LYALL: Toronto’s housing crisis is now a demographic crisis

For generations, the promise of Toronto was simple: work hard, build a career, buy a home and raise a family.

Today, that promise is slipping away.

The housing crisis is no longer merely an economic issue. It is changing migration patterns, delaying life decisions and even contributing to a decline in birth rates. What began as an affordability challenge has become a social and demographic crisis that threatens the future of Ontario’s largest city.

The latest evidence is impossible to ignore.

Realtors are watching people leave

A recent Royal LePage survey found that 55 per cent of Greater Toronto Area (GTA) residents would consider moving to another Canadian city if it meant they could afford to buy a home and secure employment there. More than half of the people living in Canada’s economic engine are effectively saying they would leave if homeownership were attainable elsewhere.

That should alarm policymakers.

Among the destinations attracting interest are Edmonton, Thunder Bay, Charlottetown and Windsor-Essex — communities where housing costs remain dramatically lower than in the GTA.

Meanwhile, some immigrants are returning to their country of origin or leaving Canada to pursue entrepreneurial opportunities elsewhere.

What was once a last-resort decision is increasingly becoming a rational housing strategy. Young families, first-time buyers and middle-income earners are concluding that if they want a house, Toronto may no longer be the place to find one.

The affordability math doesn’t add up

The reason is straightforward. Housing prices have risen far faster than incomes. Twenty-five years ago, the typical Ontario home cost roughly three to four times a household’s annual income. Today, that ratio is closer to seven to nine times income in many urban markets, even after a modest correction from pandemic-era peaks. In practical terms, the price-to-income ratio has roughly doubled since the early 2000s. Housing has become increasingly disconnected from what ordinary working people can afford.

The consequences are especially severe for younger Ontarians. Polling consistently shows that many have lost confidence that homeownership is achievable. One survey found that only 47 per cent of Ontarians aged 18 to 38 believe purchasing a home is within reach. More troubling, more than one-quarter believe it is completely unattainable, while another quarter remain uncertain.

That represents a profound shift in expectations.

Young people still want homes. They still aspire to ownership and the stability it provides. What they increasingly doubt is whether government policies will restore affordability in time for them to benefit.

Temporary fixes for a permanent problem

Governments deserve some credit for finally recognizing the seriousness of the issue. Ottawa and Queen’s Park have introduced measures, including enhanced harmonized sales tax (HST) rebates and agreements to reduce development charges on new housing. These are positive steps, but they are temporary and short of what’s needed.

The public mood remains skeptical because affordability has not yet improved meaningfully. Recent polling has found that most young Canadians do not believe the housing crisis is being resolved. The prevailing sentiment is not that governments are ignoring the problem; it is that governments are trying but have not delivered results that people can feel in their daily lives.

A crisis reshaping family life

The housing crisis is also having consequences that extend well beyond real estate. It is now affecting family formation and birth rates.

Toronto’s fertility rate has fallen to just 1.11 children per woman, significantly below Canada’s already-low national rate of 1.25 and far below the replacement rate of 2.1 needed to sustain population levels without immigration.

Statistics Canada data show that Canadian mothers are having children later than ever before, while researchers increasingly point to housing affordability as a key factor driving delays in family formation.

The stories behind the statistics are heartbreaking. Couples who want children are postponing parenthood because they cannot afford the housing space they believe a family requires. Others are moving away from Toronto altogether in search of homes where raising children is financially realistic.

Researchers have begun documenting the connection. A Statistics Canada survey found that 37 per cent of Canadians aged 15 to 49 did not believe they could afford to have a child within three years, while 31 per cent doubted they would have access to suitable housing. Studies in several countries have linked high housing costs to lower fertility rates.

Construction is stalling too

Meanwhile, evidence suggests the housing supply crisis is worsening.

A recent report prepared for the Residential Construction Council of Ontario (RESCON) paints a troubling picture. Housing starts across Ontario’s major municipalities were down 31 per cent in the first quarter of 2026 (Q1) compared with a year earlier. Sales plunged 68 per cent. In the Toronto census metropolitan area, starts were down 47 per cent, sales were down 69 per cent and industry employment fell by more than 10,300 workers.

Sales have picked up in the second quarter (Q2), due in large part to the temporary HST rebates and development charge measures, but they are still short of what’s needed.

Those numbers matter because fewer starts today mean fewer homes tomorrow.

The report noted that temporary tax relief measures may help, but their initial impact is expected to be modest. That should prompt a broader discussion about the role government-imposed costs play in driving unaffordability.

The tax burden nobody talks about

Today, taxes, fees and government charges account for roughly 36 per cent of the purchase price of a new home in Ontario. That is substantially higher than any other jurisdiction, with the exception of Vancouver. No amount of optimism, marketing or government announcements can overcome the reality that adding tens or even hundreds of thousands of dollars in taxes and charges inflates housing costs.

If governments are serious about affordability, they must make tax relief permanent rather than temporary.

Reducing development charges, lowering HST burdens and streamlining regulatory costs would not solve every housing problem overnight. But it would directly lower the cost of building homes and help restore economic viability to projects that are currently sitting on the sidelines.

The warning signs are everywhere. Young people are losing faith in homeownership. Families are leaving Toronto. Birth rates are falling. Housing construction is slowing.

When a housing crisis begins influencing where people live, whether they stay and whether they have children, it has become something much bigger than a housing issue.

It has become a threat to the long-term prosperity and vitality of Ontario itself.

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