Affordability has always been at the centre of Toronto’s housing discussions. Whether in quiet market conditions or during periods of intense media coverage, the question remains the same: is housing in Toronto truly affordable?
According to the latest research from RBC, there is a glimpse of improvement. Their 2025 report shows that housing affordability across Canada, including Toronto, is the best it has been in three years. This comes as a result of falling interest rates, modest price declines, and rising household incomes.
Breaking Down the Numbers
The report highlights that Canada’s aggregate affordability measure has improved to 55.1% in Q1 2025, down almost 5% from the previous year. However, it’s important to note that this remains far from pre-pandemic levels. RBC points out that despite five consecutive quarters of improvement, only about a third of the affordability lost during the pandemic has been recovered.
In Toronto, ownership costs have decreased, along with Vancouver recording the largest drops. Still, these two remain Canada’s least affordable housing markets. For example, Toronto’s ownership cost as a share of household income stands at 68.3%, while Vancouver sits at an eye-watering 92.7%.
Condos as the Entry Point
One key takeaway from the report is the clear affordability gap between single-family detached homes and condos. For many in Toronto, buying a detached home in prime neighbourhoods remains unrealistic. Condos continue to be the main entry point into the housing market, acting as the first step on what’s often called the “property ladder.”
On average, ownership costs for condos represent 37.6% of household income, compared to 61.7% for single-family homes nationwide. This substantial difference demonstrates why condos remain the starting place for many buyers, with the hope of moving up to larger properties over time.
Monthly Costs See Meaningful Declines
The research shows that condo prices have decreased in areas such as the Greater Toronto Area, with affordability stress easing significantly. Compared to last year, monthly payments for condos are about $600 lower, while purchase prices have dropped by approximately $60,000. These changes are significant for buyers looking to enter the market or upgrade within it.
Will Affordability Continue to Improve?
While recent trends have been positive, RBC notes that most of the improvement may already be behind us. Future progress will largely depend on further interest rate cuts, additional home price declines, and continued household income growth. If interest rates stabilize, improvements in affordability will rest solely on income gains and potential price adjustments.
Toronto Market Outlook
Looking at market performance, sales in Toronto have remained slow, with 2024 recording one of the lowest sales years on record, and 2025 expected to follow a similar trend. Despite this, prices have held steady, with average home prices hovering around $1.1 million for almost three years.
The report suggests that while rebuilding buyer confidence is positive, it is unlikely to trigger a strong market rally. Housing affordability challenges remain a significant barrier, especially in major markets like Toronto.
Toronto’s housing affordability has improved to its best level in three years, driven by falling interest rates and price adjustments. For buyers, particularly those looking at condos as an entry point, this is welcome news. However, achieving true affordability across the board remains a challenge that will take more than market corrections to resolve.
According to the latest research from RBC, there is a glimpse of improvement. Their 2025 report shows that housing affordability across Canada, including Toronto, is the best it has been in three years. This comes as a result of falling interest rates, modest price declines, and rising household incomes.
Breaking Down the Numbers
The report highlights that Canada’s aggregate affordability measure has improved to 55.1% in Q1 2025, down almost 5% from the previous year. However, it’s important to note that this remains far from pre-pandemic levels. RBC points out that despite five consecutive quarters of improvement, only about a third of the affordability lost during the pandemic has been recovered.
In Toronto, ownership costs have decreased, along with Vancouver recording the largest drops. Still, these two remain Canada’s least affordable housing markets. For example, Toronto’s ownership cost as a share of household income stands at 68.3%, while Vancouver sits at an eye-watering 92.7%.
Condos as the Entry Point
One key takeaway from the report is the clear affordability gap between single-family detached homes and condos. For many in Toronto, buying a detached home in prime neighbourhoods remains unrealistic. Condos continue to be the main entry point into the housing market, acting as the first step on what’s often called the “property ladder.”
On average, ownership costs for condos represent 37.6% of household income, compared to 61.7% for single-family homes nationwide. This substantial difference demonstrates why condos remain the starting place for many buyers, with the hope of moving up to larger properties over time.
Monthly Costs See Meaningful Declines
The research shows that condo prices have decreased in areas such as the Greater Toronto Area, with affordability stress easing significantly. Compared to last year, monthly payments for condos are about $600 lower, while purchase prices have dropped by approximately $60,000. These changes are significant for buyers looking to enter the market or upgrade within it.
Will Affordability Continue to Improve?
While recent trends have been positive, RBC notes that most of the improvement may already be behind us. Future progress will largely depend on further interest rate cuts, additional home price declines, and continued household income growth. If interest rates stabilize, improvements in affordability will rest solely on income gains and potential price adjustments.
Toronto Market Outlook
Looking at market performance, sales in Toronto have remained slow, with 2024 recording one of the lowest sales years on record, and 2025 expected to follow a similar trend. Despite this, prices have held steady, with average home prices hovering around $1.1 million for almost three years.
The report suggests that while rebuilding buyer confidence is positive, it is unlikely to trigger a strong market rally. Housing affordability challenges remain a significant barrier, especially in major markets like Toronto.
Toronto’s housing affordability has improved to its best level in three years, driven by falling interest rates and price adjustments. For buyers, particularly those looking at condos as an entry point, this is welcome news. However, achieving true affordability across the board remains a challenge that will take more than market corrections to resolve.
