Everyone agrees that Canada faces a housing shortage. But it’s not a shortage of homes: it’s a shortage of homes people can afford. In Toronto, for example, there is currently a glut of condos on the market. Prices have fallen as investors offload properties: high interest rates mean their mortgage payments exceed the rents they can get.
Homes have become unaffordable because of the disconnect between wages and prices. Why? Because there’s a disconnect between wages and prices. The average price-to-earnings ratio in Canada more than doubled from 3.2 in 1980 to 6.7 in 2020. Vancouver currently has the highest price to earnings ratio , at 12.3, followed by Toronto at 9.3. To put that in perspective, to buy an average house in those cities in July 2024, you need a household income of $208,000 and $226,000 , respectively. Not exactly middle-class.
