Housing Affordability
A perfect storm of trends in the Greater Toronto Area has led to a market-wide mismatch between demand and supply for housing that people can afford. Demographic trends have collided with strong market forces and the basic principles of supply and demand, and public policy has been wholly insufficient in addressing the scale and scope of these changes. As a result, the crisis has spiralled uncontrollably, and this process has become self perpetuating.
Although the underlying causes of the housing affordability crisis are varied and complex, the fact at the heart of the crisis is straightforward: the cost of owning or renting a home has increased much more quickly than average wages. In Toronto, between 2006 and 2018, median household income grew by only 30%, whereas average home ownership costs grew by 131%. Put simply, we are in the midst of a housing crisis because housing is becoming more expensive, but people are not making more money.
The growth of the population of the Greater Toronto Area (GTA) has been significant and sustained, and the rate of growth is forecast to accelerate. Between today and 2031, Toronto’s natural growth is forecast to grow at an annual rate of 41,000. Both the Toronto and GTA populations are expected to exceed the provincial Places to Grow targets, which are intended to guide and manage regional growth; by 2041, the population of the GTA is projected to be just shy of 10 million.
The increased demand for rental housing has driven up the cost of renting. This is felt particularly acutely in Toronto, where the Average Market Rent (AMR) is now $1,374 per month, which requires an annual household income of more than $50,000 to meet Canada Mortgage and Housing Corporation’s (CMHC) affordability criteria. This puts rental housing out of reach for 4 out of 10 households.