Why Canada's housing market remained in a deep chill in January

Home prices are sliding across many parts of Canada, but that trend still wasn’t enough to stoke the national housing market into life at the beginning of this year.

Sales slipped by 5.8% last month compared with December, the Canadian Real Estate Association (CREA) said on Wednesday, as the MLS Home Price Index (HPI) posted a 4.9% year-over-year decline.

That marked a gloomy start to 2026 for sellers hoping to get top dollar for their listings, but better news for would-be homebuyers on the margins of the market.

Still, plenty of those potential buyers aren’t biting, sitting on the sidelines despite momentum finally swinging away from sellers in recent months.

CREA said overall homebuying activity was curtailed by punishing weather conditions, especially in Ontario.

With the Greater Golden Horseshoe and Southwestern Ontario leading the national slump, the story was “probably more about a historic winter storm than a downshift in demand,” according to the association’s senior economist Shaun Cathcart.

Anne-Elise Cugliari Allegritti, vice president, research and communications at real estate giant Royal LePage, told Canadian Mortgage Professional buyers and sellers may have had drastically different priorities at the beginning of the year, partly due to the unusually severe winter in parts of the country.

That makes it difficult, she said, to gauge whether the sluggish start to the year was a one-off or a sign of further cooldowns ahead.

“Where is a seller sitting in January?” she said. “For a seller that maybe took their home off the market before Christmas because they thought ‘I’ll take a break over the holidays,’ the New Year is a new opportunity to get back into it. They want to move on with their selling plans, probably so they can move on with their buying plans.

“And they’re sort of in this position: ‘I’m ready to go.’ A buyer, on the other hand, sees four, six, 10 inches of snow on the ground and might say, ‘I can wait until next month to start shopping again.’”

Other factors hindering the housing market

But while extreme weather likely had a part in the slower pace of January activity, other longer-lasting trends are also at play – including the fact that prices in many markets, despite their recent decline, are still far too high for the average first-time buyer.

And even those who can finally afford a home might be hesitant to take the plunge either because they think prices will fall further, or due to concern about the direction of the economy.

“Every buyer wants to know that they’ve paid the lowest possible price that they can, just as a seller hopes that they’re getting the most that they possibly can for their home,” Cugliari Allegritti said.

“But I think what’s holding people back right now, besides this relentless winter that we’re experiencing, is still a bit of unease, a lot of uncertainty about our economic future.”

No sign of a rush to the market as prices continue to cool

Another bleak month for Canadian home sales also looks likely to cement the notion that prices aren’t set to climb anytime soon, another factor that could convince buyers it’s better to wait in hope of lower prices down the line.

“I don’t think there’s a real urgency or fear that prices are going to go up,” Cugliari Allegritti said. “So for buyers that are looking around, if they’re not desperate to move or in a situation where they have to start a new job by X date and they have to be in a new home, whether they buy this month or two months from now isn’t going to make a massive difference.”

Buyers, especially those purchasing for the first time, have had a hard time keeping up with rampant price appreciation in Canada’s housing market over the past decade, especially during the COVID-19 pandemic when frantic bidding wars sent prices skyrocketing.

Now, even if the numbers show those buyers aren’t flooding the market, an improving affordability outlook for non-homeowners is a positive development, Cugliari Allegritti said.

“I think what’s positive that we can take away from this is that affordability and opportunity are continuing to improve,” she said. “And that’s certainly going to be welcome news for younger Canadians and for first-time buyers.”

CMP

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No letup in Canada's housing market gloom as January sales slide

Canada’s housing market opened 2026 on the back foot, as national home sales dropped sharply in January and new listings climbed, widening the gap between buyers and sellers just as a historic winter storm swept southern Ontario.

The Canadian Real Estate Association (CREA) reported that home sales fell 5.8% month over month on a seasonally adjusted basis and 16.2% compared with a year earlier.

New listings rose 7.3%, pulling the national sales‑to‑new‑listings ratio down to 45% from 51.3% in December and nudging months of inventory up to 4.9 – just shy of the five‑month level CREA uses as a marker of balance.

