Affordability worsens in all 13 major Canadian housing markets in May

Prospective home buyers across Canada saw their purchasing power erode in May 2026, as mortgage affordability slid in every one of the 13 major cities tracked by Ratehub.ca.

The monthly study, which measures the annual income a borrower needs to qualify for a mortgage on an average-priced home, found that modestly higher fixed rates and rising home prices combined to push qualifying thresholds higher from coast to coast.

"Our latest home affordability analysis found that home affordability worsened in all of the cities we studied," said Penelope Graham, mortgage expert at Ratehub.ca in Toronto.

Rates and prices tighten in tandem

Two forces converged against buyers last month. The average five-year fixed rate across Canada's big five banks edged up to 4.49% in May, from 4.47% in April, a modest move, but enough to lift the mortgage stress test rate to 6.49%.

Demand was also firming up. According to the Canadian Real Estate Association (CREA), national home sales rose 5.5% month-over-month in May 2026, and the national average home price climbed to $702,079, its highest level in two years and the first time it has crossed the $700,000 mark in 23 months.

"Both mortgage rate and home price changes impacted home affordability this month," Graham said.

"Home prices were up in the majority of the cities and the average of the Big Five Banks' five-year fixed rates increased slightly, but enough to have an impact on the income required to buy a home."

Canada's already-strained affordability picture has proved difficult to improve, with structural gaps in supply compounding the challenge. The deeper forces driving Canada's persistent housing unaffordability crisis, including the cost-of-delivery pressures flagged by economists, suggest rate changes alone are unlikely to provide lasting relief.

A market of uneven pressures

The impact was not uniform. St. John's, Newfoundland saw the steepest deterioration: buyers there now need $2,800 more in annual income to qualify for the average home. That translates to $75 more per month, or $900 more per year, compared with April. 

Hamilton, Ontario followed, requiring $1,480 more in annual income as the average home price rose to $744,000.

Ottawa buyers need $1,260 more, with average prices reaching $635,300.

In Canada's two most expensive markets, the qualifying bar also moved higher. Vancouver buyers need an annual income of $225,200, up $900 from April, to afford an average home now priced at $1,100,700.

Toronto borrowers face a required income of $195,720, up $780, on an average price of $946,500.

Calgary and Halifax saw more modest increases of $660 and $540 respectively, while Prairie markets Edmonton and Winnipeg registered the smallest gains outside Québec, at $240 and $170.

Montréal, notably, was the only city where average home prices actually declined month-over-month, dropping $1,000 to $593,400, yet qualifying income still crept up by $10 due to the rate change, adding just $1 to the monthly payment.

For brokers working in Ontario and British Columbia, the national figure can obscure very different local conditions. In a recent interview with Canadian Mortgage Professional, Sal Guatieri, senior economist and director at Bank of Montreal (BMO) Capital Markets, said Ontario had not yet turned a corner.

"We're getting closer to more reasonable affordability in the Ontario housing market," Guatieri said. "We're not quite there yet."

For buyers who have been waiting, the data points to a narrowing window. Graham's advice is direct: "As conditions are anticipated to pick up in markets across Canada, it's important to have an idea of how differing price points and borrowing costs may impact your buying budget."

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!

Are young Torontonians abandoning the dream of homeownership?

Prices may be on the wane in Toronto’s condo market, but affordability challenges in the sector mean a property purchase is still out of reach for many renters in the city – and that’s leading some to re-evaluate their immediate housing priorities.

Even with average values having declined over the past couple of years amid a deep freeze in the Toronto condo market, added fees and the hefty monthly cost of owning a condo are leading some renters to question whether they even want to buy a small apartment imminently, according to Toronto-based Rates.ca mortgage and housing expert Victor Tran (pictured top).

“I think a lot of people are just looking for financial freedom and flexibility generally, and they’re OK to rent,” he told Canadian Mortgage Professional. “It’s not the end of the world.”

For the first time in at least 30 years, no new projects launched during the first quarter of 2026, according to Urbanation, with a record-high 4,295 new condos completed and unsold by the end of Q1.

That was more than double the level from a year ago and nearly five times higher than in the same period in 2024. Average condo prices, meanwhile, have continued to slide even with activity in the sector picking back up slightly in recent months.

