RBC Says National Housing Affordability Hits Four-Year Best at 53% of Income in Q1 2026

RBC's Housing Affordability Measures express the share of median pre-tax household income required to cover mortgage payments, property taxes and utilities, using benchmark prices for single-detached homes, condo apartments and an aggregate of all housing types, according to RBC Economics. A lower number means more affordable. A reading of 50% means the typical household would need to spend half of its pre-tax income to carry the benchmark home at current prices and rates. For smaller markets, RBC's modified measure assumes a 20% down payment, a 25-year amortization and a five-year fixed mortgage rate.

Two things are worth holding in mind when reading the city numbers. The first is that the index is a synthetic standard — it pegs each city to a benchmark home and the same payment math, which makes city-to-city comparison clean but does not describe any individual owner's actual carrying cost. The second is that "ownership costs" in this index include only the major recurring items — mortgage, property tax, utilities — not insurance, condo fees, maintenance or capital reserve, which means real-world household burden generally runs higher than the headline percentage suggests.

The Q1 2026 national reading at 53% is the lowest in four years, and the direction matters more than the level. It is the second consecutive quarter of improvement and signals that the multi-year squeeze on Canadian buyers and would-be movers has eased rather than worsened. That is meaningful for resale liquidity, which depends on a workable affordability backdrop for the next cohort of buyers.

The clearest movement happened in the two largest markets. Vancouver's aggregate measure dropped 4.0 points quarter-over-quarter and 9.3 points year-over-year to 84.1%, the sharpest improvement in the country — and still, RBC noted, the worst affordability reading nationally by a wide margin, with only about half of the pandemic-era deterioration reversed. Toronto improved 2.2 points to 65.2%, but single-detached affordability there remained severely strained, with benchmark ownership costs consuming more than 80% of typical pre-tax household income.

The condo segment moved the most in percentage terms. The national condo measure fell to 35.2%, less than a percentage point off its Q4 2019 reading, and RBC noted some markets are already back below pre-pandemic levels. Toronto condo affordability sits near 36% in RBC's national summary, the segment that has carried the largest correction since the pandemic peak — and the segment that has the firmest argument for stabilizing resale conditions if the affordability improvement continues.

The pattern is not uniform improvement. It is a national average that masks two parallel stories — one of price-led correction in the markets that ran hardest during the pandemic (Vancouver, Toronto, national condo), and one of continued deterioration in the markets where prices kept climbing through 2025 into 2026 (Montreal, Quebec City).

Three markets stood out as exceptions. Montreal's affordability measure rose to 52.6%, its worst level since 1990 and a second consecutive quarter of deterioration, on prices that were still 5.5% above year-ago levels. Quebec City reached 39.5%, which RBC pegged at 9.3 percentage points above its 10-year average — the only major market it tracks where conditions have not improved since the end of 2023. Halifax sat at 41.6%, fully 13.6 percentage points above its 2019 reading, reflecting one of the largest post-pandemic price runs that has not yet meaningfully corrected.

The lesson for owners in these markets is the inverse of the national headline. An improving national affordability chart does not imply local resale conditions are about to normalize. It implies the markets that overshot are correcting first, and the markets that held their gains are now the laggards. That has direct implications for sellers timing a list, and for owners weighing whether to sit out 2026 in markets where carrying-cost pressure is still rising.

The most important sentence in RBC's release for current owners is the forward-looking caveat. RBC warned that further affordability gains will be slimmer because prices appear to be stabilizing in most major markets, and it does not expect additional Bank of Canada rate cuts this year. Stable prices and stable interest rates together imply little change to mortgage costs over the back half of 2026.

The rate environment supports that read. The Bank of Canada's policy rate has held at 2.25% across all four 2026 decisions — January, March, April and June, per the central bank's own rate page. The Bank's April deliberations explicitly noted that something close to the current 2.25% rate would likely be appropriate in the base case, and that any changes from here would be expected to be small. That is as close as a central bank gets to saying the easing cycle is over.

The renewal wave is the second half of the story. The Bank's 2026 Financial Stability Report estimates that the last cohort of five-year fixed-payment mortgages taken during the pandemic — about 12% of all outstanding mortgages — will renew over the next 12 months and is expected to see payments rise by roughly 15% on average. Another 14% of outstanding mortgages renewing over the same period are variable-payment or shorter-term fixed-payment loans taken after rates rose in 2022–2023, and those borrowers on average are not expected to see payment changes. The risk is concentrated in the pandemic-fixed vintage, not spread evenly across the entire mortgage book.

Refinancing capacity at current prices looks broadly intact. The Bank estimates only about 4% of borrowers renewing in 2027 would be unable to refinance at renewal nationally, rising to roughly 9% in the Toronto area — and those shares would climb to about 7% and 12% respectively if home prices fell another 10%. Those numbers are scenario-based and not observed outcomes, but they describe where the system is more sensitive to further price weakness: in Toronto specifically, in detached homes specifically, in the cohort that bought near the top.

For owners who are not transacting, the cleanest read is that the worst-case scenario for the broad housing market — accelerating affordability deterioration paired with persistently rising rates — is not the one playing out right now. Affordability is improving, rates are flat, and prices are stabilizing in most markets. That is a steadier backdrop than the 2022–2024 environment, and a meaningful change from the trajectory CMHC's affordability composite index flagged earlier this year, when the crunch was officially spreading well beyond Toronto and Vancouver.

For owners considering selling, the resale picture is mixed. Buyer affordability is the best it has been in four years, which supports demand, but resale volumes that ticked up modestly in May after months of slack still sit below historical averages. The condo segment in particular — where affordability has corrected most — also faces the heaviest completion supply and the weakest pre-construction sentiment, especially in the GTA. The CMHC 2026 Housing Market Outlook expects national prices to stabilize and then rise modestly, but expects Ontario specifically to keep seeing price declines through 2026 before recovery in 2027. Condo starts are projected to remain particularly weak, especially in Toronto, where pre-construction sales fell to multi-decade lows in 2025.

For owners renewing in 2026 or 2027, the planning posture has not changed. The Bank of Canada's published mortgage stress analysis still applies: roughly 60% of renewers in 2025 and 2026 were expected to see payment increases, with average monthly payments about 6% higher for 2026 renewers and 15% to 20% higher for five-year fixed-rate renewers. About half of borrowers facing higher payments could eliminate those increases by extending amortization by five years, and most were expected to renew at rates below their original stress-test levels. Those are useful structural cushions. They are not a reason to skip the math.

Three things are worth watching over the next two RBC releases. First, whether Vancouver and Toronto continue their recovery trajectories — RBC has only reversed about half of Vancouver's pandemic-era deterioration, and Toronto's detached single-family math is still extreme. Second, whether Montreal and Quebec City's deterioration accelerates or stalls — RBC has flagged both as outliers, and a third consecutive quarter of worsening conditions would change the regional story. Third, whether the Bank of Canada's stable-rate stance holds — anything that moves the policy rate, in either direction, will move the affordability index and the renewal math together.

The story for owners is straightforward: the trajectory has improved, the structure has not. Better affordability does not mean cheaper renewals. Plan accordingly.