Supply: the fifteen-year hole
Ontario built fewer homes per person in the 2010s than it did in the 1970s, and the population grew faster. The Canada Mortgage and Housing Corporation has estimated the country needs something like three and a half million extra homes by 2030 on top of what would normally be built to get back to 2004 levels of affordability. Ontario's share of that is the largest.
The reason is not mysterious. In most of the GTA it takes years to get a permit, development charges on a new condo run well into the tens of thousands of dollars, and the zoning in most residential neighbourhoods allows one house per lot. Every one of those is a municipal or provincial decision. None of them is a market outcome.
Immigration: the demand shock that reversed
From 2022 to 2024 Canada's population grew by more than a million people a year, mostly through temporary residents: international students and temporary foreign workers. That is a lot of people looking for a bedroom in a country that was already short on bedrooms. Rents in Toronto rose fast, and then the federal government cut the temporary resident targets hard in late 2024.
The effect showed up within about a year. Rents for one-bedroom units in Toronto fell in 2025 for the first time in a long time. That is the cleanest natural experiment we have had in this market. Demand from newcomers was a real driver of rent, and turning the tap down brought rents down. It did not do much for purchase prices, because the people who rent a room and the people who buy a semi in Richmond Hill are different people.
Rates: the lever everyone watches and the one that matters least
The Bank of Canada took its policy rate from a quarter of a percent to five percent in 2022 and 2023, then cut it back toward the mid-twos through 2025. Mortgage rates followed. Sales volumes swung wildly. Prices barely moved.
That tells you something. When rates went up, prices did not crash, because sellers pulled listings rather than accept less. When rates came down, prices did not surge, because buyers were stretched already and the supply of new listings finally picked up. Rates change who can afford to buy. They do not change how many homes exist.
What would actually change the number
More homes, built faster, in the places people already want to live. That means allowing fourplexes and small apartment buildings on ordinary residential streets, cutting the development charges that make small projects unviable, and approving permits in months instead of years. Toronto and a handful of other cities have started. The province has moved slower than its own housing task force recommended.
My read: prices in the GTA stay roughly flat for a few years while incomes catch up a little, rents stay soft as long as population growth stays low, and the people who benefit are the ones who can wait. That is not a satisfying answer if you are 25. It is the honest one.