It would take nearly two decades for family-sized homes in Hamilton-Burlington to become affordable to young adults with middle-class incomes if home prices don’t fall. And that’s based on assumptions that exclude a lot of people from even imagining homeownership.
In truth, prices do need to fall if young adults are ever to afford to buy a home.
Federal Housing Minister Gregor Robertson set off a big debate when he said he didn’t think home prices needed to fall for homeownership to become affordable. Most experts disagreed. Mike Moffat, with the Missing Middle Initiative, went further and did some calculations to find out just how distant affordability would be if prices simply remain stable at current, high levels, based on various assumptions. Read about it here: https://www.missingmiddleinitiative.ca/p/what-would-it-take-for-your-kids
In Hamilton-Burlington, single-family home prices were four times average incomes in 2011, peaked at a staggering 11.6 times incomes in February 2022, and are now eight times incomes. So our home prices have declined but are still high and pricing young adults out of owning.
Moffat began his Hamilton-Burlington calculations using a household income of $112,080, a figure higher than that of at least 60 per cent of Hamiltonians (Census 2021). He assumed 2 per cent income growth, a level not seen since the 1970s, inflation at 2 per cent, which is lower than has recently been the case, and mortgage interest of 4 per cent, which is also low.
Apply those optimistic numbers and for that household, in 16 years, house prices would be as affordable as prices were in 2011, when they were four times incomes. To reach three times income, which was once the standard, would take 24 years.
Moffat stressed that those were very optimistic, even unlikely, assumptions. His real point is that for homeownership to become affordable to first time buyers, prices really do need to come down.
Declining home values would not be a big deal for Hamilton-Burlington owners who have seen their home value double since 2011. (We don’t have comparable income figures for 2011-2025 but average and median incomes rose 38% between 2010 and 2020.) Anyone who bought during the early pandemic would be unhappy with further declines, especially if they had hoped to sell quickly, but no one has a right to expect constant increases. Prices have soared for a couple of decades but there is nothing automatic about rising values.
The chart at right, from the National Bank of Canada, shows changes in affordability in the Hamilton-Burlington area since 2000. The higher the line, the less affordable house prices were, so affordability was at its worst in early 2022. Specifically the chart shows mortgage payments for the median priced home as a percentage of median income. In the first quarter of 2025, in Hamilton-Burlington, mortgage payments would eat up 46% of median income for the median-priced condo and 67% for a non-condo.