In its April 30 Economic Viewpoint, “Priced Out of the Canadian Dream: The Rise of the Permanent Renter,” Desjardins Senior Economist Kari Norman argues that Toronto and Vancouver have crossed a structural threshold where a return to broad-based homeownership for the middle class may no longer be attainable. The report frames these markets as global cities, where housing dynamics more closely resemble those of London, New York, and Sydney than those of other Canadian centres.
Global city dynamics
Toronto and Vancouver display measurable global-city characteristics. The Globalization and World Cities Research Network classifies Toronto as a highly integrated global node alongside Frankfurt, Chicago, and Milan, while Vancouver is rated as moderately connected. Brand Finance’s Global City Index similarly places Toronto well ahead of other Canadian cities. A defining feature of global cities is their partial decoupling from national economic norms: labour markets, income distributions, and housing markets tend to behave more like those of peer global cities than those of other domestic centres.
Affordability and tenure outcomes
Affordability metrics reflect this growing divergence. In 2023, the average home price-to-income ratio reached 10.7 in Toronto and 12.9 in Vancouver, well above the 7.5 national average and firmly within Demographia’s “impossibly unaffordable” category (nine times income or higher). This places both cities closer to Hong Kong, Sydney, and major U.S. gateway markets than to Calgary, Edmonton, or Montreal.
Homeownership rates have followed suit. At the 2021 Census subdivision level, ownership stood at 52 per cent in Toronto and 46 per cent in Vancouver, compared with a national rate of 67 per cent. Younger adults are particularly affected, with ownership rates well below the national trend across the 25–54 age range. The 2026 Census is expected to confirm a further decline, driven by rapid population growth, the much higher propensity of newcomers to rent on arrival, and continued deterioration in affordability despite recent interest rate relief.
Income polarization and the family-sized rental shortage
Global cities concentrate both very high-paying professional jobs and a large pool of lower-wage service workers, producing a more polarized income distribution. In Toronto, 37 per cent of workers earn under $40,000 and 18 per cent earn over $70,000, compared with roughly one-third under $40,000 and less than 10 per cent over $70,000 nationally. Where housing prices are set through competition among households, this polarization weakens middle-class access to ownership and extends long-term renting beyond lower-income households into the professional middle class.
The rental stock is also poorly matched to family needs. Toronto and Vancouver have a substantially higher shares of renter households living in “unsuitable” conditions—dwellings without enough bedrooms for household size and composition—than the national average. Vacancy rates for family-sized units are lower than for smaller apartments, reflecting a purpose-built rental and investor-owned condo stock dominated by studios and one-bedroom units.
Restoring past affordability may be infeasible
The report quantifies the scale of adjustment that would be required to return these markets to Canadian-norm affordability. Incomes in Toronto and Vancouver would need to be 60 to 80 per cent higher than the national average; alternatively, mortgage rates would have to fall to implausibly low levels, including zero or negative rates, or home prices would need to decline by a further 25 to 40 per cent. Each path is judged unrealistic, suggesting policy should pivot toward managing persistent unaffordability rather than attempting to reverse it.
Policy implications
Desjardins recommends prioritizing family-sized purpose-built rental supply, as current incentives favour smaller, higher-yield units. Because high financing and construction costs, not zoning, are identified by CMHC and the City of Toronto as the primary constraint, programs such as CMHC’s Apartment Loan Construction Program that reduce upfront costs and early-stage project risk have a useful role.
Looking beyond major cities
A complementary perspective from the C.D. Howe Institute argues that supply-side efforts within Toronto and Vancouver alone will be offset by in-migration from smaller centres, perpetuating concentration in already-expensive markets. The Institute urges policymakers to identify and support a small set of mid-sized cities, such as Kitchener-Waterloo, London, and Kamloops, through reduced development charges, transit investment connecting larger and smaller hubs, and university-business partnerships, so they can scale into genuine alternatives that harness agglomeration benefits and ease national affordability pressures.
Final thoughts
The challenge with most federal policy is that it takes a “cookie-cutter” approach. The affordability pressures facing Toronto and Vancouver are not the same as those in Edmonton or Montreal. In Toronto and Vancouver, the core challenge is how to create workforce housing. This requires either directly subsidized housing or indirectly subsidized housing choice through improved transportation networks that allow lower-income households to live outside major centers while maintaining reasonable commute times.
Sources:
Desjardins – Priced Out of the Canadian Dream: The Rise of the Permanent Renter
C.D. Howe Institute – To Solve the Housing Affordability Crisis, Think Beyond Big Cities
Independent Opinion
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