At A Glance
• affordability is about more than housing prices.
• the index looks at both renting and owning.
• regional data shows where housing pressures are strongest.

Housing affordability is a phrase we hear often in the news. But what does it actually mean for people trying to rent or buy a home? The answer depends on where you live and your financial situation. CMHC’s Housing Affordability Composite Index helps explain what is really happening.

Why A New Affordability Index was Needed?

Many housing affordability indexes already exist. The majority focus on home prices. Price matters, but it is only part of the story. Affordability also depends on :

• income
• supply and demand
• household costs

These factors affect how much people can spend on housing and what they have left for other needs.

The rental market is another key piece. Many indexes look only at homebuyers, leaving out a large part of the housing system.

CMHC’s Housing Affordability Composite Index includes both renting and owning. This gives a fuller, more complete picture of housing affordability.

Looking Beyond National Headlines

Housing stories often focus on large cities such as Toronto and Vancouver. These markets are important, but they don’t represent the whole country. Housing conditions vary across Canada. Some regions face strong competition, while others have more stable markets.

The index breaks affordability down by region and market. This helps show where housing pressures are strongest.

What The Index Tells Us About Homebuying?

The index shows that homebuying affordability reached its lowest level since the 1990s during the third quarter of 2022. This decline did not happen overnight. In the early 2000s and between 2015 and 2020, pressures came mostly from Vancouver and Toronto. After that, pressures spread to other cities.

During the pandemic, remote work changed where many people chose to live. This increased demand in cities such as Ottawa and Montréal.

Signs of Change in Some Markets

There are early signs that affordability may be improving in some regions. Conditions have shifted slightly since 2023. Cities such as Ottawa, Toronto, Vancouver and Halifax have seen small improvements. In Montréal, Calgary and Edmonton, affordability appears to be stabilizing.

Why The Rental Market Matters?

About one third of Canadian households rent their home. This makes the rental market a key part of housing affordability. Rental pressures have increased quickly in 2022 and 2023. Inflation and population growth increased demand for rental housing.

Since then, early signs of stabilization appeared at the national level. Pressures remain, but the situation may be slowly improving.

How Renting and Owning Affect Each Other?

The rental and ownership markets are closely connected. Changes in one often affect the other.

For example, many condominium units are available in Toronto and Vancouver. When these units do not sell, they often become rental homes. This increases rental supply. Renters may see more options and slower rent growth.

Why The Index Matters?

Housing affordability is about more than the price of a home. It affects financial stability and future opportunities.

CMHC’s new Housing Affordability Composite Index, combined with market intelligence from local market analysts, provides data on renting and owning and shows differences across regions.

The Index helps :

• identify imbalances between supply and demand
• highlights where affordability pressures are felt most acutely, and
• inform decisions about what types of units to build and where at a given point in time

This clearer picture helps identify where housing pressures are highest. Better data supports better housing decisions.

Ask an Expert : What CMHC’s Housing Affordability Index is and Why It Matters by CMHC