Redefining Affordability: Why CMHC’s Benchmark Shift Matters
June 27, 2025
By Allwyn Dsouza, Senior Analyst, Research and Insights, REIC/ICI
By Allwyn Dsouza, Senior Analyst, Research and Insights, REIC/ICI
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In a move that received little public fanfare but will have implications for housing policy across Canada, the Canada Mortgage and Housing Corporation (CMHC) has officially abandoned its 2004 benchmark for housing affordability. In its place? The "more realistic" target of 2019[1].
Let’s be clear: this is more than a bureaucratic footnote. It’s a fundamental shift in how we define success in tackling one of the biggest crises of our time. For years, 2004 was CMHC’s key reference point—the last time the average Canadian household could afford a home without stretching their budget to the limit. Back then, the average household in Ontario spent around 35% of its income on housing[2]. |
By 2021, that figure had ballooned to nearly 60% in key markets. In cities like Toronto and Vancouver, housing costs devour income so ferociously that only about one in seven homes is now affordable to a median-income earner.
Figure 1.0
Source: CMHC
That’s what made the 2004 benchmark powerful. It wasn’t just a statistic—it was a promise. It told Canadians: we see how far affordability has fallen, and we’re aiming to restore it to a time when homeownership wasn’t a privilege for the wealthy or the lucky.
So why did CMHC change the benchmark?
Their reasoning, according to a June 2025 statement, is pragmatism. They say that the post-pandemic surge in demand, supply bottlenecks, and soaring construction costs make the 2004 goal unattainable. Instead, they’ve chosen to reset the bar to 2019—a year that, while far from ideal in terms of affordability, was still better than the conditions Canadians face today.
Why is this important?
Moving the benchmark doesn’t just shift a line in a report—it reshapes how we measure progress, justify funding, allocate subsidies, and set political expectations.
From a policy lens, this change dilutes ambition. CMHC’s own models estimate that Canada needs to build 5.8 million homes by 2030 to restore affordability to 2004 levels. By using 2019 as the reference point, the supply shortfall remains at 4.8 million— not a drastic reduction— but the timeline is extended to 2035. Thus, the shift does not materially alter the supply-side challenge, but it does change the affordability target: not 30% of income, but perhaps 40–45%, depending on location and housing type. Under business-as-usual conditions, housing could still consume over 50% of income by 2035, and policymakers can consider the goal achieved.
Abandoning the 2004 target has generated debate. On one hand, policy-makers and economists say it simply reflects reality: trying to return to the early-2000s would have required a housing construction boom far beyond Canada’s capacity and made even less sense after the pandemic[3] . Many experts argue it’s better to set attainable goals (here, 2019 levels) to keep public expectations grounded and focus on actionable plans — like doubling starts to roughly 500,000 per year over the next decade. But that in itself is a stretched target and far from attainable.
The Cost of “Realism”
CMHC officials argue that this change is about realism and to be fair, they’re not wrong to point out that restoring 2004 affordability would require doubling Canada’s annual housing starts from roughly 245,000 to nearly 500,000—a level we’ve never come close to in our history.
So why did CMHC change the benchmark?
Their reasoning, according to a June 2025 statement, is pragmatism. They say that the post-pandemic surge in demand, supply bottlenecks, and soaring construction costs make the 2004 goal unattainable. Instead, they’ve chosen to reset the bar to 2019—a year that, while far from ideal in terms of affordability, was still better than the conditions Canadians face today.
Why is this important?
Moving the benchmark doesn’t just shift a line in a report—it reshapes how we measure progress, justify funding, allocate subsidies, and set political expectations.
From a policy lens, this change dilutes ambition. CMHC’s own models estimate that Canada needs to build 5.8 million homes by 2030 to restore affordability to 2004 levels. By using 2019 as the reference point, the supply shortfall remains at 4.8 million— not a drastic reduction— but the timeline is extended to 2035. Thus, the shift does not materially alter the supply-side challenge, but it does change the affordability target: not 30% of income, but perhaps 40–45%, depending on location and housing type. Under business-as-usual conditions, housing could still consume over 50% of income by 2035, and policymakers can consider the goal achieved.
Abandoning the 2004 target has generated debate. On one hand, policy-makers and economists say it simply reflects reality: trying to return to the early-2000s would have required a housing construction boom far beyond Canada’s capacity and made even less sense after the pandemic[3] . Many experts argue it’s better to set attainable goals (here, 2019 levels) to keep public expectations grounded and focus on actionable plans — like doubling starts to roughly 500,000 per year over the next decade. But that in itself is a stretched target and far from attainable.
The Cost of “Realism”
CMHC officials argue that this change is about realism and to be fair, they’re not wrong to point out that restoring 2004 affordability would require doubling Canada’s annual housing starts from roughly 245,000 to nearly 500,000—a level we’ve never come close to in our history.
