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The ongoing struggle for housing affordability in major cities across Canada and the United States is significantly influenced by zoning regulations, land-use policies, economic conditions, and demographic shifts. While factors such as foreign investments and local economic performance contribute to the narrative, they largely play secondary roles. A closer examination of the ratios of home prices to median household incomes reveals the most affected markets, with cities like Toronto, Vancouver, and Montreal in Canada, alongside Dallas and Charlotte in the U.S., showing marked declines in affordability over the years.
The Decline of Affordability in Canadian Cities
Between 2005 and 2015, Toronto and Vancouver experienced the most considerable deterioration in housing affordability. A pivotal factor in this trend was the monetary policy adopted following the 2008–09 financial crisis. The Bank of Canada maintained interest rates at near-zero levels for over eight years, fostering an environment of speculative demand. Unlike its southern neighbour, Canada did not endure a severe economic downturn or a significant housing market correction during this period. This combination of low mortgage rates and robust population growth intensified demand, exacerbating affordability concerns.
Montreal’s trajectory, however, diverged from that of Toronto and Vancouver. The city saw a more concentrated decline in affordability between 2015 and 2025, indicating an expansion of the pressures reshaping Canada’s housing landscape beyond the more traditionally expensive markets.
U.S. Market Trends: Lessons from Fast-Growing Cities
In the United States, cities experiencing rapid growth, such as Charlotte and Dallas, have also faced significant declines in housing affordability. Despite this, both cities remain relatively affordable compared to their Canadian counterparts. Interestingly, cities like Houston and Orlando, which similarly saw strong population growth, did not experience the same pressure on housing prices. This disparity suggests that regions with more flexible zoning and land-use regulations can adapt their housing supply to meet demand more effectively, thereby mitigating prolonged price escalations.
California presents a unique case study. Once among the least affordable markets, cities like Los Angeles, San Diego, and San Francisco have seen their rankings improve. This shift is attributed, in part, to slower population growth, which may indicate a self-correcting market where extreme unaffordability begins to deter demand.
The Role of Zoning and Land-Use Regulations
When analysing the most unaffordable cities across the years—2005, 2015, and 2025—it becomes evident they share a commonality: they are situated in regions with stringent zoning and land-use regulations. These rules create barriers that prevent the timely expansion of housing supply in response to growing demand. While population growth and speculative investments add further strain, it is the capacity of the housing supply to adapt that ultimately dictates market affordability.
In Canada, municipalities are beginning to respond to these challenges by relaxing zoning restrictions, often motivated by federal and provincial government initiatives. Ottawa is also taking steps to moderate population growth through immigration policies, which have already yielded positive results in terms of affordability in certain regions of Ontario and British Columbia. The potential for further improvement hinges on continued efforts to ease land-use constraints and facilitate the development of more housing.
Why it Matters
The findings outlined highlight a critical intersection between policy, market forces, and housing availability. As Canadian cities grapple with escalating housing costs, the emphasis on reforming zoning laws and land-use regulations becomes paramount. By fostering a more adaptable supply of housing while managing population growth, Canada can make strides towards restoring affordability in its housing markets. This is not merely an economic issue, but a social imperative that affects the well-being and stability of communities across the nation.
