Canada Housing disaster 2025: The Great Canadian Shell Game

If you’ve been waiting for a miracle in the Canadian housing market, I hope you like waiting. Despite the “bold” headlines coming out of Ottawa and the provinces, the average Canadian is still getting squeezed until the pips squeak.

I thought it was time to do an annual review on how our governments performed in 2025 regarding the housing shortage crisis. The quick assessment? It is a failure of math, policy, and will.

We’ve had a new budget, a new “housing czar” approach from the Federal Government, and a lot of expensive-looking agencies. But let’s look at the numbers—because the numbers don’t lie, even if the politicians do.

The 1995 vs. 2025 Reality Check

To understand why the current government strategies are failing, we first need to look at how fundamentally the market has broken compared to 30 years ago.

In 1995, people complained about high interest rates (nearly 9%). Today, the government pats itself on the back for rates around 4.5%. But this ignores the “Interest Rate Paradox”: A lower rate on a massive debt is far more dangerous than a high rate on a small debt.

The following tables break down exactly how the goalposts have moved.

1. Financials: The “Affordability” Illusion

The shift from a cash-flow problem to a debt-load problem.

Metric	1995 (Average)	Today (Average)	Change
Average Home Price	~$160,000	~$720,000	+350%
Household Income	~$55,000	~$96,000	+75%
Mortgage Rate (5-Yr)	~9.00%	~4.50%	-50%
Monthly Payment	~$1,190	~$3,770	+216%
Payment-to-Income	~26%	~47%	Crisis Level

Sources: CREA National Price Map | Bank of Canada Historical Rates

2. The Rental Trap

The government claims their policies help renters eventually buy. The data proves the opposite. High rents are stripping away the ability to save.

Metric	1995 (Average)	Today (Average)	Change
Avg. Rent (2-Bed)	~$590	~$2,060	+249%
Rent % of Income	~13%	~26%	Doubled
Vacancy Rate	~4.2%	~1.5%	Critically Low

Source: Rentals.ca National Rent Report (Jan 2026)

The 2025 Federal Budget: Smoke, Mirrors, and Bill C-15

The 2025 Federal Budget, titled “Canada Strong,” was tabled on November 4, 2025. It promised to fix these disparities. It didn’t take long for the industry to realize the “500,000 homes a year” promise was more of a hallucination than a plan.

What did they actually “give” you?

• The GST Rebate: A full rebate on new homes up to $1 million. Sounds great, until you try finding a new detached home for under a million in the GTA or GVA. It’s a carrot on a stick that most people can’t reach.
• Build Canada Homes (BCH): A new $13 billion “super-agency” designed to act as a federal developer. Translation: more bureaucracy, more studies, and more government employees in Ottawa while you’re still living in your parents’ basement.
• The “Double the Pace” Myth: The Prime Minister promised to double construction to 500,000 units a year. Let’s check the scoreboard.

The “Supply” Lie: We Are Building More, But Falling Further Behind

There is a popular talking point that “housing starts are up.” Technically, this is true. According to the latest CMHC Housing Starts Report, we saw a year-over-year increase of roughly 5.6% in housing starts, reaching a total of 259,028.

In a normal market, that would be good news. In our market, it is a drop in the ocean.

3. Supply & Demand: The Per-Capita Collapse

We are building more homes than in 1995, but our population has exploded.

Metric	1995 (Average)	Today (Average)	Change
Population	29.3 Million	41.6 Million	+42%
Homes Built (Starts)	~111,000	259,028	+133%
Target Needed	N/A	500,000	Missed by 48%

The government pushes the “Seasonally Adjusted Annual Rate” (SAAR) to make the numbers look bigger. But we need to look at actual shovels in the ground. To hit the government’s own target of 500,000 homes, we need to start 41,667 homes every single month.

Here is the real 2025 scoreboard, updated with the final December actuals:

Month (2025)	Actual Units Started	Progress Toward Monthly Goal (42k)
January	14,850	35%
February	15,120	36%
March	16,400	39%
April	20,440	49%
May	23,870	57%
June	23,282	56%
July	23,464	56%
August	18,408	44%
September	22,375	53%
October	19,174	46%
November	21,870	52%
December	20,716	49%
Rural/Other Est.	~19,000	(Annual adj. for rural areas)
TOTAL 2025	259,028	Total Failure

The Verdict: Despite a modest bump over last year, we didn’t even hit half of the target. We are building for a 1995 population with a 2026 demand.

The Development Fee Shakedown: The Hidden Tax

Why aren’t builders building more? The answer lies in the “hidden” tax municipalities levy on every new door: Development Charges (DCs).

The Federal and Provincial governments are largely to blame for this. Over the last 30 years, upper levels of government have “downloaded” the costs of infrastructure (roads, sewers, transit) to municipalities without giving them the tax tools to pay for it.

Cities are legally required to balance their budgets. With no help from the Feds or Provinces, they have turned to the only piggy bank they have left: New Home Buyers.

4. The Cost of Government (Development Fees)

The price you pay before a single brick is laid.

City	2025 Dev. Fees (Approx.)	2015 Dev. Fees (Approx.)	% Increase
Toronto	$180,600	$65,000	178%
Vancouver	$125,500	$48,000	161%
Markham	$180,300	$58,000	210%
Burlington	$111,600	$38,000	194%
Calgary	$52,000	$24,000	116%

Source: CMHC: We Built This City on Development Charges (2025 Report)

Your government is treating new homebuyers like an ATM. You’re paying nearly $200k in fees in the GTA. That isn’t “growth paying for growth”; that is the government taxing the next generation into poverty to balance books they refused to manage responsibly.

The Ultimate Barrier: The Down Payment

The most crushing metric of all is not the monthly payment, but the time required to enter the market. In 1995, the barrier was interest; today, it is capital.

5. Barrier to Entry

The “Time-to-Save” Crisis.

Metric	1995 (Average)	Today (Average)	Change
Down Payment (10%)	$16,000	$72,000	+350%
Years to Save (National)	~2.9 Years	~7.5 Years	+158%
Years to Save (Major City)	~4 Years	~25+ Years	Broken

Source: National Bank of Canada Housing Affordability Monitor

Where Are We Heading? (The Cold, Hard Forecast)

Don’t expect a crash. Expect a “grind.” As interest rates settle, the pent-up demand will hit the market again. Because we failed to build the 500,000 homes promised, prices will start their climb once more.  It won’t happen anytime soon, but the basic economics of supply and demand rules will apply here. 

Metric	2025 (Current)	2026 (Projected)	2028 (Outlook)
Avg. Home Price	$676,705 (-1.4%)	$698,622 (+3.2%)	$765,000+
Rental Rates	Slight Cooling (-2%)	Rising (+3-5%)	New Record Highs
Vacancy Rate	1.8%	1.6%	< 1.5%

The bottom line: The government is playing a shell game. They move the money around, change the names of the programs, and tell you they’re “building for you.” But until those development fees drop and the shovels actually hit the dirt at a rate of 40k+ a month, you’re just paying for their expensive mistakes.

Stay skeptical, Canada.

Your best interest is my only interest. I reply to all questions and I welcome your comments. Like this article? Share with a friend.

Steve Garganis: 416-224-0114; steve@canadamortgagenews.