Storm-hit Ontario dragged a fragile national market

CREA senior economist Shaun Cathcart said the pullback was concentrated in central and southwestern Ontario, directly along the path of a major storm in the third week of January.

“The monthly decline in national home sales was driven primarily by less activity in the Greater Golden Horseshoe and Southwestern Ontario, suggesting that the story was probably more about a historic winter storm than a downshift in demand,” Cathcart said.

“Notwithstanding the chilly start to the year, we continue to expect 2026 will ultimately be defined by pent-up demand from first-time buyers finally seeing a chance to enter the market.”

While Ontario led the downturn, markets such as Calgary and Regina posted January sales gains, underscoring how regional performance remained uneven.

Prices eased, but balance held

Price declines stayed modest relative to the drop in activity. The national MLS Home Price Index slipped 0.9% month over month and 4.9% year over year, while the average sale price fell 2.6% from a year earlier to $652,941, with weakness concentrated in Ontario, British Columbia and Alberta.

CREA said there were 140,680 properties listed on Canadian MLS systems at the end of January, up 4.5% annually yet still about 11.4% below the long‑term average for that time of year, keeping months of inventory near the five‑month “balanced” benchmark.

Rates, affordability and what comes next

Cathcart stressed that CREA does not see enough evidence in the January figures to revise its 2026 outlook. “Unless we get another two‑foot snowstorm in the most populated part of Canada, our forecast is for things to improve,” he said.

CREA itself forecast a 5.1% rise in national home sales in 2026, to about 494,500 transactions, after a near‑2% decline the previous year, while acknowledging that tariff‑driven uncertainty has knocked buyers to the sidelines in 2025. 

Still, he indicated that stretched borrowers, especially first‑time buyers, remain cautious.

The Bank of Canada held its policy rate at 2.25% on January 28, keeping borrowing costs well below their 2023 peak but high enough to restrain some would‑be purchasers.

CMP

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Why the Big Six aren’t taking a major hit as the condo crisis continues

The impact of Canada’s condo market downturn on scores of homebuyers and investors is, by this stage, well-known: plummeting property values, appraisal crises, cashflow nightmares and sometimes legal woes.

Those trends are showing no sign of fading – but even with few experts expecting a quick end to the condo market’s slide, especially in Toronto, they still don’t appear likely to plunge Canada’s major lenders into turmoil.

That’s because while the market’s crash has grabbed headlines over the past two years and caused sharp pain for many buyers, the condo sector represents just a tiny slice of the Big Six’s overall loan portfolio, a new report by DBRS Morningstar has highlighted.

Condo developer loans accounted for less than 1% of at least five of the country’s main six lenders’ total portfolios in the fourth quarter, the credit ratings agency said, with Royal Bank of Canada’s (RBC) exposure undisclosed.

And even specifically within the lenders’ commercial real estate portfolios, condo developer exposure is highly limited: it accounts for 4% of the Bank of Montreal’s (BMO) CRE portfolio, for instance, and 6% at Scotiabank. TD’s sits at just 3%, while at National Bank of Canada (NBC) it’s somewhere lower than 2.7%.

That means the current downturn almost certainly won’t trigger a meltdown among Canada’s banking giants, even if the crisis still has some way to run.

“It’s hard to overstate just how big and diversified those banks really are,” Josh Veenkamp, assistant vice president, North American financial institution ratings at Morningstar, told Canadian Mortgage Professional.

Still, that’s not to say lenders across the board will emerge unscathed. Morningstar’s report noted the potential for steeper losses among lenders which, unlike the major banks, have more exposure to condo developers – and specifically, smaller ones.

The banking giants tend to focus on “larger, higher-quality developers” in their condo sector lending. But while it’s unclear how much other lenders have pumped into condo developers, Morningstar sees a good chance of higher exposure among some companies.

“We believe there are likely some private non-bank lenders with high concentration in the space,” its report said, “but note that the Canadian financial institutions within our rated universe are generally well diversified and do not have outsized exposure to condo land development and construction.”

