Many Canadians believe that moving to a large dynamic city for a higher-paying job inevitably means accepting a substantially higher cost of living, especially when it comes to housing.

But is that true?

As noted in a new study by the Fraser Institute, most growing North American metropolises have seen housing affordability improve, alongside population and economic growth—just not in Canada.

Our study, which compared changes in affordability (shelter costs as a share of income) with changes in population across 396 Canadian and U.S. metropolitan areas between 2006 and 2016 (the latest decade of comparable data), found that most U.S. locations experienced positive population growth along with a declining share of (median) income dedicated to housing costs (e.g. rents, mortgages, taxes). In other words, the majority of U.S. cities simultaneously enjoyed population and income growth and increasing housing affordability.

For example, large metropolitan areas surrounding Atlanta, Dallas and Houston all grew quickly (Dallas and Houston each added more than one million inhabitants) between 2006 and 2016, accompanied by rising median incomes. Despite this growth, housing affordability improved in all three places with housing costs falling relative to income by between 13 per cent and 16 per cent.

This same pattern was true for cities across a range of sizes and locations in the U.S. Conversely, most Canadian locations, including the largest cities, saw affordability decline. Which raises the obvious question. Why are so many booming American metropolises—such as Charlotte, Tampa and Columbus—able to avoid the affordability crunch seen in big Canadian cities such as Montreal, Toronto and Vancouver?

Simply put, while median incomes increased at broadly comparable rates in Canadian and U.S. cities, housing costs in most Canadian cities increased at far faster rates (up to four times in some cases). Moreover, in most U.S. metropolitan areas, housing costs remained flat or rose at a slower pace than incomes, while housing costs in most Canadian cities grew faster (more than 50 per cent faster, in some cases) than incomes.

These findings have important implications for public policy, particularly now during the COVID recovery. Many federal and provincial housing policies provide financial incentives (including down payment assistance and tax exemptions) to homebuyers. Meanwhile, hundreds of American cities have improved affordability by containing the growth of housing costs, largely by helping increase the housing supply. The laws of supply and demand apply to housing, like any other good.

If Canadian policymakers want to mirror that success and improve affordability, they should look at how places as diverse as Minneapolis, Raleigh and Salt Lake City managed to hold down the growth of housing prices while welcoming hundreds of thousands—if not millions—of new residents over a decade.

Yes, currently there seems to be a trade-off between better job opportunities and housing affordability in Canada’s largest cities. But fast-growing cities south of the border prove that this trade-off is not inevitable. The sooner Canada’s governments, at all levels, learn from these success stories, the sooner that choice—between economic opportunity and housing affordability—will no longer apply to Canadian workers and their families.