Nobody Talks About Housing Anymore - Why?

Canada’s runner-up past-time, after hockey of course, is talking about housing with anyone who will listen. These days, it seems like nobody is talking about housing anymore. What gives!?!

Aside from a temporary rebound around the release of the Canadian federal budget and into the seasonally chatty holiday period, interest in Canadian housing, as measured by Google search activity, is at a five-year low (Google Trends data for ‘Canada housing market’ below).

Housing market activity also confirms Canadians’ lack of interest in housing. Canadian home sales activity is at a level on par with the post-pandemic hangover that followed the flurry of activity in 2020 and 2021.

Canadian house prices have declined rather consistently since the February 2022 market peak, as we can see from the 10-year chart below, and are now sitting at a five-year low.

You would think that Canadian home prices steadily declining and sitting at a five-year low would bring new buyers into the market. What Canadian home prices don’t capture is just how disparate house prices have changed across the nation since the pandemic peak.

As we can see below, Canadian home prices are largely being dragged down by declines in Hamilton (down 28.5% from peak), Toronto (down 26.2% since peak), and Vancouver adjacent communities in Fraser Valley (down 23.4% from peak) while some communities like Quebec City, Montreal, Edmonton, Calgary, and Halifax are at or close to all-time highs. Note that all city-specific house price figures are as of April 2026.

The key difference between these cities is the average cost of a home. Those cities with lower house prices, and naturally lower house price-to-income ratios, have held up well. Buyers in these cities need smaller down payments to step onto the property ladder, need to borrow less to buy the average home and therefore have a better chance of qualifying for a mortgage. We have also seen net interprovincial migration from high priced cities/provinces to lower priced cities/provinces which helps amplify the demand in these lower price-to-income ratio cities and reduce demand in many higher price-to-income ratio cities, which has a tangible effect housing supply and prices.

For those of us in and around the Toronto area, with house prices well below peak and interest rates down slightly from peak, let’s revisit our 2016 and 2023 affordability analyses and see how today’s housing market stacks up relative to history.

In 2016, at a time when most Canadians agreed that housing prices were detached from reality, we argued that prices were inexpensive relative to historical average prices due to low interest rates and therefore lower than normal carrying costs (i.e. mortgage interest plus taxes) of owning a home being far lower than in the past. Higher prices relative to historical norms made mustering up a down payment more difficult than the past but for those who could do so, the cost of carrying a mortgage on a property appeared to be below historical averages.

*for simplicity, we assume a 25 year mortgage and that the house is 100% mortgaged

We revisited this analysis in 2023, at time when house prices were much higher than 2016 levels and interest rates had returned to historical norms. In this analysis, we concluded that house prices in 2023 were arguably the highest in history when looking through the lens of carrying costs. In addition to what appeared to be close to the highest carrying costs in history, close to the highest house prices (in today’s dollars) in history meant that homebuyers would need to drum up a down payment that is roughly twice historical norms to secure a mortgage.

*for simplicity, we assume a 25 year mortgage and that the house is 100% mortgaged

Fast forward to 2026, interest rates are lower than 2023, although notably above 2016 levels, and house prices have come down materially, both nationally and in high price jurisdictions like Toronto. Note that we have used the average sales prices below while the figures in the city-by-city chart above are ‘benchmark’ prices – we did this to stay consistent with past analyses. The gap between these two prices is due to currently slow condo market activity which should ultimately be temporary.

*for simplicity, we assume a 25 year mortgage and that the house is 100% mortgaged

Housing affordability has improved markedly since 2023 but remains in line with historical averages across Canada but the dollars-to-donuts reality varies from city-to-city. Affordability in Toronto appears elevated relative to history which may explain why housing prices and housing market activity remain depressed in Toronto and many other cities with high real estate prices. Many cities that were previously low-price cities – Halifax, Edmonton, much of Quebec – are closing the gap with high price cities and we may begin to see prices and sales activity cool in these cities as affordability worsens. In higher price cities, we’re well on our way on the affordability improvement journey but not quite there yet, and in many lower price cities, welcome to the club of Canadian housing unaffordability!

