Canada's two most expensive housing markets just got slightly less impossible to crack. Toronto and Vancouver both saw meaningful price drops in September, and those declines translated into real affordability gains for buyers.

In Toronto, the average home price fell by $9,400. That might not sound like much when you're talking about million-dollar properties, but it matters. The required annual income to buy dropped by $2,130, and the average monthly mortgage payment came down by $58 to $4,917.

Vancouver saw similar movement. Prices dropped $8,300, and the required income fell by $2,000.

These aren't market-shaking changes. Nobody's calling this a collapse. But for buyers who've been sitting on the sidelines watching prices climb for years, any movement in the right direction feels significant.

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11 Out of 13 Cities Saw Affordability Improve

Toronto and Vancouver led the way, but they weren't alone. Ratehub.ca's monthly affordability report showed that 11 out of 13 major Canadian cities saw improved affordability compared to August.

Calgary, Regina, and Victoria all required roughly $900 to $1,100 less income than the month before. Again, not huge numbers, but enough to make a difference for someone sitting right on the edge of qualifying for a mortgage.

The report tracks changes in home prices, mortgage rates, and stress-test levels to calculate the minimum income needed to buy an average-priced home. It's a useful snapshot of what it actually takes to get into the market.

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Falling Prices Did the Heavy Lifting

Mortgage rates didn't move much in September. The average five-year fixed rate edged down to 4.47% from 4.49%. The qualifying stress-test rate eased to 6.47% from 6.49%. Those are barely noticeable shifts.

Because borrowing costs stayed essentially flat, the decline in home prices was the primary driver behind improved affordability. Sellers came down. Buyers got a bit more breathing room.

That's a change from earlier in the year when rate cuts were doing most of the work. Now it's prices adjusting to reality.

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Not Every City Improved

Montreal and Halifax went the other way. Modest price increases in both cities pushed the income needed to buy a home higher. Montreal saw an increase of $1,040. Halifax was up $210.

It's a reminder that the Canadian housing market isn't one thing. Different cities are moving in different directions based on local supply, demand, and economic conditions. What's happening in Toronto doesn't necessarily predict what happens in Halifax.

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National Sales Activity Tells a Mixed Story

National home sales fell 1.7% from August but remained 5.2% higher than a year earlier, making September the busiest month since 2021.

The national average sale price rose 0.7% year over year to $676,154. Meanwhile, the MLS Home Price Index slipped 0.1% month over month. Those numbers are moving in opposite directions, which tells you the market is still trying to figure itself out.

Some areas are heating up. Others are cooling. Buyers and sellers are both testing the waters, trying to find where prices actually settle.

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Variable Rates Hit the Lowest Level Since Mid-2022

Here's where things get interesting for buyers who can handle some risk. The lowest five-year variable mortgage rate narrowed to 3.70%, the lowest it's been since mid-2022. The best five-year fixed rate stood at 3.79%.

On a home priced at $676,154, the variable rate would save you about $84 per month or $1,008 per year compared to higher fixed rates. The fixed-rate savings were estimated at $233 per month or $2,796 per year compared to rates earlier in the year.

Those savings add up. For someone stretching to afford a home, an extra $200 or $300 a month in their pocket can make the difference between comfortable and stressed.

Variable rates come with risk, though. If rates climb again, so does your payment. Fixed rates lock you in, which means stability but potentially less savings if rates keep dropping.

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What $58 a Month Actually Means

Let's talk about that $58 monthly savings in Toronto. It's easy to dismiss as insignificant. Fifty-eight bucks doesn't change your life.

But when you're already paying $4,917 a month on your mortgage, every bit counts. That's $696 a year. It's not vacation money, but it's groceries. It's a car payment. It's breathing room in a budget that's already tight.

And more importantly, it's a signal. Prices are moving in the right direction, even if it's slow. For buyers who've been priced out for years, seeing any downward movement feels like progress.

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The Income Threshold Matters More Than You Think

The $2,130 drop in required income for Toronto buyers is actually the bigger deal. When you're trying to qualify for a mortgage, every dollar of income counts. Lenders run the numbers based on your gross annual income, and if you're even slightly below the threshold, you don't qualify.

A $2,130 reduction means people who were just barely shut out last month can now get approved. That's real. That changes someone's life.

Same goes for Vancouver's $2,000 drop. It's not going to suddenly make housing affordable for everyone, but it opens the door for buyers who were right on the edge.

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This Isn't a Trend Yet

One month of data doesn't make a trend. September showed improvement in most markets, but that doesn't mean October will follow the same pattern. Prices could bounce back. Rates could shift. Sales activity could change everything.

What we're seeing right now is a market in transition. Sellers are adjusting expectations. Buyers are cautiously optimistic. Rates are lower than they've been in a while, but still high enough to keep some people on the sidelines.

The big question is whether this continues. If prices keep drifting lower and rates stay favorable, affordability could actually improve in a meaningful way. But if prices stabilize or tick back up, we're right back where we started.

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The Reality for Most Buyers

Even with these improvements, Toronto and Vancouver remain expensive. A $9,400 price drop doesn't make either city affordable. It just makes them slightly less unaffordable.

The average monthly mortgage payment in Toronto is still $4,917. That's nearly $60,000 a year just on your mortgage. Add in property taxes, insurance, utilities, and maintenance, and you're looking at housing costs that eat up a massive chunk of most people's income.

Vancouver's numbers are similar. A $8,300 price drop helps, but it doesn't solve the fundamental affordability crisis. These markets are still out of reach for most first-time buyers without help from family or years of aggressive saving.

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What This Means Going Forward

The September data suggests the market is softening, at least in most cities. That's good news for buyers who've been waiting for an opening.

But softening doesn't mean crashing. Prices are coming down modestly, not collapsing. And in some markets, they're still going up. The Canadian housing market is too diverse and too complex to predict with any certainty.

What we can say is this: if you've been sitting on the sidelines waiting for affordability to improve, September gave you a small window. Rates are lower, prices are down in most markets, and the income thresholds are easier to hit.

Whether that window stays open depends on what happens next. And right now, nobody knows for sure.