Can We Spend $110 When We Earn Only $100 Per Month?

This question sparked a discussion this morning following the re-release of a Fraser Institute report that found that homeowners in Toronto with an average-sized family home pay 110.2% of their monthly after-tax income in mortgage payments. This figure stood at 56% in 2014. As expected, the news has elicited strong reactions. Questions arose: “How is this even feasible?” “How can someone be expected to pay more than they earn?”

The Fraser Institute, a Conservative think tank, appears to have two main objectives with this report: (1) to inform the public about the current situation regarding housing unaffordability and (2) to highlight, or perhaps urge, the government to address the crisis, particularly the income disparity in Toronto.

It is widely recognized that wages in Toronto have not kept pace with the soaring living costs, especially for lower-income households. Despite a modest rebound in wage growth, the cost of living has skyrocketed, leaving many families with little financial flexibility. Between 2019 and 2023, the lowest-earning quintile experienced virtually no wage growth, while higher-income households enjoyed the largest earnings gains.

Looking at the period from January to October 2025, there are no bright spots either. Although average weekly earnings increased by 3.7% year-over-year, the rising costs of living—including housing, food, and everyday essentials—have overshadowed any slight increases in wages. Consequently, Toronto residents’ purchasing power continues to face significant pressure, as earnings fail to keep pace with expenses.

The Fraser report reiterates this reality: housing affordability is intricately linked to income levels and home prices. Notably, while home prices have risen year over year (excluding the current post-COVID period), salaries in Toronto have stagnated over the past decade, which lies at the heart of the housing affordability crisis.

“As wages have flatlined, the housing unaffordability crisis has worsened. To make housing more affordable for Ontario families, policymakers should focus on increasing wages and incomes as a key part of the overall solution,” advises the report.

Let’s hope the city’s employers and business leaders are paying attention.

Continuing with the report, while Toronto was deemed the most expensive among the province’s 14 largest urban centres, Oshawa ranked second, with the average mortgage accounting for 92.2% of the median family income after taxes. Ottawa-Gatineau was the least expensive area, at 50.4%.

Noteworthy: It’s important to note that in none of the province’s major urban centres was the average mortgage even close to the affordability threshold of one-third of an average family’s income.