The Canadian real estate affordability crisis has eased—but housing is still far from affordable. RBC data shows Q3 2025 marked the seventh consecutive quarter of housing affordability improvements. Despite the persistent trend, affordability remains just slightly better than the peak of the 1990s real estate bubble. RBC warns that with rate cuts unlikely in 2026, this may be as good as it gets anytime soon—unless home prices fall further.
Canadian Housing Affordability Improves For A 7th Quarter
Canada has seen persistent improvements to housing affordability, measured as ownership carrying costs as a share of median household income. A median household needs to dedicate 53.2% of its income to cover ownership costs in Q3 2025, 0.4 points less than the previous quarter. It was the 7th consecutive decline, but also the smallest, suggesting this trend is running on fumes.
“The latest gain, however, is the slimmest this cycle… just 0.4 percentage points, or less than a quarter of the average 1.7 ppt drop in the prior six quarters,” explains RBC assistant chief economist Robert Hogue.
Canadian Housing Affordability Improves, Still Near 90s Peak
The RBC Housing Affordability Index: Ownership Costs As A Share of A Median Household’s Income.
Source: RBC; Better Dwelling.
RBC emphasizes the difference between improved housing affordability and affordable housing. Virtually every market remains worse than it was pre-pandemic, with the current level just 2.8 points below the worst level previously recorded—the peak of the 1990s real estate bubble.
Putting it bluntly, Hogue notes “buyers in every corner of the country still find it less affordable to own a home today than before the pandemic.”
National trends can be distorted by swings in big markets, and this is one of those times. The latest data shows disproportionate gains in the affordability index were driven by improvements in Toronto and Vancouver. But with ownership still consuming roughly 68% of median income in both cities, the population of buyers remains limited.
A few smaller markets are nearing normal. Regina (26.4%) and Winnipeg (32.1%) are close to historic norms, but they’re exceptions—not the rule.
Canadian Real Estate Unlikely To See Further Improvements—Unless Prices Fall
RBC warns this may be it for affordability advances in the near term, as rates did much of the heavy lifting. Most of the recent progress came from falling mortgage rates, a trend the bank says has run its course. “We see improvement slowing with the Bank of Canada likely on hold through 2026,” explains Hogue.
He adds, “Further meaningful advancement would require steeper price declines or more robust income increases—neither of which seems likely under our base case forecasts.”
That’s typical near the end of a real estate cycle, when markets resist deeper price cuts. Home prices remain out of reach for most buyers, leading to a slow recovery driven by stagnating prices and income growth. Without further price declines, the only other path involves broad currency debasement and sustained inflation—a gamble that creates more problems than it solves.
Further price drops may seem unlikely, especially in Toronto and, to a lesser extent, Vancouver. While Toronto has already shed a quarter of its peak value, making it hard to see further declines, recent data disagrees. Price declines have actually picked up steam, as sales near record lows while inventory continues to build. Bubbles rarely behave rationally—on the way up or down.
Is it me or has RBC been smoking something a little too strong? Regina is nowhere near where it was back in 2019. Outside of the downtown core (no thank you), it’s still $1M-$1.5M for a decent home. It was nowhere near that a few years ago.
I’m shocked that the Brookfield RPS home prices RBC uses only superficially improves the data. It’s not like we have a more accurate and commonly cited pricing stat that’s backwards adjusted from CREA.
CREA also revises the model for distribution and the broad upzoning plays a part in artificially boosting the comparables, so the decline seems more “appropriate” when reflecting the new additional development rights.
The big problem is that models and other stuff are overstated and unreliable. I can make a mdle say whatever i want, by changing the way the model interprets the data. Add to that where we have bad data, and even worse, conflicts of interest in what they are reporting.
I remember 92, and no one was buying anything. Every 3rd hpuse wasnpower of sale. We have a long way to go to get to that again. I believe the banks and ottawa think they can maintain thesenprices without destroying canada, but they are the ones who effectively debased the dollar to a peso to gwnerate big bank profitals, not us.
I don’t think RBC is right on the call, neither is the framing that most banks are presenting where they frame this as a Toronto and Vancouver issue where prices are fine everywhere else.
That only makes sense if Toronto and Vancouver become economically devastated like Detroit, and Regina and Halifax rule the economy. It’s so unlikely that it’s on the same probability union as aliens come to earth and give us a home building gun that makes them out of thin air.
I don’t think prices can come down more. It’s not fair but young adults are going to have to suck it up. It wasn’t fair when interest rates were 18% either.
It’s not that we have to, it’s that we can’t.
Prices in Toronto are currently falling at a rate of $10,000 month, with no end in sight. The negative synergistic effects of the crash haven’t even started to bite yet.
Nothing is affordable if prices are falling. Few buyers will be interested in catching a falling knife.
Banks and real estate companies are just spewing nonsense to protect their own interests.
All these crystal ball forecasts are just, that no one knows what tomorrow will bring.
Just look at the economics the more for sale the lower the prices will be. Until inventory drops there is no chance of any price increase.
I am in nova scotia, and the average home was 250-400k pre-plandemic. It’s currently close to double that.
I am not buying until it starts to look like pre-plandemic.