel like they have any future there?
Now that the tariff panic has receded for the present, our focus needs to swing back to doing whatever we need to do to unlock building in this country.