By: Kourosh Rahmanian
An Overview of Housing Affordability in Canada
Housing affordability in Canada continues to be one of the country’s biggest economic and public policy issues. While affordability challenges have long been associated with major markets such as Vancouver and Toronto, rising home prices, borrowing costs, population growth, and limited housing supply have created affordability pressures in communities across the country.
The challenge is particularly significant when looking at housing affordability in BC. CMHC research shows a substantial loss of homebuying affordability in British Columbia between 2019 and 2024. Outside Vancouver, CMHC's adjusted homebuying affordability ratio increased from 47% in 2019 to 64% in 2024, while Vancouver's increased from 71% to 99%.
For Canadians considering homeownership, understanding mortgage affordability, available government programs, and the true costs of buying a home is increasingly important.
This article looks at what housing affordability really means, some of the factors contributing to Canada's affordability challenges, steps governments have taken to address the issue, and resources that may help Canadians—particularly those buying a home in BC.
What Does Housing Affordability Mean?
Housing affordability refers to a household's ability to obtain suitable housing without having housing costs consume an excessive portion of its income.
According to the Canada Mortgage and Housing Corporation (CMHC), housing is generally considered affordable when it costs less than 30% of a household's before-tax income.
However, affordability isn't simply about whether you can make a monthly mortgage payment. For homeowners, the real cost of housing can include mortgage payments, property taxes, utilities, insurance, maintenance, and other expenses.
That's why mortgage affordability should be considered in the context of your overall household budget—not simply the maximum mortgage amount for which you can qualify.
What Factors Are Causing Housing Affordability Issues?
There isn't one single cause behind Canada's housing affordability problem. Instead, affordability is influenced by several interconnected factors, including:
Housing supply remains an especially important part of the discussion. CMHC has identified significant supply challenges and estimates that substantially more housing will be required to restore affordability toward pre-pandemic levels.
These pressures can become even more pronounced in desirable regions with limited housing supply, making housing affordability in BC an ongoing concern for prospective buyers.
What Has the Government Done to Address Housing Affordability?
The federal government introduced Canada's National Housing Strategy in 2017 as a long-term initiative designed to increase housing supply and improve access to affordable housing.
Since then, additional programs and mortgage rule changes have been introduced to address different parts of Canada's housing challenge.
For example, eligible first-time buyers can use a First Home Savings Account (FHSA) to save toward the purchase of a qualifying first home. The FHSA provides tax-deductible contributions and allows qualifying withdrawals for a home purchase to be made tax-free.
Mortgage rules have also changed. For insured mortgages with less than a 20% down payment, eligible first-time home buyers and buyers of new builds may qualify for a maximum amortization of up to 30 years. A longer amortization can reduce monthly mortgage payments, although it generally means paying more interest over the life of the mortgage.
Buying a Home in BC: What Can Buyers Do?
Despite affordability challenges, there are steps prospective buyers can take to better understand their options when buying a home in BC.
One of the most important is establishing a realistic budget before beginning your home search. The amount a lender is prepared to approve and the amount that feels comfortable within your monthly budget are not necessarily the same.
Buyers should consider their:
Borrowers may also need to qualify under Canada's mortgage stress test. For uninsured mortgages at federally regulated lenders, OSFI's current minimum qualifying rate is the greater of the mortgage contract rate plus 2% or 5.25%.
Understanding these numbers before making an offer can help you determine what mortgage affordability looks like for your specific financial situation.
First-Time Home Buyer in BC
If you're a first-time home buyer in BC, it's also worth reviewing both federal and provincial programs before purchasing.
In addition to federal programs such as the FHSA, British Columbia offers programs and exemptions that may reduce some of the upfront costs associated with purchasing a home, depending on the buyer and property meeting the applicable eligibility requirements.
Because programs, thresholds, and mortgage rules can change, buyers should confirm current requirements with the appropriate government agency and qualified professionals before relying on a particular benefit.
How a Mortgage Broker Can Help with Affordability
Mortgage affordability isn't determined by interest rates alone. Different lenders can have different lending guidelines, products, qualification requirements, and approaches to a borrower's financial situation.
Working with a mortgage broker in Kelowna can help local buyers understand the mortgage options available to them and how different scenarios may affect their purchasing power.
Similarly, an experienced mortgage broker in the Okanagan can provide local perspective while comparing available mortgage options from multiple lenders.
A mortgage broker can help you evaluate questions such as:
Getting this information early can be especially valuable before you begin actively viewing properties.
Housing Affordability's Effects on Canadian Businesses
Housing affordability affects more than people trying to purchase or rent a home. High housing costs can reduce household purchasing power and create challenges for employers attempting to attract and retain workers in expensive communities.
When a greater percentage of household income goes toward housing, consumers have less disposable income available for other goods and services. At the same time, businesses operating in communities with high housing costs may face challenges recruiting employees who can afford to live nearby.
Housing supply and economic growth are therefore closely connected. Canada needs enough appropriate housing not only for existing residents but also to accommodate population and workforce growth.
The Bottom Line on Housing Affordability in Canada
Housing affordability in Canada is a complex issue that affects homeowners, renters, first-time buyers, businesses, and the broader economy.
Rising housing costs, insufficient supply, population growth, borrowing costs, and strong demand have contributed to affordability pressures across the country. These challenges are particularly important for anyone concerned about housing affordability in BC or considering buying a home in BC.
While no single program can solve Canada's affordability challenge, understanding your personal finances and available mortgage options can make the home-buying process easier to navigate.
If you're considering purchasing a home in Kelowna or elsewhere in the Okanagan, speaking with a mortgage broker in Kelowna or mortgage broker in the Okanagan before you begin your search can help you understand your borrowing options, purchasing power, and overall mortgage affordability.
References:
Canada Mortgage and Housing Corporation. About Affordable Housing in Canada.
Canada Mortgage and Housing Corporation. Beyond Toronto and Vancouver: Affordability Challenges Spread Across Canadian Cities.
Business Development Bank of Canada. Ratté, S. Housing Affordability and SMEs: Turning a Challenge Into Opportunity.
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