Canada's most populous city faces some key challenges that, if not addressed, could reduce quality of life for over half the population by 2025, according to a new report by the Toronto Community Foundation.

The foundation released its Vital Signs report Tuesday, an annual check-up that measures the quality of life of Torontonians when it comes to issues ranging from affordable housing to crime.

This year's report, titled The World Needs Toronto To Succeed, tells a tale of two cities: On the one hand, the city is healthier, greener and has lower crime rate than ever before. But the report also says Toronto is plagued by gridlock, high youth unemployment and overpriced housing.

The authors highlight several concerning trends:

The gap between the rich and the poor is growing.

Skilled immigrants are twice as likely to be unemployed as those born in Canada.

Child poverty rates increased more than 40 per cent in one year.

"We've got very highly educated people coming here. They need to get into the workforce," said Rahul K. Bhardwaj, the foundation's president and CEO in an interview with CBC's Matt Galloway. "The double whammy there is that we're still a severely unaffordable housing market."

Bhardwaj put the two together saying too many skilled workers are unable to find work or an affordable home when they start to build their lives in the city — despite the need driven by our aging population and a declining birthrate.

Middle-income neighbourhoods could disappear

The report projects a disappearance of the city's middle income neighbourhoods by 2025.

"By that time, we're finding out that 60 per cent of Toronto will be made up of very low and low income neighbourhoods, and that's extremely troubling," said Bhardwaj.

Already there are one million people living in Toronto's low and very low income neighbourhoods, the report stated.

The widening gap between rich and poor is not only about unequal incomes but also unequal opportunities. The report notes that poverty is a barrier to academic success, employability and good health.

In the lead up to the provincial election, the report also says civic engagement could be higher among Torontonians, especially as urban issues fare worse when city-dwellers do not head to the polls.

'Transit deserts' a concern

The report also highlights the difficulties of low-income residents who live in "transit deserts." The report notes that the average commute in Toronto is about 30 minutes, but for people who use public transit the average is almost 50 minutes.

"Clearly they can't spend as much time with their families [and] …they can't come back and contribute into their own community," Bhardwaj said.

The report contained some good news as well: Toronto's crime rate continues to fall, and the city is well-educated, environmentally friendly and has a robust arts and culture scene.

Bhardwaj argues now is the time for Torontonians to stand up for their city, which is already globally competitive and capable of breaking new ground.

He added Toronto has good prospects of strengthening its appeal as a tourist destination and capitalizing on its strong financial indicators.

"We need a vision for our city that sees us through for the long-term, and the world needs us to succeed," said Bhardwaj.