In contrast with larger firms, smaller developers face potentially greater risk from the condo crisis because they usually have less liquidity and greater reliance on external funding, making it more difficult to absorb the shock of a regressing market.

Resale market gathers ground even amid new-condo slump

Some good news amid the doom and gloom for Toronto’s condo sector: the resale market has seemingly stabilized even if the new-condo market continues to tank, with price discounts helping spur an uptick in activity.

That’s a plus for homeowners struggling to pay their current mortgage who may be considering selling their property – and Morningstar also highlighted a truth about condo prices that’s surprising considering how much attention the downturn has commanded in recent years.

Specifically, that’s the fact that Canada-wide, condo prices have actually fallen by less since their 2022 highs than the composite of all housing types – perhaps the most surprising finding from the report, according to Veenkamp.

“It’s not a huge surprise – but the condo prices actually came down slightly less than the broader composite came down,” he said. “So that is interesting, and different than what you would probably see more generally.”

Don’t expect a bounceback

But Morningstar still sees project cancellations and lower construction activity continuing in the near term, and smaller developers and lenders feeling further strain, with an uncertain timeline for the market’s recovery.

And plenty of buyers are still sitting on the sidelines, deterred by economic uncertainty and affordability issues, according to Rates.ca mortgage and real estate expert Victor Tran.

He said other costs like condo fees and insurance are also denting people’s ability to afford a home, even if prices have recently dropped in Toronto.

“Once we add all of those things together, even if the purchase price is a little bit less now, it’s still really challenging for a lot of people,” Tran told CMP.

CMP

We hope you are finding our Blog informative and enjoyable to read while keeping you up to date with the ever changing real estate market. 

Please feel free to contact me via Direct/Text or e-mail at any time and my team will be pleased to assist you, family members and friends with all your real estate needs. Referrals are always welcome and rewarded!

Regulatory red tape drives up Canadian home prices, CMHC study finds

Canada’s housing affordability problem has long been blamed on interest rates, immigration and construction costs. A new Canada Mortgage and Housing Corporation (CMHC) study put harder numbers to those concerns, linking stricter municipal land‑use rules to both slower supply growth and higher prices across the country.

Drawing on responses from more than 400 municipalities, CMHC built a Municipal Land Use and Regulation Index as a proxy for how supportive and efficient local approval regimes are, including fees, timelines and planning requirements.

“When a city’s housing regulations become 10% more restrictive, house prices go up by about 14%, even after accounting for population, density, growth and other factors. The finding is statistically significant,” the report said.

To illustrate that gap, “cities in Ontario are, on average, 15% more restrictive than those in Alberta.”

Price pressures showed up clearly across regions. Among large markets, “Toronto, Vancouver and Victoria have higher average regulation scores. These markets also tend to have the most unaffordable housing in Canada.”

In the study’s table, Vancouver’s overall regulation score of 106 sat alongside a house‑price‑to‑income ratio of 14.18; Toronto’s score of 100 was paired with a ratio of 9.67, while Victoria’s score of 110 was linked to 10.04. By contrast, Québec City posted a regulation score of 75 and a ratio of 3.97.

Approval dynamics also mattered. “Canada’s most unaffordable markets see the strongest demand for rezoning, but tend to approve these at the lowest rates,” CMHC said.

Vancouver and Toronto both recorded rezoning approval rates of just 47%, despite their steepest price‑to‑income ratios. Provinces with higher approval rates, such as New Brunswick at 91% and Saskatchewan at 90%, showed materially lower ratios.

Longer planning timelines remained a recurring drag. “Approval times were found to rise with the size of a city, with other forms of regulation, and with more community opposition,” the report said.

CMHC warned that “a one log point rise in the regulation score is linked to a 1.6 percentage point drop in the annual growth of the housing stock,” a hit that compounds over time.

The data offered a baseline rather than a verdict. The survey used 2022 as its reference year, before many cities rolled out Housing Accelerator Fund‑linked reforms such as as‑of‑right upzoning and e‑permitting.