If we were to see another ~10% price decline or a 1% decrease in interest rates, or some combination of the two, this would push affordability to become historically attractive in nearly all cities across Canada and could help reignite housing market activity. With Canada having entered a technical recession in Q1 2026, and headwinds like high energy prices, lower immigration levels, and trade uncertainty affecting Q2 and beyond, the Bank of Canada may need to cut interest rates in the coming quarters to reignite housing market and overall economic activity. There is hope yet!

We hope this article provides some context about the current housing market which you can use as ammunition to spark a conversation about housing.

NEWS AND OUR VIEWS

Canada Enters a Technical Recession. The Canadian economy just barely entered a technical recession in Q1 2026 as GDP growth in Q1 came in just below zero at -0.008%, following up Q4 2025’s GDP decline of 0.25%. A recession is widely accepted as two consecutive quarters of GDP decline, so this technically qualifies as a recession. The last times Canada entered a technical recession were in 2020, shortly after the start of pandemic related lockdowns, and in 2015, during an energy market downturn when Western Canadian Select (WCS) oil price fell to the low US$20s per barrel.

Our Take:

It is hard to claim that the current recession facing the Canadian economy is a serious one, with the total GDP decline over two quarters equating to just 0.3%. The federal government’s reliance on immigration to sustain GDP post-pandemic shifted to hard caps on permanent and temporary residents following the most recent federal election, which presents a medium-term overhang on Canadian GDP growth going forward. Economists estimate a return to GDP growth in Q2 and for the rest of the year, but that growth will remain in the low single digits and is reliant on federal government policy commitments to reduce trade barriers, increase defense and infrastructure spending, and reduce red tape around new ‘nation-building’ projects. Upcoming CUSMA (Canada-US-Mexico Agreement) trade talks could also have a material impact on economic growth in 2026 and beyond but it is unclear how those talks will end and if the net effect on Canadian GDP will be negative or positive. As we noted above, housing market activity has acted as a drag on GDP in recent years and lower prices or lower interest rates could help reignite housing market activity and that sector’s contribution to overall GDP growth. It is very much wait and see for the Canadian economy going into the second half of 2026.

JUST FOR FUN

A US Army Special Forces soldier involved in the capture of Venezuelan President Maduro was arrested and charged for allegedly betting that the operation would occur. The soldier was involved in the planning and execution of Operation Absolute Resolve and had bet ~US$32,000 in total on Polymarket, one of the better-known prediction markets, that Maduro would be “out” as the President of Venezuela by January. At the time, the bet was priced by Polymarket as a long-shot gamble with 12:1 odds, netting the soldier more than 12x his money in just a couple of weeks when Maduro was ultimately captured and flown to the US to stand trial.

Insider trading in the traditional sense typically involves illegal trading in securities and often only involves principals of large organizations and their close circle of contacts. In this case, the soldier was not a high ranking official, nor a key decision-maker in the military, highlighting that even somewhat ordinary people can attain knowledge of world-changing events, and bet on them. Or even worse, ordinary people can influence the outcomes of prediction markets directly, even without any inside information, such as when another prediction market ‘winner’ is assumed to have used a hairdryer to alter a temperature sensor at Charles de Gaulle Airport to win big, though the illegality of such an action, aside from a potential trespassing charge, is unclear.

Then there is the question of the morality of prediction markets. What topic is too taboo to bet on? People’s lives? Fair game for now. You can bet on celebrity hookups, breakups, and or whether they will shake hands when they meet next. War? Also fair game for now. You can bet on peace deals between the US/Israel and Iran/Lebanon/Hezbollah or you can even bet on whether certain cities/territories in Ukraine will be captured or if there will be a coup d’etat in Ukraine. Prediction markets appear to be in their Wild West phase for now.

We predict that prediction markets are still in their infancy, and when they mature is unpredictable.