Over Half of Canadians Expect Higher Mortgage Payments When They Renew, and the Markets with the Steepest Declines in Affordability

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. 

Mapping the Canadian Housing Market

Canada still has a few pockets of housing affordability, if you know where to look. According to WOWA’s latest housing market report, prices declined in almost every province other than British Columbia and Manitoba. The report also points out that nearly every province currently features a balanced market, though Saskatchewan is currently tilting in favour of sellers, while Ontario leans more towards buyers. Furthermore, after a promising surge in home prices and transaction volumes towards the end of last year and early January, tariff threats sent both over a cliff last month, creating more pockets of affordability country-wide.   

A Liberal Cage Match in Montreal

A Bank of Canada governor and a former Canadian Finance Minister spent the week sparring over the state of the economy. The two front-runners to replace Justin Trudeau as Liberal Party Leader exchanged polite Canadian-style jabs, with former Bank of Canada governor Mark Carney arguing the economy needed significant fixing, and recent finance minister Chrystia Freeland suggesting the country is in a “strong fiscal position.” Both, however, see housing and immigration as key, co-mingled priorities, with Freeland proposing to let the former dictate the latter, while Carney pledges a temporary cap on immigration while doubling the pace of housing construction. 

The Renewal Tsunami Makes Landfall  

The doomsday Canadian economists had warned about has come as more of a whimper.  According to CMHC, 1.2 million Canadian mortgages are up for renewal this year, the majority of which were purchased in the rock-bottom interest rate days of the pandemic. What was feared would become a tsunami of delinquencies, however, is proving to be more of a splash, as interest rates creep lower. According to a survey by Royal LePage, 57% anticipate higher payments, but only 22% expect a “significant” increase. Additional rate cuts in the face of tariff threats are expected to further reduce renewal price increases.

Five Steps Forward, Two Steps Back for Affordability 

After five months of improving housing affordability across Canada, the country has now seen two consecutive months of declines. According to the latest RateHub.ca report, buying conditions worsened in 12 of Canada’s 13 major markets in January, due to rising prices. The steepest affordability declines — measured by the amount of income required to pass the “stress test” — were in Hamilton, where borrowers needed $4,050 more to afford an average home, followed by Halifax and Edmonton, with about $3,000. The only region that saw affordability improve was Fredericton, where buyers could earn $450 less and qualify for the average home.

Turning the 6ix Upside-Down

The 6ix’s housing market is looking more like a nine as it transitions to the upside-down version of its recent self. Just a few years ago headlines highlighted an affordability crisis, a price bubble, vicious bidding wars and a supply shortage. These days, however, Toronto is seeing huge numbers of unsold homes sitting on the market, following a 26% spike in new listings over the last two months and a 7.9% drop in transactions last month. After a 20% drop in prices from their 2022 peak, 83% of GTA neighbourhoods are now seeing most homes sell for below asking prices.   

Share this article on social.