Canada's housing market isn't following a single story anymore. It's a dozen different stories playing out at once, depending on where you're standing.

Back in early 2022, we watched home prices hit absurd levels. The typical Canadian home reached $837,400 in February that year, which was a 58 percent jump in just three years. That kind of growth couldn't last. And it didn't.

The Bank of Canada stepped in hard, raising interest rates to cool inflation. Prices dropped. In some markets, they dropped a lot. But here's where it gets complicated: not everywhere saw the same correction.

‍

The Tale of Two (or Ten) Markets

If you're selling a home in Calgary, Saskatoon, or Moncton, you've actually seen prices climb since early 2022. Double-digit gains in some cases. Meanwhile, parts of Ontario and British Columbia got hammered.

Greater Vancouver saw prices fall nearly 20 percent in real terms since February 2022. Greater Toronto? Down 34 percent. Hamilton took an even harder hit at almost 40 percent when you account for inflation.

Those are serious corrections. And while sales activity is picking back up across Ontario, a full recovery looks uncertain. The province's unemployment rate sits at 7.9 percent, higher than the national average. Trade war concerns aren't helping either.

The Prairies and Atlantic Canada tell a different story. Sales are robust. Prices are grinding higher. The Bank of Canada has cut interest rates eight times since mid-2024, and that's bringing buyers back. Home sales rose for five consecutive months through August.

But calling this a national recovery would be misleading.

‍

Still Out of Reach for Most

Sure, affordability has improved. Prices dropped in many markets. Wages went up. Interest rates are coming down. All good things, right?

Not enough. Not nearly enough in some places.

In Toronto and Vancouver, economists at National Bank estimate affordability has only returned to late 2021 or early 2022 levels. You know, right before everything got even more expensive. Mortgage payments still eat up a massive chunk of median household income.

Robert Hogue, assistant chief economist at Royal Bank of Canada, doesn't see major improvements ahead either. "The speed of improvement is likely to slow," he noted. Earlier interest rate cuts are already fading in their effect. Income growth is slowing down too.

For many Canadians, home ownership remains more dream than reality.

‍

The Rental Market Is Finally Catching Its Breath

Here's one area where things are actually getting better: rentals.

Remember when finding an affordable apartment felt impossible? When landlords could name their price and still have lineups? That's changing.

The federal government slammed the brakes on population growth after years of record immigration and international student inflows. The shift happened fast. In the second quarter of this year, population growth fell to the lowest rate for that quarter since 1946 (excluding the first pandemic year).

At the same time, a wave of new rental apartments hit the market. Suddenly, landlords faced something unfamiliar: competition. In many cities, they've started lowering rents to fill units.

Average asking rents for one-bedroom units peaked in late 2023 or 2024 in most major markets, according to Statistics Canada. Halifax, Kitchener-Waterloo, Toronto, Calgary, Vancouver, and Kelowna have all seen declines.

BMO senior economist Robert Kavcic points out that with plenty of rental supply still under construction and demand cooling, rents could keep falling. "The bearish move in rents is still in its early days," he wrote.

That's genuinely good news for renters who've been squeezed for years.

‍

Investors Have Left the Building

Preconstruction condo sales have collapsed. Toronto, Vancouver, Calgary. All of them.

In the Greater Toronto and Hamilton area, there were just 502 new condo sales in the second quarter. That's down 68 percent from a year earlier and the lowest level in more than thirty years. Calgary saw a 50 percent drop. Vancouver? Down 62 percent.

Why the exodus? The math stopped working.

Monthly rents typically don't cover mortgage payments and expenses on new units anymore. You can't count on steady appreciation. And if you're planning to actually live there, resale condos or single-family homes offer more space for less money.

Raymond Wong from Altus Group puts it plainly: "To live in a condo designed for investors is challenging based on the layout."

This isn't just about investor disappointment. It's a problem for future housing supply. Developers rely on presale numbers to finance projects. Without those sales, projects get shelved. The pipeline for new housing in major cities looks increasingly barren.

‍

Construction Isn't Keeping Up

Housing starts look okay on the surface. Second quarter numbers hit about 277,000 annualized, the best since late 2022. Purpose-built rentals are picking up even as condos fall off.

But those projects were planned and financed years ago. Looking forward, the picture darkens. Canada Mortgage and Housing Corp. forecasts roughly 220,000 starts for 2027, down about 50,000 units from 2021.

The federal government wants to double home construction. They launched Build Canada Homes with $13 billion in initial funding. Noble goal. But it might take a heroic effort just to stop construction from falling further.

‍

The Development Fee Problem

Cities got addicted to development charges. For years, they hiked the fees developers pay for new projects to fund infrastructure and services. In Toronto, high-rise projects faced fees of $135,000 per unit.

Those costs get passed to buyers, making homes even less affordable. Now governments are targeting these fees. The federal Build Canada Homes program promises to cut development charges in half for multiunit housing. Details remain scarce on how they'll do that without gutting municipal budgets.

‍

Mortgage Stress Is Real

Economists warned for years that Canadians who locked in pandemic-era mortgage rates would face pain at renewal time. We're seeing that pain now.

The number of mortgages past due by 90 days or more is climbing. It's still a small percentage, but the trend is clear. Ontario has seen particularly steep increases. Toronto's delinquency rate hit the highest level since 2013.

Falling mortgage rates will help people renewing soon. But the damage isn't over. TD senior economist Andrew Hencic notes more rate resets are coming, which will drain household spending power. The silver lining? Stress tests appear to have worked as intended, preventing a wave of defaults.

‍

Housing's Outsized Role in Our Economy

For better or worse, real estate drives a huge chunk of Canada's economy. At the 2021 peak, residential investment hit nearly 10 percent of GDP, roughly double the U.S. rate. It's since dropped to under 8 percent, still historically high.

You can look at this two ways. On one hand, we desperately need housing investment to solve supply problems. On the other hand, maybe we're too obsessed with real estate while other economic sectors struggle.

During the pandemic peak, real estate commissions and land transfer taxes alone accounted for 2.6 percent of GDP, versus less than 1 percent in previous decades. That's not exactly a sign of a diverse, dynamic economy.

‍

What This Means for You

If you're thinking about buying or selling, location matters more than ever. The "Canadian housing market" doesn't really exist as a single entity anymore.

Prairie and Atlantic markets show strength. Ontario and British Columbia remain uncertain, with affordability still a major barrier despite corrections. The rental market is finally easing after years of stress.

For buyers who've been waiting on the sidelines, conditions are improving slowly. But slowly is the key word. Don't expect a sudden return to easy money or bargain prices.

For sellers in slower markets, patience will be necessary. The days of automatic bidding wars and instant appreciation are behind us, at least for now.

And for everyone watching from outside the market, Canada's housing crisis isn't going away anytime soon. Lower rents help. Modest price corrections help. But the fundamental gap between what homes cost and what people can afford? That's still the defining challenge.

The market is messy. It's complicated. And it's going to stay that way for a while.