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Canadian housing is currently at its most affordable point in three years, according to RBC’s Housing Affordability Index—but that’s a modest victory. In Q1 2025, a median household needed to allocate 55.1% of its income to cover ownership costs (mortgage, taxes, utilities), a significant drop from 60.7% in Q1 2024 and the record 63.5% set in Q4 2023. Though this marks five consecutive quarters of improvement, affordability has only reverted roughly one-third from the peak of the recent surge.

However, RBC cautions that this improvement is slight when viewed against the backdrop of historical housing crises. Today’s affordability levels are only marginally better than the crisis-period peak of the early 1990s bubble, underscoring the enduring challenge facing buyers, especially in major Canadian markets. The progress made, while real, is still far from making home ownership a comfortable reality for many.

Looking ahead, RBC forecasts affordability will slightly improve to 52% by year-end thanks to potential interest rate cuts and rising incomes. Yet by 2026, it expects affordability to stall or worsen without a significant drop in home prices or a surge in wages. In essence, Canada’s housing correction appears to be more of a pause than a reversal—and absent stronger economic support, affordability may remain largely out of reach for most households.

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