The cost of living has always been a significant factor in shaping housing markets, but it has had an even more pronounced effect in recent years. Rising inflation, stagnant wages, and growing demand for urban spaces have all contributed to a dynamic shift in how people live and where they choose to live, especially in major cities across Canada and the U.S.
As housing costs continue to soar, here’s how the cost of living is changing how we live.
People Are More Stressed About Making Ends Meet
The National Association of Realtors shows that in the last half of 2024, single-family existing home prices were up in 87% of metro areas—196 out of 226, to be exact. According to NAR Chief Economist Lawrence Yen, “A typical homeowner accumulated $147,000 in housing wealth in the last five years.”
While that’s great for long-term investment, it doesn’t exactly help with everyday expenses. Many households feel the squeeze, struggling to make ends meet as inflation keeps prices high. A Pew Research Center survey found that nearly 74% of Americans worry about rising food and essentials costs. But it’s not just grocery bills causing stress—housing costs are a growing concern, too. Last year, 69% of Americans reported anxiety over housing expenses, up eight percentage points from 2023.
And it’s not just Americans that are feeling the pinch. Stats Canada reports that nearly 45% of Canadians say rising prices seriously impact their ability to cover daily expenses—12 percentage points higher than two years ago.
Meanwhile, home prices keep climbing. In Canada, in particular, the Canadian Real Estate Association (CREA) reported that in December 2024, the average home price hit $676,640. In its January 2025 quarterly forecast report, CREA predicts that the average price will rise to $722,221 in 2025 and reach $746,379 by 2026.
People Live With Their Parents Longer
Canadian Census data from 2021 and a 2024 report by The Vanier Institute of Canada reveals that nearly half (45.8%) of individuals aged 20 to 29 lived with at least one parent. This marks an increase from 1991 when 32.1% of people in their twenties resided with their parents. Adults living with their parents include those who have never moved out and those who returned after living independently.
Ontario had the highest percentage of young adults in their twenties living with their parents, at 53.3% in 2021. Other provinces and territories above the national average were rare, with the lowest figures reported in Nova Scotia (36%) and Saskatchewan (37%).
In the United States, around 1 in 3 adults aged 18 to 34 live with their parents, according to U.S. Census Bureau data.
More young adults living at home can affect the housing market.. Families may also stay in their homes longer, decreasing the availability of larger properties and increasing competition. As young adults eventually leave their parents’ homes, housing preferences could shift, with more interest in paying a larger down payment for a more permanent “forever home” over a starter home. .
The Suburban Migration Trend
One of the most significant housing trends influenced by rising living costs is the migration from urban centers to suburban or even rural areas. The pandemic accelerated this trend as remote and hybrid work schedules became more widespread, making it easier for people to live farther from their offices.
The U.S. Census Bureau also found that exurban (defined as “the far outer suburbs of metro areas, often have a mix of urban and rural character) communities are the fastest-growing places since the COVID-19 pandemic.
Similarly, the CMHC reported that, in Canada, suburban regions like Ontario’s Durham Region and the Greater Montreal Area have experienced substantial population growth. According to the CMHC 2025 Housing Market report, as remote work decreases, people are expected to prioritize proximity to their jobs, which should drive a recovery in sales within larger urban markets.
Similarly, experts predict that rental markets in major cities will experience some relief, with higher vacancy rates leading to slower rent growth.
By the end of 2024, the average asking rents for all residential property types in Canada had dropped 3.2% compared to the previous year, reaching a 17-month low of $2,109 in December.
This migration to the suburbs has significantly impacted housing prices outside urban cores, where the supply of homes tends to be abundant. In fact, the demand for homes in the suburbs and remote rural communities has pushed up prices in those regions, though they remain more affordable than their urban counterparts.
The Future of Housing in Canada and the U.S.
As cities evolve, it will be essential for governments, developers, and communities to find innovative solutions to ensure that housing remains accessible to all income levels. In the meantime, individuals will continue to navigate the complex and shifting landscape of urban housing, adapting to the rising living costs as best they can.
Are you looking to enter the real estate market this winter? Give us a call today! One of the experienced agents at Zoocasa will be more than happy to help you through the exciting home-buying process!
