Canadian Rental Rates, and What Lower Interest Rates Mean for Mortgages

This week’s top real estate stories.

By  Jared Lindzon | 2 minute read

Every Friday, Wahi brings you the most important real estate stories from the past week.

That Which Goes Up…

Canadian rental rates have bounced so high that they appear to have hit the ceiling. According to a new report by Rentals.ca national average rents declined in October for the first time since the summer of 2021, with average monthly costs now sitting $50 below June’s record-breaking high of $2,202. The biggest cities — namely Toronto, Vancouver, Burnaby, and Oakville — saw the biggest declines, while smaller cities — like Saskatoon, Quebec City, and Regina — experienced the steepest hikes. The report suggests that years of increasing prices may finally be reversing as landlords discover just how much the market can bear.

Toronto Mid-rises are Coming to an “Avenue” Near You  

The city of downtown skyscrapers and detached home-filled neighbourhoods may soon plug a mid-rise-sized hole in its housing mix. Toronto mayor Olivia Chow recently proposed major changes to Toronto’s zoning policies that would allow mid-rise buildings on all “avenues” (busier streets) without the usual time-consuming rezoning process. The proposed changes specify that the wider the avenue, the taller the building, up to a maximum of 11 stories. The change is designed to increase housing density in the quickly growing city while taking some of the pressure off the City’s planning department, which has been bogged down by rezoning requests.

Lower Interest Rates Mean Less Expensive Mortgages, Right? Right!? 

A celebrated Canadian economist is causing us to question the nature of our reality. Speaking at Mortgage Professionals Canada’s national conference in late October, TD’s former chief economist Don Drummond suggested that lower interest rates wouldn’t necessarily lead to lower fixed-rate mortgage costs. Drummond explains that while the Bank of Canada is on a rate-cutting crusade, fixed rates are often more closely correlated with bond rates, which aren’t coming down as quickly. As a result, even if the overnight bank rate drops to 2.75% next summer, he suggests 5-year fixed rates may hover around their current 5% range.

Diagnosing our Housing Illness 

Do you suffer from chronic stress, existential dread, community decline, and the nagging feeling that home ownership has become out of reach? If so, you may be suffering from a housing crisis. According to a Habitat for Humanity survey 82% of Canadians are worried housing affordability is shrinking the middle class, 74% say it’s fracturing communities, and 41% say it’s causing significant stress. The study also found 59% worry they’ll need to sacrifice other necessities to afford housing, and younger Canadians say it’s causing them to delay starting a family. If these symptoms persist, 64% recommend lowering fees and taxes.

The One Championship Toronto is Likely to Win in 2025  

Despite skyrocketing costs, Toronto’s real estate prices won’t reach the even more outrageous price tags of global cities like Manhattan, though it could soon surpass Vancouver. Last week Royal LePage CEO and president Phil Soper told the Toronto Star that the city has been gaining on Vancouver for some time, and he expects The Six to take the unwanted crown from Vancouver at some point in 2025. Despite the doom and gloom, Soper suggests Toronto will maintain high ownership rates into the future, though some may get priced out of the city along the way.

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