The traditional ‘starter home’ – a modest detached home with a decent yard – has all but vanished from new construction in most of Canada’s urban centers. What first-time buyers can access today is fundamentally different from what was available to previous generations.
From 1945 to 1980, starter homes were everywhere. Think post-war bungalows and ranch-style houses — typically 750-1,200 square feet, built on a good-sized lot. The model was simple: a small house on a big lot, allowing for expansion over time, like adding a garage or building an extension as a family grew.
That model began to shift in the 1990s, as homes grew significantly larger. In 1975, the average Canadian home measured 1,050 square feet. By 2010, new homes had nearly doubled in size, averaging nearly 1,950 square feet. This growth wasn’t driven by larger families — in fact, the average household size declined from 3.5 people in 1971 to 2.5 by 2006.
As homes grew, affordability deteriorated. In 1999, the average home price was 3.2 times household income. By 2010, that ratio had climbed to 5.9, and by 2024, it had reached 11.8 times income.
Builder economics drove much of this change. Rising land development costs made building small homes on expensive lots financially unviable. Permits, infrastructure, and other soft costs are largely the same whether a home is 1,200 or 4,000 square feet. To make projects viable, builders responded by building bigger, more expensive homes.
There was also a push in major centers, such as the GTA, for dense urban development in the city core. Since purpose-built rental units were often uneconomical to build, this led to a proliferation of condominiums downtown. However, a typical 500-square-foot condo is impractical for raising a family. On the urban fringe, more townhouses were built, but not enough to fundamentally alter the cost of housing.
This focus on urban density leaves few options for middle-class buyers planning to start families. In major urban centers like Toronto or Vancouver, this creates a challenge: cities are fundamentally labour markets, and people need to live where the jobs are. When housing is unaffordable, many are forced to “double up” in rental space. That may work for singles, but not for those looking to start a family.
This trend is clearly happening in the GTA, where there has been notable outmigration, especially among young families. If governments want to address this situation, they need to consider solutions such as building more ground-oriented housing on sites they control, like Downsview in north Toronto; improving inter-urban transportation in satellite cities around Toronto (rather than focusing solely on high-speed trains); exploring land lease arrangements to lower housing costs; and changing the tax structure on new housing. None of these measures alone will solve the problem, but together they are necessary steps toward improving affordability.
For cities to function, a range of jobs, including those that pay middle-class wages, must be supported. If the middle class is priced out of Toronto, don’t be surprised when hospitals struggle to find nurses and builders can’t find skilled tradespeople. The current housing strategy needs to shift from focusing on rental housing to also supporting housing for middle class families.
Independent Opinion
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