Young families looking for a starter home in most Canadian cities today face far steeper odds than those in Vancouver, Victoria or Toronto just two decades ago, according to a new report from the University of Ottawa’s Missing Middle Initiative (MMI).
Average dual incomes for young households (ages 25 to 34) have risen by 76 per cent since 2004, but the average newly-built starter home price over 23 metropolitan areas has jumped 265 per cent, the report says — far outpacing income growth even before adjusting for inflation.
Today, the price-to-median income ratio is higher in eight Canadian cities than it was in Vancouver — the most expensive in the country — in 2004.
The data underscore the reality that “[t]he middle class will not be able to afford a family-sized starter home” unless policymakers “get serious about the cost of homebuilding,” the report says.
If, hypothetically, the cost of building new homes were to stay the same, the MMI report notes it would take an average of around 25 years for incomes to reach a point where starter home affordability approaches the levels seen in 2004.
Housing affordability has been a dominant issue in Canada for years, with some in younger generations abandoning hope of ownership. Governments at different levels have taken steps to address the issue, seeking to increase supply and cut back red tape — but economists warn the current situation is one in which “prices are still too high to buy and not high enough to build.”
The MMI report shows how far the balance between wages and home prices has tipped this century. In 2004, the median dual-earner income in most Canadian cities was between $50,000 and $70,000, with newly-built starter single-family or semi-detached homes priced at 4x that amount or less in all but Vancouver, Victoria and Toronto.
In Kingston, Ont., for example, a starter home was around $185,000 in 2004, about 3.1x the median dual-earner income of $59,200. A starter home in Vancouver was $365,000, or 6.8x the median dual-earner income of $53,500. In Sherbrooke, Que., starter homes were around $100,000, just 1.8x the median dual-earner income.
Today, the starter home price in Kingston is around $740,000, about 6.9x that city’s 2025 median dual-earner income of $107,480 — meaning the price-to-income ratio has grown by around 120 per cent. In Sherbrooke, a starter home now costs $369,000, 3.3x the median dual-earner income of $111,500, or a price-to-income ratio rise of 80 per cent. In Vancouver, a starter home now costs around $1.7 million, 17.2x the median dual-earner income of $98,823 — a 152 per cent increase in the price-to-income ratio.
The report argues the imbalance predates the pandemic. In London, Ont., the price-to-income ratio more than doubled between 2004 and 2019, for example.
The findings suggest that restoring affordability may depend less on falling home prices than on lowering the cost of building the units. Without changes to land-use rules, development charges and construction standards, the report implies the gap between wages and new-home prices could remain a structural feature of Canada’s housing market.
John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on X @jmacf.
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