CMHC said these moves were “a positive step toward better land use policy,” but stressed that “cities will have to continuously look at their regulations, policies, and approval processes to ensure they support the housing outcomes they want to achieve.”

The new research landed as Ottawa continues to lean on cities to loosen local rules. Under the $4 billion Housing Accelerator Fund, applications that did not show flexibility on zoning rules faced an uphill battle, federal housing minister Sean Fraser previously said, urging municipalities to be more ambitious than their neighbours if they wanted funding.

The program’s second round, launched in 2024, required large cities to adopt four‑units‑as‑of‑right bylaws as part of their action plans – a direct attempt to chip away at exclusionary zoning and enable gentle density in established neighbourhoods.

Yet local politics remained fraught. Private lender executive Kevin Fettig argued that restrictive zoning often reflected homeowners’ desire to mitigate the risk of a decline in property value, complicating federal efforts to add supply.

CMP

We hope you are finding our Blog informative and enjoyable to read while keeping you up to date with the ever changing real estate market. 

Please feel free to contact me via Direct/Text or e-mail at any time and my team will be pleased to assist you, family members and friends with all your real estate needs. Referrals are always welcome and rewarded!

Here's how homeowners are coping with mortgage renewals in a choppy economy

Toronto’s sharp rise in mortgage delinquencies turned renewal time into a stress test for many homeowners – especially those who bought at peak prices during the pandemic, according to mortgage broker Victor Tran of Rates.ca.

The number of borrowers in arrears in the Greater Toronto Area more than quadrupled from 2022 to late 2025, Canada Mortgage and Housing Corporation (CMHC) data showed, even as the overall delinquency rate remained low by historical standards.

Nationally, arrears also edged up but still sat around a quarter of one percent of mortgages.

Arrears rose – but most borrowers still paid

“At first glance, the increase sounds alarming, but the overall delinquency rate remains low,” Tran said.

“It reflects the strain higher rates are putting on monthly payments at renewal, especially for homeowners who bought during the pandemic, rather than widespread foreclosure risk.”

CMHC modelling suggests arrears would continue rising moderately through late 2026, with Toronto leading delinquency growth as high household debt, softer prices and a weaker labour market squeeze borrowers.

Federal watchdog Office of the Superintendent of Financial Institutions (OSFI) likewise warned of “mortgage payment shocks” as more than one‑third of Canadian mortgages come up for renewal by the end of 2026, even after rate cuts.

Tran stressed that lenders generally prefer to avoid taking properties back. “Lenders typically want to avoid foreclosure,” he said. “It’s costly and time‑consuming, which means lenders are often motivated to work with homeowners to find solutions that keep them in their homes.”

He pointed to extending amortizations, refinancing to roll in higher‑interest debt, or restructuring terms to improve monthly cash flow as options borrowers explore when payments become tight.

Options narrowed for borrowers who waited

Still, renewal has not guaranteed flexibility. Homeowners who no longer meet qualification rules often have to stay with their existing lender, Tran noted, limiting their ability to shop the market or access equity even with a perfect payment history – a constraint regulators and consumer‑credit agencies also highlighted as renewals reset at higher rates.

“Missed payments usually don’t happen all at once,” Tran said. “As renewals roll through at higher rates, pressure builds month by month, especially for homeowners with tighter budgets, and many don’t realize how quickly options can narrow if they wait until close to renewal to revisit how their mortgage is structured.”

For Toronto borrowers heading into renewal, Tran’s message is that early engagement matters: understand how arrears are treated, assess income and debt before signing a new term, and approach the lender – or a broker – while there is still time to adjust the mortgage rather than after a missed payment forces the issue.

CMP

We hope you are finding our Blog informative and enjoyable to read while keeping you up to date with the ever changing real estate market. 

Please feel free to contact me via Direct/Text or e-mail at any time and my team will be pleased to assist you, family members and friends with all your real estate needs. Referrals are always welcome and rewarded!