Figure 2.0
But realism, without ambition, risks becoming resignation. In a country grappling with a housing supply shortage, a labour crunch in construction, and rental vacancy rates near historic lows, what’s needed now is urgency—not retreat.
CMHC’s reasoning is largely sound: it recognizes that pre-2004 affordability is now out of reach without extreme measures. By the same token, adopting 2019 as a yardstick doesn’t make the actual shortage any smaller – it simply adjusts the reference point.
Does Benchmarking to 2019 Make Sense?
Could a different benchmark year have made more sense? Some analysts argue that 2004, while historically affordable, was also marked by relatively high interest rates and lax lending standards—it wasn’t a time of ample housing supply, just lower prices. In contrast, 2019 was selected because it came just before the unprecedented pandemic-era housing surge. It offers a more recent, pre-COVID baseline that avoids the distortions caused by ultra-low interest rates, speculative demand, and supply chain disruptions from 2020 to 2022. While 2019 was far from perfect, it reflects a period of greater market stability and may serve as a more pragmatic and policy-relevant point of comparison. However, 2019 was still a year of significant affordability strain:
Over the past decade, Canada’s worsening housing affordability crisis has prompted governments at all levels to implement transformative policy initiatives. Much of this urgency was catalyzed by CMHC’s previous benchmark—restoring affordability to 2004 levels—which underscored how deeply prices had outpaced incomes. That benchmark provided a clear, quantifiable target that helped shift political inertia into substantive policy action.
Key initiatives include:
Policy Consequences: Subtle but Significant
The re-benchmarking does not materially change the number of homes Canada needs to build. CMHC’s supply gap remains at 4.8 million units but it does change the endpoint—which has ripple effects:
CMHC’s reasoning is largely sound: it recognizes that pre-2004 affordability is now out of reach without extreme measures. By the same token, adopting 2019 as a yardstick doesn’t make the actual shortage any smaller – it simply adjusts the reference point.
Does Benchmarking to 2019 Make Sense?
Could a different benchmark year have made more sense? Some analysts argue that 2004, while historically affordable, was also marked by relatively high interest rates and lax lending standards—it wasn’t a time of ample housing supply, just lower prices. In contrast, 2019 was selected because it came just before the unprecedented pandemic-era housing surge. It offers a more recent, pre-COVID baseline that avoids the distortions caused by ultra-low interest rates, speculative demand, and supply chain disruptions from 2020 to 2022. While 2019 was far from perfect, it reflects a period of greater market stability and may serve as a more pragmatic and policy-relevant point of comparison. However, 2019 was still a year of significant affordability strain:
- Home prices were already more than 2x income in many cities.
- Rental cost burdens were rising, especially in high-growth metros.
- Mortgage costs averaged over 40% of household income, well above the 30% “rule of thumb.”
Over the past decade, Canada’s worsening housing affordability crisis has prompted governments at all levels to implement transformative policy initiatives. Much of this urgency was catalyzed by CMHC’s previous benchmark—restoring affordability to 2004 levels—which underscored how deeply prices had outpaced incomes. That benchmark provided a clear, quantifiable target that helped shift political inertia into substantive policy action.
Key initiatives include:
- Housing Accelerator Fund (2023–present) – A $4B federal program incentivizing municipalities to reform zoning bylaws, streamline approvals, and permit higher-density development. Cities must tie outcomes to measurable increases in housing starts.
- Rapid Housing Initiative (2020) – Initially a $1B program, later expanded, that funds non-market affordable housing builds across Canada, particularly for vulnerable populations. Its speed-focused delivery model cut red tape and enabled units to be built within 12–18 months.
- Tax Reforms on Speculation – Introduction of the Underused Housing Tax (2022), expanded foreign buyer bans, and anti-flipping rules, all aimed at curbing speculative demand and aligning prices with real housing needs.
- National Housing Strategy Act (2019) – Made housing a human right under federal law, mandating accountability for federal policy and investment, with measurable targets.
- Provincial Upzoning Mandates – Ontario (2022–24) and British Columbia (2023) introduced sweeping land-use reforms legalizing fourplexes and mid-rise buildings in traditionally single-detached zones.
Policy Consequences: Subtle but Significant
The re-benchmarking does not materially change the number of homes Canada needs to build. CMHC’s supply gap remains at 4.8 million units but it does change the endpoint—which has ripple effects:
| Dimension | 2004 Benchmark | 2019 Benchmark |
|---|---|---|
| Affordability Definition | ≤30% of income | ~40–45% of income |
| Total Units Needed | ~5.8M by 2030 | ~4.8M by 2035 |
| Political Urgency | High (restoring lost ground) |
Moderate (stabilizing conditions) |
| Municipal Compliance | Challenging | Easier to demonstrate progress |
| Non-Market Housing Need | Emphasized | Potentially deprioritized |
1. Lowering the Perceived Ambition of Policy Goals
Old benchmark (2004) implied that housing affordability should return to the era when homeownership cost ~30% of gross income. This was aspirational and politically bold. New benchmark (2019) effectively lowers the bar, as affordability in 2019 was already strained (e.g., price-to-income ratios were double historical norms in major cities).