And Tran said there’s no sign yet that many potential first-time homebuyers are ready to take the plunge into the market. “There was definitely an increase in sales. Inventory is piling up a little bit, but it’s more or less the same as what happened in the last spring market,” he said. “But I’m not optimistic that things will improve.”

‘Not much interest’ in condos among younger cohort

Younger demographics have historically been the main audience for entry-level condos, with that cohort once viewing condo ownership as a first step on the property ladder before gravitating into a larger, detached or semi-detached home.

Tran said many are now concluding that renting and investing elsewhere makes more financial sense, especially with no guarantee that buying a Toronto condo – once a lucrative short-term investment – will ultimately prove financially beneficial.

“The demographic that are looking at condos is usually younger and there’s not much interest there at the moment,” he said. “I feel like there’s been a shift in values, and not as much value put into homeownership.”

The pattern Tran described might feel like a familiar one to many younger Canadians: crunching the numbers, factoring in maintenance fees, property taxes, utilities, and mortgage payments, and finally deciding that the math doesn’t work.

What’s more, rents have declined in recent months, meaning many renters are feeling their pressure to buy easing and instead redirecting the funds for a potential downpayment into the stock market or other investments.

“If they invest their downpayment into the market instead, their rate of return is still decent, and it’s more liquid,” Tran said. “If you need the money, you can just sell your ETFs or mutual funds or whatever it is and get the money within 24 hours, as opposed to housing – it’s all locked in. It’s very expensive to transact in real estate.”

The trend of younger Canadians turning their back on homeownership has also gathered pace because of the eyewatering runup in national home prices over the past decade.

In 2023 – shortly after the COVID-19 pandemic spurred a big spike in average prices – an Ipsos/Global News poll showed 63% of Canadians who don’t own a home say they have given up on ever owning one, with 69% of Canadians agreeing that homeownership is now only for the rich.

Supply pipeline adding to pressure

New construction may have completely dried up in the condo sector, but there’s still a glut of unfinished units scheduled to come onstream – a trend Tran described as “a bit alarming.”

And with buyer negotiating power also remaining substantial across the condo segment thanks to high standing inventory suppressing prices, Tran doesn’t see the conditions for a pickup in market activity anytime soon.

“There’s really no positive signs that we’re getting close to a recovery in terms of pricing,” he said.

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!

Canadian home sales jump in May, ending sluggish spring start

Canadian home sales climbed 5.5% on a month-over-month basis in May 2026, the Canadian Real Estate Association (CREA) reported Tuesday. That's the first month this year to deliver meaningful upward momentum in national demand.

The gain lifted the national average sale price to $702,079, up 1.5% from May 2025 and the highest monthly reading in two years. It was also the first time the measure crossed the $700,000 mark in 23 months, according to CREA's May 2026 housing market report.

Garry Bhaura, CREA chair, said the figures were the clearest signal yet for Canadians still sitting on the sidelines. "Like the weather in many parts of Canada this year, the spring market appears to have been delayed by a month or so, but the May numbers left little doubt that activity is now picking up," Bhaura said.

"If you have been on the fence this year as either a buyer or as a seller waiting for a sign, this could be it."

Ontario drives the national gain

Shaun Cathcart, senior economist with the Canadian Real Estate Association in Ottawa, said Ontario's disproportionate contribution to May's jump raised a specific question about buyer motivation.

"The national sales increase from April to May was broad-based but driven disproportionately by Ontario, suggesting the HST rebate on new builds may have only briefly drawn the attention of buyers away from the existing home market," Cathcart said.

Actual sales, not seasonally adjusted, remained 5.1% below May 2025. New listings edged down 1% month-over-month, tightening the national sales-to-new-listings ratio to 49.2% from 46.2% in April.

CREA's long-term average for that measure sits at 54.8%, with readings between 45% and 65% generally consistent with balanced market conditions.

Even with May's uptick, mortgage brokers tracking market conditions heading into mid-2026 have largely tempered their expectations for the months ahead.

What does May's rebound mean for mortgage brokers?

The National Composite MLS Home Price Index (HPI) — which tracks price changes for comparable properties to strip out shifts in the composition of what is selling — edged down 0.1% month-over-month in May, the smallest decline since January 2025 aside from April.

