Some types of homes, like condos and detached houses, have lost nearly 10% of their value. Other types, such as semi-detached homes, are still increasing in price but at a slower pace. This change affects different groups differently. 

For renters like me, this could be good news. In Toronto, the average rent for a one-bedroom apartment in June 2025 was about $2,224—that’s almost $400 less than it was in October 2023.  Landlords are now eager to find tenants, and there are stories of rent discounts and $500 lease bonuses, leaving renters with extra money for food, daycare, or other expenses.

Seven out of Canada’s thirteen major cities saw improvements in housing affordability. Buyers in Hamilton, for instance, saw prices fall by $100,000. 

Does this mean prices will stay low? Not necessarily. 

Experts say the housing market is still in trouble. Even though some prices are falling, the country still faces a significant problem: there are too many people wanting homes, but not enough are being built.

Why Are There Too Many People and Not Enough Homes?

Over the last 30 years, more families have formed than new homes have been built. However, the government has recently made it more difficult for new immigrants to come to Canada, and birth rates are low. 

With lower immigration and lower birth rates, that should mean we’ll soon be on track to meet the demand for housing. “We now expect an average of 150,000 new households to be formed annually under this stricter policy, well within the number of new units the construction industry can deliver,” said Robert Hogue, Assistant Chief Economist at RBC.

However, the type of homes being built matters a lot.

Since 2020, condos have made up the largest share in Canada’s new housing portfolio. Roughly half of all new homes in Canada are condos. Many of these are known as “micro condos”). And they are glorified prison cells made exclusively for financial speculation.

They are snapped up quickly by investors who hope to sell them later for a profit. That has left cities like Toronto and Vancouver filled with small, cramped spaces that aren’t suitable for raising a family.

However, a worsening economic climate, lower immigration, and tariffs mean sales of condos are dropping to levels not seen since 1995.

To provide space for families, the City of Toronto is currently considering a list of reforms to allow for more multi-family and multiplex units. By removing restrictive zoning, the city hopes to meet the Province’s goal of 285,000 new homes in the city by 2031.

In an ideal world, building more family-sized homes and rentals should help make housing more affordable, especially for renters. But we’re not in an ideal world.

A recent study from the University of Waterloo found that big investment companies and wealthy landlords were artificially inflating rent prices. Researchers from the university examined rent hikes from large landlords, mom-and-pop landlords, nonprofits, and medium-sized landlords, finding that it was the financial landlords who charged the most in rent. They found that the rent prices of homes owned by large asset managers were 44 percent more than the average neighbourhood rent.

These types of rentals heavily favour financialized landlords and make up a growing percentage of the housing stock in Toronto and Vancouver. Sometimes, these large landlords use tactics to raise rents or evict tenants so they can increase prices.  

So even though rental rates are falling now, it’s coming at the cost of good ownership. Because no matter what, the concentration of supply in fewer hands is always a bad thing in the long run. 

Historically, homes have been mom-and-pop operations where the landlord, at the very least, lives in the city. Toronto is hoping for a massive increase in capital expenditure in the rental market, but if they are not careful, renters will be squeezed by private equity firms.

Over the next few years, experts anticipate that house prices will continue to grow, albeit at a slower pace. Still, most Canadians will continue to struggle to afford a home, whether they’re renting or buying. 

For renters, think about this. To live comfortably, a person’s rent should cost no more than 30% of their income. But in Toronto, the average rent for a one-bedroom is so high that you’d need to earn over $100,000 a year to afford it. The average income in Toronto is just under $60,000 a year.

For buyers, consider this. According to the Canadian real estate company Re/Max, 25 years ago, the average home in Canada cost approximately $225,000. Today, it’s over $655,000—almost triple. In Toronto, the average person would need to earn over $200,000 a year to buy the average house. This is double what even nurses and some professors get paid. The out-of-reach homeownership dream means more and more Canadians will be lifelong renters. 

If you’re looking to buy or rent, talk to people on the street and find out what’s happening in your specific area. The housing story is complex, but one thing is clear: for many Canadians, affordable and stable housing will remain a significant challenge.