The dream of homeownership is slipping further out of reach for a growing number of Canadians, particularly young families. A latest report from the University of Ottawa’s Missing Middle Initiative (MMI) paints a stark picture: the gap between rising house prices and stagnant income growth has widened dramatically over the past two decades, making it increasingly challenging for middle-class households to afford a starter home. The report underscores a growing affordability crisis that extends beyond the well-documented challenges in major metropolitan areas like Vancouver and Toronto.
The analysis reveals that between 2004 and 2023, average dual incomes for households aged 25 to 34 rose by 76 percent. However, over the same period, the average price of a newly-built starter home across 23 Canadian metropolitan areas soared by a staggering 265 percent. This disparity far outpaces income gains, even before accounting for the effects of inflation. The core issue, according to the MMI, isn’t simply high prices, but a fundamental imbalance in the economics of homebuilding.
The Widening Gap: Price-to-Income Ratios
The MMI report highlights that the price-to-median income ratio – a key measure of affordability – now exceeds levels seen in Vancouver, historically Canada’s most expensive city, in 2004, in eight other Canadian cities. This indicates that the affordability crisis has spread beyond the traditional hotspots. The report specifically examined Kingston, Ontario; Sherbrooke, Quebec; and Vancouver, British Columbia, to illustrate the dramatic shift.
In 2004, a starter home in Kingston, Ontario, cost around $185,000, roughly 3.1 times the median dual-earner income of $59,200. By 2025, that same home now costs approximately $740,000, representing 6.9 times the city’s median dual-earner income of $107,480 – a 120 percent increase in the price-to-income ratio. Similarly, in Sherbrooke, Quebec, the ratio climbed from 1.8 in 2004 to 3.3 in 2025, an 80 percent increase. Vancouver experienced the most dramatic shift, with the ratio jumping from 6.8 in 2004 to 17.2 in 2025, a 152 percent increase.
A Structural Problem, Not Just a Recent Surge
The MMI’s analysis demonstrates that this affordability crisis isn’t solely a product of the recent pandemic-era housing boom. The imbalance between wages and home prices was already evident before 2020. In London, Ontario, for example, the price-to-income ratio more than doubled between 2004 and 2019. This suggests that underlying structural issues within the housing market are the primary drivers of the problem.
The report’s authors argue that unless policymakers “get serious about the cost of homebuilding,” the middle class will be priced out of the starter home market. If the cost of building new homes were to remain constant, the MMI estimates it would take approximately 25 years for incomes to catch up to 2004 affordability levels. This underscores the urgency of addressing the supply-side challenges within the Canadian housing market.
The Missing Middle Initiative and the Search for Solutions
The Missing Middle Initiative, housed at the University of Ottawa’s Institute for the Environment, was launched in January 2025 as a spin-off from the University of Ottawa’s Smart Prosperity Institute. Founded by Mike Moffatt, who previously served as Director of the PLACE Centre and Senior Director of Policy at SPI since 2018, the MMI aims to revive Canada’s urban middle class by addressing the barriers to homeownership. The organization’s “North Star” is a Canada where every middle-class individual or family has access to affordable, adequate, suitable, resilient, and climate-friendly housing options.
The MMI’s research suggests that restoring affordability requires a focus on lowering the cost of building new homes, rather than solely relying on measures to cool demand or increase housing supply. This includes addressing restrictive land-use rules, reducing development charges, and streamlining construction standards. The organization publishes research, a Substack newsletter, thought pieces, videos, and the Missing Middle Podcast to explore these issues and potential solutions. The MMI operates with a relatively small team of five full-time employees and an annual budget of under $1 million.
The current situation has led some younger generations to abandon hope of ever owning a home. Governments at various levels are attempting to address the issue by increasing supply and cutting red tape, but economists caution that “prices are still too high to buy and not high enough to build.”
Looking ahead, the MMI will continue to publish research and advocate for policy changes aimed at addressing the structural issues driving the housing affordability crisis. The next major report from the initiative, expected in the fall of 2026, will focus on the impact of zoning regulations on housing costs in major Canadian cities.
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