On an annual basis, the HPI fell 4.1%, though that marked the narrowest year-over-year drop recorded in 2026 so far. Prices remained negative year-over-year in British Columbia, Alberta, and Ontario, while other provinces continued to post gains.

National inventory fell to 4.8 months, down from 5.1 months in each of February, March, and April, a tighter picture than the conditions that led CREA to downgrade its 2026 sales and price forecasts in April amid rising bond yields and higher fixed mortgage rates.

Cathcart said the alignment of buyer and seller expectations is the key development to watch. 

"Sellers' and buyers' expectations are increasingly aligned, as evidenced by tightening sale-to-list price ratios and shorter periods between listing and sale dates. As a result, prices have largely stabilized following some softness earlier in the year," he said.

For buyers who are still hesitating, the more pressing question may not be about prices at all. Kevin Fettig, president of Mississauga-based private mortgage lender CMI Financial Group, said the May data is encouraging on paper, but buyers risk fixating on the wrong variable.

"Stop watching whether home prices are down and start watching where the interest rates are heading, because the bigger risk this season isn't mistiming the market, it's mistiming the financing," Fettig said.

"If the rate environment shifts while you're mid-decision, it could cost you your purchasing window."

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!

What would it take for the Bank of Canada to move interest rates?

The Bank of Canada held its benchmark rate steady for the fifth consecutive decision last week, and currently looks in no mood to step off the sidelines as economic uncertainty continues.

Most forecasters expect more of the same from the central bank for the foreseeable future – but that doesn’t mean rates are frozen forever. So what would actually need to happen for Bank decisionmakers to consider either a cut or a hike?

Sal Guatieri (pictured top), senior economist and director at Bank of Montreal (BMO) Capital Markets, told Canadian Mortgage Professional the bar for action in either direction is high, but not necessarily unreachable.

The case for a hike

One of the biggest threats to Canada’s economic outlook is no secret: surging oil prices since February as a result of the US-Israel war on Iran, putting upward pressure on inflation and squeezing Canadians at the pumps.

While positive news emerged late on Sunday as US president Donald Trump suggested an end to the war could be imminent, there’s still no sign of a deal – and if the war rumbles on and continues to spike the price of oil, Guatieri said it could spur the Bank into hiking rates.

“If higher energy costs do spread to other prices and we see a generalized increase in inflation, they may need to take action and raise rates,” he said.

Bond markets currently see an 8% chance of a 25-basis-point hike at the Bank’s July 15 meeting, rising to 32% by September 2, according to nesto.ca’s rate forecast tracker. Scotiabank is the most hawkish of Canada’s major banks, forecasting 50 basis points’ worth of hikes in the fourth quarter of the year.

The case for a cut

While inflation outlook remains troubling for the Bank, governor Tiff Macklem was frank about the current weakness of the Canadian economy in his remarks to the media last week – even if he stopped short of describing it as a recession.

While the labour market unexpectedly added nearly 90,000 jobs at last reading, the economy has sagged under the weight of US tariffs and broader uncertainty since the beginning of 2025 – and there seems little chance of it roaring back between now and the end of the year.

Further weakness in gross domestic product (GDP) could prove a key variable in the Bank of Canada’s approach to the rest of the year, according to Guatieri.

“If we see further shocks to Canada’s economy… if we see further evidence of weakness in the economy and no clear signs of a pickup in GDP growth in Q2, that could spur the Bank of Canada into action as far as providing more support to the economy by cutting interest rates,” he said.

Like Macklem, many major economists have questioned whether the country is actually in a recession despite recording consecutive GDP declines on a quarter-over-quarter basis.

The bottom line

Brokers and borrowers would undoubtedly welcome rate cuts because they could provide the impetus for the housing market to gather pace with a subdued first half of the year nearly over.

Affordability has remained a huge challenge in the housing sector, with Ratehub reporting that most Canadian markets saw buying prospects worsen in April thanks in part to climbing interest rates.

Still, a cut remains a distant prospect – and by far the most likely scenario is a prolonged hold by the Bank as the Iran conflict and CUSMA (Canada-United States Mexico Agreement) renegotiations continue.

Guatieri said it would take a significant deterioration in the economic outlook for the Bank to step off the sidelines and cut rates, while a hike is also unlikely.

“Unless something goes wrong further in the economy or with respect to tariffs… we’re unlikely to see the Bank of Canada cut interest rates,” he said.

