Canada’s federal housing agency is redefining what affordability means in light of soaring home prices, warning Canadians not to expect a return to conditions seen a generation ago.In a report, the Canada Mortgage and Housing Corporation said the goal of restoring housing affordability will now be measured against prices just before the pandemic rather than those from 20 years ago. Blacklock's Reporter said the change reflects how far out of reach home ownership has become for many Canadians.“This aspiration shouldn’t be interpreted as an official government target,” CMHC wrote in Canada’s Housing Supply Shortages: Moving To A New Framework. “Instead, it’s a way to show how big of a challenge it is to return to affordability.”.The report acknowledges there is no fixed definition of affordability, but it generally relates housing costs to income. CMHC said its earlier benchmark — based on mortgage qualification rules — has become obsolete because home prices have outpaced incomes to such a degree that average buyers can no longer qualify for average homes.The agency is now using a simplified price-to-income ratio that adjusts for mortgage rates and homeowner expenses in order to track affordability across the country more effectively.“Restoring affordability to levels last seen two decades ago is not realistic,” said CMHC. “The loss of affordability over the past two decades has been large and is becoming larger.”.CMHC said that addressing the affordability crisis would require housing construction to nearly double over the next decade. While it projects annual housing starts will average 250,000 units, it says between 430,000 and 480,000 new homes would be needed each year to restore broader access to affordable housing.The record for annual housing starts in Canada — 273,200 — was set in 1976. A recent Budget Office report predicted a peak of 262,000 starts by 2030, far below government ambitions. Federal cabinet has repeatedly promised to build 500,000 homes annually but has not offered a clear path to meeting that target.“This new government is focused on moving forward and building,” Housing Minister Gregor Robertson told MPs on June 10. “We are focused on building big.”
