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Is this the housing market's affordability sweet spot?

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  Published in House and Home on Thursday, October 9th 2025 at 18:11 GMT by The Globe and Mail
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Toronto, Vancouver and Calgary: How Canada’s Three Biggest Cities Are Struggling With Housing Affordability

In a stark reminder that Canada’s housing market is still in crisis, a recent Globe & Mail feature titled “Housing market affordability in Toronto, Vancouver, Calgary” lays out why home buyers in the country’s three largest cities are grappling with mortgage stress, and what policy makers and lenders are doing to curb the problem. Drawing on data from the Canadian Mortgage and Housing Corporation (CMHC) and Statistics Canada, the article gives a clear, data‑driven picture of why the housing market remains a painful reality for most Canadians and what steps the government and banks are taking to ease the burden.

The affordability index: a quick snapshot

The piece opens with a simple but telling comparison of the “affordability index” in Toronto, Vancouver, and Calgary. The index, which is calculated by dividing a typical monthly mortgage payment by the median disposable income of a family in a given city, shows that:

The numbers make it clear: a family in Toronto or Vancouver would need to spend a disproportionate share of its disposable income on mortgage repayments, compared with a family in Calgary. The data point also underscores the fact that mortgage stress has reached a new high in Canada’s top cities, with nearly six in ten Vancouver buyers already over the 32 % threshold that defines “stress.”

Why the numbers look so bleak

The article then turns to the underlying drivers behind these figures. Three key factors are highlighted:

1. Rising house prices – The median home price in Toronto has peaked at $1.5 million, while Vancouver’s median price is around $1.3 million, up roughly 10 % over the past year. Calgary’s median price is still on an upward trend but is only $720 k. Even though Calgary’s price level is lower, the city is experiencing a rapid rate of price appreciation, which keeps the affordability index from improving.

2. Low interest rates, now on the rise – The Bank of Canada has kept policy rates near zero for several years to boost the economy, which meant mortgage rates stayed low. But the central bank’s latest policy shift – raising the overnight rate by 25 bps – has begun to push mortgage rates upward, increasing monthly repayments across all three cities.

3. Income stagnation – Although wages have been creeping up in Canada, the growth is not keeping pace with rising home prices. The median disposable income of a two‑person household in Toronto and Vancouver is roughly $8,000 per month, compared with $7,000 in Calgary. The lag between wage growth and price inflation is widening the gap between what families can afford and what they actually have to pay.

The Globe & Mail feature also points out that these challenges are compounded by the fact that a large proportion of buyers in Toronto and Vancouver are younger professionals who are still paying off student debt or have not yet secured a long‑term savings buffer. In Calgary, a larger share of buyers are first‑time owners, which tends to moderate the stress index somewhat, but the rapid price growth still makes buying a house a stretch for many.

Policy responses and industry actions

The article then moves into the policy arena, citing the recent CMHC reforms that are intended to curb the growth of mortgage stress. The key reforms include:

• Mortgage stress testing – The government has tightened the mortgage stress test for new mortgages. Under the new rules, lenders must ensure that borrowers’ mortgage payments will be no more than 32 % of their disposable income, and the test uses the Canada Mortgage and Housing Corporation’s “stress rate” (currently 5 % higher than the Canada Mortgage and Housing Corporation’s benchmark rate). This has effectively made it harder for buyers to get approved for a loan if their income is low.

• Stricter lending standards – The CMHC has also revised the “qualified mortgage” criteria. Borrowers now have to have a larger down‑payment cushion, typically 10 % of the purchase price for homes above $1 million. The requirement is even higher for Vancouver buyers, who face a 15 % down‑payment threshold.

• Housing subsidies and incentives – Although not directly targeted at the top three cities, the federal government’s “First Home Savings Account” and provincial “home purchase incentive” programmes are being expanded. These incentives are designed to help first‑time buyers accumulate a down‑payment and reduce the burden of interest costs.

The article quotes several industry experts, including a senior analyst at RBC, who warns that if the Bank of Canada continues to raise rates, the affordability index could deteriorate even further. Meanwhile, a mortgage broker based in Toronto warns that tighter lending standards may push many buyers into the secondary market, where they will have to pay for property maintenance and property taxes that have not yet factored into their mortgage calculations.

Looking ahead

In its closing section, the Globe & Mail feature looks ahead to what could happen if the current trends continue. It suggests that a “real” housing crisis could see median mortgage payments rise to 40–45 % of disposable income in the most affected cities, effectively pushing many households into a debt trap. The piece ends by emphasizing that the key to reversing the trend lies in two things: stabilising or lowering house prices, and ensuring that income growth keeps pace with real‑estate valuations.

The article also points readers to several follow‑up stories for further context, such as “Mortgage stress on the rise: what this means for Canadian families” and “Why Calgary’s housing market is still considered ‘affordable’ by Canadian standards.” Both of these linked pieces expand on the data used in the main article and offer more detailed charts showing how affordability has changed over the last decade.

TL;DR

The Globe & Mail’s in‑depth look at Toronto, Vancouver and Calgary reveals that mortgage stress is at its highest level in Canada’s three biggest cities, driven by soaring home prices, rising interest rates, and stagnant wages. The new CMHC mortgage stress testing rules, stricter lending standards, and government incentives aim to curb the crisis, but analysts warn that without significant price moderation or wage growth, affordability could become a long‑term problem for Canadian families.