Partly as a result of this, Canadians are deeply in debt. This is a key difference between the US and Canadian housing markets since the standard US homeowner gets a 30-year fixed-rate mortgage, protecting them from rate increases for decades. Rising mortgage rates are particularly painful in Canada because the standard home mortgage has to be refinanced after five years and fully paid back after 25 years. "It's similar, but worse" in Canada, said Mike Moffatt, a senior director at the Smart Prosperity Institute at the University of Ottawa.Īfter more than 20 years of low interest rates, which pushed housing prices up, Canada's central bank recently raised its benchmark interest rate to a 22-year high of 5% in an attempt to control inflation. The combination of a housing shortage, rising interest rates, and investor speculation have all contributed to a severe housing-affordability crisis in the US, as well. And record population growth from immigration has only added to demand. Investors pouring money into real-estate speculation haven't helped. Mosche Lander, a Concordia University economist, argued that city governments, which largely control housing policy, were "biased towards homeowners and not towards renters," supporting policies that limit homebuilding and keep home values elevated. The country simply isn't building enough housing. The drivers? Demand has raced ahead of supply. The country is also almost certainly heading toward a recession - if it's not already in one - and the housing market is partly to blame, economists say. The average home value in Canada has more than doubled since 2011. The housing affordability crisis in the US is bad - but America's neighbors to the north may have it worse. ![]() We believe that sales activity will continue to gradually cool in the year ahead, but it's going to take higher interest rates to soften the market in a meaningful way.Account icon An icon in the shape of a person's head and shoulders. "Home sales have backed off from extreme levels seen in recent months, but current activity is still historically strong and fostering outsized price growth. While people like Gilliss are staying on the sidelines, Kavcic at BMO says the market is still strong despite the recent slowdown, with sales in May still well above their average level of the last decade. According to the Niagara real estate board, the average home price in Niagara region is now $620,700, a figure that's up by more than a third from where it was before COVID. Prices are not exactly cooling in the area. But will we get to a calmer period where we can actually negotiate real prices and real conditions? That's what I'm hoping for." "Will it go back to pre-pandemic prices? Absolutely not. "I'm willing to dip my toes in, but I want to see how this plays out," she told CBC News. She's glad to see things cooling down a little, but she's still nervous about jumping in. Today, that home costs 70 per cent of what it would in Toronto, Bank of Montreal economist Robert Kavcic noted.ĭuration 0:45 Lindsay Gillis says an influx of buyers from Toronto have inflated house prices where she lives to the point that she can't afford to buy in. During the pandemic, mid-sized cities within an hour or two of major hubs such as Toronto were seeing some of the biggest price gains, as buyers from the city headed farther afield in search of more space for their home-buying dollars.īefore the pandemic, a benchmark home in Barrie, Ont., located about 100 kilometres north of Toronto, cost about 57 per cent of what a similar home would cost in downtown Toronto. ![]() The slowdown in some Ontario markets is noteworthy mostly because that province drove a lot of the gains on the way up. ![]() But "it is not likely to go much higher at this point," CREA says, partly because price increases are slowing down on a monthly basis, in Ontario especially. ![]() Analysis New stress test level makes it harder to qualify for a mortgage in Canadaīut even the HPI rose by more than 24 per cent in May compared to the same time last year, which is the highest increase on record.
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