Implication: Governments can now claim success with less drastic improvements. This could reduce political urgency and make it easier for federal/provincial targets to appear achievable.
2. Impact on Federal and Provincial Budgeting
The shift will likely influence how housing program targets are set (e.g., CMHC's co-investment fund, Housing Accelerator Fund). For example, housing supply action plans tied to benchmarks may now set their affordability metrics based on less aggressive targets, potentially qualifying more developments as "affordable" under looser terms.
Implication: Fewer subsidies may be directed toward deep affordability (e.g., for vulnerable renters) if average affordability is redefined more leniently.
3. Changing How Municipalities Are Measured
CMHC works with municipalities through programs like the Housing Accelerator Fund. These require local governments to deliver faster approvals and more housing. With 2004 affordability off the table, the performance metrics for municipalities may be softened, especially in high-cost cities like Toronto or Vancouver.
Implication: Cities may face less pressure to enact major zoning reforms, as their targets now reflect 2019 costs rather than the more affordable 2004 baseline.
4. Shift in Housing Program Design
Programs like National Housing Strategy initiatives often peg eligibility to affordability indicators. If those indicators are re-centered around 2019 data instead of 2004, the threshold for qualifying as "affordable" housing shifts upward, allowing higher rents and prices in subsidized developments.
Implication: This could reduce the number of housing units that are accessible to low-income households.
5. Framing Future Political Platforms
Political parties often reference CMHC metrics to justify housing plans (e.g., the Liberal Party’s 2025 platform references CMHC’s modeling to justify a 500,000 unit/year goal). A re-benchmarking from 2004 to 2019 gives future governments more leeway in defining what “restoring affordability” means.
Implication: Expect political narratives around housing to shift from “restoring what was lost” to “managing current pressures.”
6. Long-Term Strategic Planning
A 2004 benchmark implied transformational change; a 2019 benchmark implies incremental repair. Long-term plans on labor force development (e.g., skilled trades training), supply chain resilience, and housing innovation (e.g., modular construction) may see scaled-back urgency.
Implication: Government might deprioritize disruptive reforms like land use deregulation, social housing expansion, or mass land assembly.
7. Reduced Legal and Advocacy Leverage
Housing advocates and non-profits often used the 2004 benchmark to argue for urgent action. Courts and tribunals occasionally consider CMHC data in social housing and eviction cases. A 2019 baseline gives the state a defensive narrative, implying affordability is not “historically out of reach.”
Implication: Weakens tools for legal and activist pressure around housing rights and emergency interventions.
Alternatives: Could CMHC Have Done It Differently?
Rather than pivoting to a new year, other options could have been:
- Used dynamic metrics, like a national price-to-income ratio target or shelter-cost-to-income ratio (e.g., ~30%).
- Established region-specific benchmarks, recognizing that affordability varies drastically between Halifax, Winnipeg, and Vancouver.
- Created a multi-tier benchmark: e.g., target 2019 affordability nationally, 2004 affordability for vulnerable populations, and price-rent stability as a long-term anchor.
The Bigger Picture: Affordability as a Moving Target
The CMHC's move is reflective of a broader tension in public policy: balancing feasibility with moral obligation. Canada faces a structural shortage of housing, compounded by immigration-driven population growth, land-use regulation, construction labor constraints, and speculative behavior.
The danger is not that CMHC made a practical decision—it’s that stakeholders may use it to justify inaction. If governments begin declaring “affordability progress” under the new baseline, even as cost burdens remain historically high, public trust in housing policy will further erode.
Ultimately, Canada’s housing crisis isn’t just a matter of building more units; it’s a test of ambition. Benchmarks are more than technical thresholds; they reflect the values we choose to uphold. If we stop aiming for affordability that enables people to thrive—not merely get by—we risk losing more than a statistic. We risk redefining housing as a privilege, rather than a foundation for stability, dignity, and opportunity.
As CMHC shifts its housing affordability benchmark from 2004 to 2019, the conversation around what "affordable" truly means is being redefined. This change has far-reaching implications—not just for policy, but for how developers, investors, and governments plan housing delivery across Canada.
The Real Estate Institute of Canada (REIC) supports its members in understanding and responding to such structural shifts. In a market where affordability targets influence zoning reforms, funding programs, and public trust, REIC ensures professionals are equipped with the knowledge and ethical grounding to lead responsibly. Through ongoing education, industry insight, and collaboration with policy stakeholders, REIC empowers members to balance economic feasibility with social responsibility.
Allwyn Dsouza is REIC’s Senior Analyst, Market Research and Insights. He can be reached at [email protected]. Media enquiries can be directed to [email protected]