Vancouver, Montreal and Toronto saw the steepest home price increases among large North American metropolitan areas between July, 2005, and July, 2025.Frank Gunn/The Canadian Press
As of 2025, Vancouver and Toronto rank as the first and third most unaffordable metropolitan areas among the 25 largest metropolitan areas in North America.
The question is whether these cities have always been costly, or whether the surge in housing prices – or lagging income growth – pushed them further behind.
The data reveal that population growth is a secondary factor. The population of Charlotte, N.C., nearly doubled, while Montreal’s rose only 23 per cent, yet Montreal’s housing prices climbed far more dramatically.
Twenty years of price growth
Between July, 2005, and July, 2025, Vancouver, Montreal and Toronto recorded the steepest home price increases among large North American metropolitan areas. Notably, Montreal now slightly edges out Toronto in 20-year price growth, owing in part to the recent price correction in the Greater Toronto Area.
Population growth is often seen as the prime driver of housing costs: More people mean more demand, which pushes prices higher. Yet the data reveal otherwise.
Charlotte, Orlando and Houston posted the fastest population growth over the past 20 years, but their home price appreciation fell well below that of Canadian cities. Orlando, for instance, saw its population grow by 52 per cent – outpacing Toronto, Vancouver and Montreal – yet its housing prices increased far less than in those Canadian markets.
Supply and demand imbalances
Population growth alone cannot explain Canada’s housing price surge. Instead, persistent imbalances between housing supply and demand dominate.
On the supply side, restrictive zoning limits new housing, while lengthy approvals and high development fees raise costs. Rising material prices and shortages of skilled labour can also add pressure to final prices.
On the demand side, beyond population growth, speculative demand can play a significant role when housing is treated as an investment asset. As with most asset classes, price growth has far outpaced salary increases. Higher salaries and inflows of foreign capital may further tilt the equation by enabling higher bids in competitive markets.
The role of policy and speculation
As I noted in an earlier article, overly stimulative monetary policy between 2008 and 2017 added fuel to the fire. Rock-bottom interest rates encouraged speculative buying on top of genuine household demand.
In Canada, comparatively low property taxes – unlike in the United States, where those taxes fund much of the K-12 school system – reduced the carrying cost of real estate and made it an even more attractive asset. Combined with steady inflows of foreign capital, these factors further reinforced speculative demand.
Yet demand pressures alone cannot explain the surge. Cities such as Charlotte, with explosive population growth but far lower price appreciation, highlight the decisive role of supply constraints. Toronto, unconstrained by geography, still saw housing growth limited by zoning restrictions and regulatory barriers.
A convergence of forces
In the end, immigration-driven population growth has contributed to demand, but its role has been secondary. The affordability crisis stems primarily from stimulative monetary policy that supercharged speculation, paired with municipal and provincial regulations that restricted supply. Inflows of foreign capital and relatively low property tax rates further amplified speculative demand.
Together, these factors explain why Canadian metros now rank among the least affordable housing markets in North America. Until policy-makers address the demand distortions and the supply bottlenecks, affordability will remain out of reach.
Hanif Bayat, PhD, is the CEO and founder of WOWA.ca, a Canadian personal finance platform.
