Affordable housing in Canada
In Canada, affordable housing refers to living spaces that are financially accessible to people with a median household income. Canada ranks among the lowest of the most developed countries for housing affordability. Housing affordability is generally measured based on a shelter-cost-to-income ratio of 30% by the Canada Mortgage and Housing Corporation, the national housing agency of Canada. It encompasses a continuum ranging from market-based options like affordable rental housing and affordable home ownership, to non-market alternatives such as government-subsidized housing.
Definition
Definitions of "affordable housing" in Canada vary among governments and organizations, typically referring to housing that costs less than 30% of gross household income or is targeted towards those with greater need, such as households earning below thresholds like $60,000 in certain cities. The Canadian housing continuum ranges from non-market options to market housing such as private rentals and ownership.Social housing in Canada is generally defined as housing that is targeted to low-income households and offered at below-market rents, typically provided by governments or non-profits, and sometimes via rent supplements in private rentals; this aligns with the OECD definition and includes terms like rent-geared-to-income or rent-assisted units. According to a 2025 analysis by the Parliamentary Budget Officer, Canada lacks reliable data on its social housing stock, but the best estimates indicate there are about 600,000 to 700,000 units—a figure that has changed little in the past 30 years. Most of this housing was built before 1994, with ongoing federal support provided through long-term operating agreements.
As of 2024, social and community housing accounted for approximately 3–4% of Canada's housing stock, while most households either own their home or rent at market rates.
As of 2018, the market-based housing system accounted for approximately 80% of Canadian households' housing acquisitions. About two thirds of Canadian households are home owners, and one third are renters who rent market-rate and non-market units.
To restore affordability, Canada needs to double housing starts from about 250,000 to 430,000–480,000 units per year through 2035.
Measuring housing affordability
Measuring affordability of housing is complicated by Canada's vast physical and human geography which includes both remote northern communities and affluent urban regions. A common rule of thumb is to calculate how much of a household's income is spent on housing expenses each month. For example, if a household spends more on average on housing expenses than each month, then their housing situation may be considered unaffordable. In a 1994 background paper commissioned by the Ontario Human Rights Commission, J. David Hulchanski, the North American editor of the international journal Housing Studies, described how the ratio of housing cost as a percentage of income was 12% from 1900 until the early 1920s, when it was increased to 20%. This increased again to 25% in the 1960s, and by the mid-1980s it reached 30%. In Canada, the commonly used 20% rule of thumb was adjusted to 25% in the 1950s. In the 1980s, this was replaced by a 30% rule. When the monthly carrying costs of a home exceed 30–35% of household income, then housing expenses are considered unaffordable. While the 30% rule continues to be used by the CMHC, banks, and mortgage providers, it has been challenged by Hulchanski and others.A 2011 article recommended tracking indicators like the share of affordable rental units for median earners, wage requirements to rent, demand for assistance, core housing need, shelter use, eviction filings, arrears or foreclosures, and vacancy rates, to better measure Canadian housing insecurity and policy outcomes.
A 2012 Macdonald-Laurier Institute report argued for 40-year amortization options for young buyers in expensive markets and criticized CMHC’s mortgage insurance for generating substantial federal revenues from first-time and lower-income buyers, while also noting that current affordability metrics are too lenient and should consider net, not gross, income and actual household expenses.
The City of Calgary describes affordable housing in terms of need. A household is in need of affordable housing when it earns less than $60,000/year and spends over 30% of gross income on the cost of housing. Alternatively, mortgage lending institutions define affordability in terms of potential home buyers considering the relative cost of debt based on interest rates and average household incomes. This measure of affordability is not oriented towards renters.Accurate measurement of housing affordability is needed to decide if a family qualifies for assistance in housing or for a mortgage to purchase privately. While the 30% rule may be used for the latter, banks and lending agencies might require a much higher Qualifying Income before approving a mortgage.