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!

It’s official: Canada is one of the world’s least affordable housing markets

 Canada ranks among the world’s least affordable housing markets, trailing the United States and the United Kingdom.

That finding comes from the 2026 Demographia International Housing Affordability report, released June 11 by the Frontier Centre for Public Policy. The report assessed 96 major markets across eight countries using the median multiple – median house price divided by median household income.

A ratio of 3.0 or below is considered affordable. Canada’s national median multiple reached 5.4, placing it in the “severely unaffordable” category.

For context:

• United States: 4.5
• United Kingdom: 5.2
• Canada: 5.4

Canada was also one of only two nations in the study to record no improvement in housing affordability in 2025. Four of the eight countries surveyed posted measurable gains.

Nine quarters of improvement, one stubborn ceiling

The Demographia findings land alongside data that looks, on the surface, more encouraging.

National Bank of Canada’s Housing Affordability Monitor, published May 26, 2026, recorded a ninth consecutive quarterly improvement in Q1 2026 – the longest such streak in Canadian history. The mortgage payment as a percentage of income fell to 52.3 per cent nationally. That is its lowest level in four years.

But that record run, read alongside Demographia, defines the bind brokers are working inside. Affordability is improving by cyclical measures. Canada remains structurally among the least affordable nations in the world.

The National Bank data shows the gaps:

MPPI = mortgage payment as a percentage of income. Source: National Bank of Canada Housing Affordability Monitor, Q1 2026.

City	MPPI Q1 2026	Long-term average	Above average by
Vancouver	81.9%	66.1%	+15.8pp
Victoria	74.5%	59.3%	+15.2pp
Toronto	70.9%	54.4%	+16.5pp
Hamilton	59.0%	42.6%	+16.4pp
Calgary	39.3%	36.3%	+3.0pp
Edmonton	33.3%	30.2%	+3.1pp

All six markets remain above their long-term averages. Edmonton and Calgary are the closest to normal, while Vancouver, Toronto, and Victoria remain the most stretched.

Vancouver, Toronto, and the limits of progress

Canada’s affordability problem is sharpest at its two biggest markets.

Vancouver recorded a median multiple of 10.8. That places it among the world’s least affordable major markets, behind only Hong Kong, Sydney, San Jose, and Adelaide.

Toronto recorded 7.6, remaining firmly in the severely unaffordable range.

Edmonton was the outlier. At 3.6, it is Canada’s most affordable major market – and the highest affordability ranking ever achieved by a non-American market in the survey’s 22-year history.

Not a single market among the 96 studied hit Demographia’s affordability benchmark. American cities Cleveland (3.1) and Pittsburgh (3.2) came close.

“Many Canadians assume housing affordability challenges are simply the result of growing cities and strong demand, but the international data tell a different story,” said Wendell Cox, principal author of the report.

“Canada now ranks among the least affordable housing markets in the developed world despite having abundant land and resources. The evidence shows that housing affordability is strongly influenced by policy choices that affect land supply and housing development.”

Policy, not demand

The report pushes back on the idea that Canada’s affordability crisis is primarily a demand problem.

Wendell Cox pointed to restrictive land-use policies – urban growth boundaries, greenbelts, and development constraints – as strongly associated with higher housing costs. The report points to New Zealand as a counterexample: a government that has moved to dismantle policies blamed for restricting land supply.

The downstream effects for brokers are direct. Higher median multiples mean:

• larger required down payments
• higher debt loads for clients entering the market
• reduced labour mobility as households are priced out of employment centres

“The goal should be to restore housing affordability for ordinary households,” Cox said. “The experience of many jurisdictions shows affordability can improve when governments remove barriers to housing supply and allow development to respond to demand.”

What brokers should watch

National Bank’s economists flagged that the improvement streak may face pressure in Q2 2026. Mortgage rates have resumed an upward trend following expectations of tighter monetary policy.

Home prices fell nationally in April 2026 – declining in six of eleven cities – which may partially offset that pressure. But the Demographia data draws a clear line between cyclical relief and structural affordability.

Canada’s nine-quarter improvement streak has brought the mortgage payment-to-income ratio back to 2022 levels. For brokers advising clients in Vancouver and Toronto, the gap between short-term gains and long-term affordability remains the defining challenge of the current market.

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!