If you think of Canada’s housing market like a roller coaster, we’re at the part where the cart turns over the top of the drop, and you can’t help but wonder: “Why did I get on this thing?”
What happened: Home sales in Toronto and Vancouver, the country’s largest housing markets, fell by ~50% last month compared to the year before, while average selling prices fell by 9% to ~$1,050,000 and 3% to $1,114,000, respectively, in the same time frame.
- And if you compare today’s prices with peak home values seen in March 2022, prices have fallen by 19% in Toronto and 10% in Vancouver.
Why it matters: This whole living in a major Canadian city thing is a mess as borrowers continue to struggle with rising interest rates, leading to lower prices for homeowners (and yet less affordability for those who aren’t) and a surge in demand in the rental market.
- The new demand for rentals is leading to double-digit rent increases, worsening existing affordability issues that stemmed from limited housing supply.
- A record number of condos are set to be completed in Toronto this year, but with the average ownership cost hitting $3,506 a month, most people can’t afford it.
What’s next: Record levels of immigration will support demand for home ownership (helping prop up prices for current homeowners) and rentals (further tightening the market), but slow movement by cities to approve new developments means that supply will likely remain tight.