Canadian Housing Update 11: Expect Slow Growth in Real Estate

Slow Growth Canadian Real Estate for the Foreseeable Future

Justin Lim
August 11, 2023
April 1, 2024
Canadian Housing

Real Estate is likely entering into a period of slow growth for the foreseeable future. An increase in listings, new mortgage rules, and rising unemployment are large factors that should cap upside returns in real estate. 

Key Numbers 

GTA Prices up 1%

Active GTA Listings up 20%

Toronto Suburb Prices flat

Toronto Suburb Active Listings up 5%

GVA Prices up 1%

Active GVA Listings up 30%

Vancouver Suburb Prices up 1%

Vancouver Suburb Active Listings up 25%


Prices Rise Minimally, with an increase in Listings

Downtown Toronto is Raging Hot, Back to the Office is in Full Effect

Slight Decrease in Mortgage Rates and NEW Rules!

Employment and Labour Picture

Outside of hot spot real estate areas, overall real estate prices should be in slow growth if the current trends of increased listings, interest rates, and unemployment continue.

Prices Rise Minimally, with an increase in Listings

Not much price change from February to March, as expected we saw a rise in active listings come back from late last year. The Spring Selling Season has kicked off as more people put their homes back up for sale. With the increase in listings, total sales are not much higher than in February, which could mean not very strong demand at these prices. 


Higher liquidity does create less price volatility and a continuation of this should tame the prices from moving too far up or down this spring. March is still early in the spring season but there does seem to be a rush to get houses listed.

Downtown Toronto is Raging Hot, Back to the Office is Still Trending

The one outlier from this trend is downtown Toronto, which saw another large price increase even with a 15-20% increase in active listings. The demand to move back to downtown Toronto does appear to be strong. This is evident in not only price and sale increases, but also in new leases which have continued to rise since December. 


The back-to-office trend appears to be cool again, this is the hottest area of real estate in Canada right now. Outside of this, it is difficult to find data on the amount of downtown human traffic but given the outsized gains in real estate vs. other geographies, this shows strong demand to live downtown right now. This 2-3 month trend alone does not give a decisive answer but where there is smoke there is usually fire and downtown is hot.

Slight Decrease in 3 and 4-year Mortgage Rates

There is not much change on the mortgage front. There has been very little shift in rates for March, this has not hurt or helped the housing market. Bond rates are slightly lower than in February, which has brought down the 3 and 4-year mortgage rates, this should lead to further small decreases next month. 

NEW Mortgage Rules at 4.5x Annual Income

The Office of the Superintendent of Financial Institutions (OFSI) has introduced a new guideline for January 2025 which states that your mortgage amount cannot exceed 4.5x of your household income. This means someone making $100,000 per year can get a mortgage for $450,000. This is to offset the high amount of debt Canadians accumulated during the low-interest rate environment of 2020 and 2021. 

The current system works on a Total Debt Servicing Ratio vs. Income. This is based on the current “qualifying mortgage rate” and your gross annual income. As the interest rates decline the qualifying rate decreases and you can get a larger mortgage. This helped drive up housing prices in the last few years and is why house price growth has exceeded income growth in the past 30 years as rates have been consistently declining over that time.

The new rule change would tie house prices closer to wage growth as opposed to wage growth times interest rates. This would give interest rates less of an effect on housing prices and more emphasis on employment and wage inflation. 

This rule is not as limiting as you may think because historically this is closer to the average and is less strict than the current rules with the current interest rates. The current qualifying rate is about 9%+ that banks approve you on. This would bring that rate down to about 7-8% depending on the individual's situation and their net-worth/debt. Therefore, slightly more accommodating than today. Also, banks have brought in new rules such as “equity lending” that can juice up mortgage amounts.

This should put an upside cap on real estate prices to grow at a slower rate during low-interest periods, which is better for the longer-term stability of real estate. This will likely not have as much of an effect on wealthier individuals and higher-priced homes. 

Employment and Labour Picture

While we pay a lot of attention to interest rates, employment is very important when determining housing demand. Jobs are weakening and unemployment is increasing. Unemployment is at 5.8% and likely to rise. The forecast for unemployment is 6.5% by the end of 2024

Job Vacancies have also been declining since the reopening which means there are fewer and fewer companies looking for employees.

While the vacancies are not as low as in 2019, Canada has increased its population by about 4 million since then. 

For Canada, unemployment has not been a problem for about 15 years (2008/2009) and we have not faced a slowly rising unemployment environment since 2000-2003 (when unemployment slowly rose for 3 years). During that period interest rates were cut from 5.75% to 2% over two years. The result was a total 6% real estate price increase over 2 years, which shows that just because rates get cut does not mean prices rise quickly.


Downtown Toronto remains the hot market while other areas are showing an increase in listing with limited buying. The prices have not fallen which is likely due to pent-up demand from the holiday season. While interest rates are slowly declining each month, they may not be declining fast enough if labour does not hold up. Given the current dynamics, of new listings, interest rates, new mortgage rules, and rising unemployment we are likely in a slow real estate growth market from here if current trends continue.

Justin, Konrad, and Merriel

More articles and information are available at 

Content Sources: Bloomberg, Trading Economics, Yahoo Finance, BCA Research

Disclaimer: This newsletter is solely the work of Konrad Kopacz and Justin Lim for the private information of their clients. Although the author is a registered Investment Advisor with Echelon Wealth Partners Inc. (“Echelon”) this is not an official publication of Echelon, and the author is not an Echelon research analyst. The views (including any recommendations) expressed in this newsletter are those of the author alone, and they have not been approved by, and are not necessarily those of, Echelon.

Echelon Wealth Partners Inc. is a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund.

Forward-looking statements are based on current expectations, estimates, forecasts and projections based on beliefs and assumptions made by the author. These statements involve risks and uncertainties and are not guarantees of future performance or results and no assurance can be given that these estimates and expectations will prove to have been correct, and actual outcomes and results may differ materially from what is expressed, implied or projected in such forward-looking statements.

The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Echelon Wealth Partners Inc. or its affiliates. Assumptions, opinions, and estimates constitute the author’s judgment as of the date of this material and are subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Past performance is not indicative of future results.

These estimates and expectations will prove to have been correct, and actual outcomes and results may differ materially from what is expressed, implied or projected in such forward-looking statements.