Shelter-cost-to-income ratio
The shelter-cost-to-income ratio, commonly set at no more than 30% of gross household income, is the most frequent benchmark for housing affordability, but definitions and included costs vary and have notable limitations. STIR often fails to capture the true financial burden on lower-income or diverse households, prompting recognition of its shortcomings by organizations like CMHC.Housing affordability indexes in market-based housing
The Bank of Canada's Housing Affordability Index, the Royal Bank of Canada Housing Affordability Measure, and the National Bank of Canada's Housing Affordability Monitor are examples of indexes used by financial institutions involved in the real estate market. The HAI is based on housing costs, which includes mortgage payments and utilities, in relation to disposable income of a representative household. The HAI represents the percentage of disposable income the average Canadian household would need to cover the mortgage and utilities of their home. By December 2023, with increases in mortgage rates and the price of houses, the Bank of Canada reported that affordability was the worst since 1982. Since the beginning of the COVID-19 pandemic in 2020, house prices saw a significant increase of over 34%. By 2023, the low supply of housing including rental units, across Canada also caused rents to soar. By 2022, with an unexpected demand coupled with a diminishing supply of residential real estate along with historically low interest ratesset during the pandemic to stabilize the economythe price of housing rose sky high in Canada. The BBC said that Canada faced some "of the worst housing affordability issues in the world." Based on OECD data, the "disconnect" between the average home price$817,000and household incomes is "one of the most dramatic". The price represents over "nine times household income."Current situation
Financialization of housing
According to research by housing expert Steve Pomeroy, Canada experienced a significant decline in private rental housing between 2011 and 2016 due chiefly to the financialization of housing, with over 300,000 units disappearing from the market and fewer than 20,000 new subsidized units added. The financialization of housing refers to the use of housing by Real Estate Investment Trusts and private equity as a profit-making financial instrument. Financialized landlords include large corporations such as Avenue Living and MainStreet that engage in en masse purchasing of undervalued rental apartments. These units that were previously affordable for lower income households, are upgraded as higher-end rental units.In May and June 2024, during a series of House of Commons hearings on the financialization of housing, Federal Housing Advocate, Marie-Josée Houle, said that it is widespread and increasing, has "very little oversight", and a "negative impact on housing in Canada". According to Houle, who reports to the Canadian Human Rights Commission, it contributes to deteriorating housing conditions and affordability of housing, displacements, and evictions.
In a CBC Fifth Estate episode and accompanying CBC News article investigating how Canada had fallen into a "rental crisis", which could affect a third of the Canadian population, they found that one of the major factors considered was the financialization of the rental housing sector. They noted that relaxed land acquisition rules made is easier for the financialization to take place. They inquired into the roles of private entities that infuse funds into the housing market by borrowing from banks, resulting in increased housing prices while simultaneously limiting the availability of affordable housing units. The investigation explored several aspects, including the role of numerous gatekeepers who act as intermediaries within the system, as well as the deep market players functioning as gateway constructors within the housing market. These gateway constructors manipulate and uphold financial barriers, effectively serving as authorized toll masters. Among these intermediaries, many consultants and lawyers operate with a profit-oriented sales approach, furthering a system that often exploits and employs unethical practices to achieve individual financial gain, similar to price gouging. The investigation found that municipality and city systems view these practices as an advantageous revenue stream, facilitating these systemic opportunities driven by individual gain, capitalizing on the absence of regulations and market conditions. CBC while examined the issue from the point of view of renterssingle parents, large families, pensioners and others on fixed or low incomes, young people starting their careerswho felt that their voices were not being heard.
In a Fifth Estate interview, Calgary-based Michael Brooks—CEO of Real Property Association of Canada, which lobbies the federal government on behalf of Canada's largest commercial real estate companies—said that the private sector was not "primarily in the business of providing a public good," such as affordable housing. The private sector is "self-interested in maintaining and growing their income." They "want to be seen as contributing to the solution and not being part of the problem." Their obligations are to their investors, which includes managing costs. REALPAC members, an association that was established in 1970, comprised $1 trillion in assets under management across Canada by 2022.
The Brookings Institution lists real estate investment trusts, along with large Canadian banks, and multinational corporations as the "most reliable dividend payers" and recommends that pensioners invest in these financial instruments. During the pandemic, REITs and other financial landlords "thrived" with individual REITs posting 100s of millions in profits in the first three months alone. They benefited from the historically low interest rates backed by the CMHC to buy and sell multi-family residential buildings, refinance debt, do renovations that allowed them to raise rents.