Even a price drop of as much as $185,000 won’t make much difference to Toronto’s housing affordability situation, says new report
Toronto homes will likely remain unaffordable to a significant share of buyers even if a much-feared recession takes root, according to a new report by Desjardins.
“We don’t see affordability returning to Canada’s largest city anytime soon,” Desjardins said.
This applies even to the worst-case scenario, which the report outlined as a 1990s‑style Ontario recession that could pull down average Toronto home values to 16% below current levels. This would represent a price drop of as much as $185,000.
In such a trajectory, “by Q4 2025, prices would sit $340,000 (30%) lower than in July 2023,” Desjardins said. “Yet even if that improbable outcome were to materialize within the next three years, it would only bring Toronto’s home price‑to‑per capita disposable income ratio back to still‑stretched, late‑2015 levels.”
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Consumers, political leaders in a bind
Desjardins warned that far from ushering in a new era of more affordable homes in Toronto, such price declines would only come “at a massive economic and social cost.”
“Compared to our base‑case Ontario forecast, a 1990s‑style recession would result in a more than $35-billion reduction in employment income and almost half a million total job losses by Q4 2025,” Desjardins estimated.
The situation stresses the “extremely difficult” position that both home buyers and policy makers are labouring under.
“Plans to boost the supply of affordable housing can’t fall short,” Desjardins said. “It’s just not an option. All levels of government and the private sector have to work together to address the herculean challenge of adequately increasing new home building.”
