How Canadians are coping with the housing market correction


Less than a year after buying their four-bedroom townhouse in Surrey, British Columbia, for $870,000, Aneesh Bhandari and his wife decided to sell their home in early May.

They were both looking forward to their first open house, Bhandari said, making bets on how many visits the house would get. They later discovered that only one person had come to view the property.

« It was an eye opener, » Bhandari told in a Thursday phone interview. « My realtor didn’t expect this, nobody expected this. »

Bhandari and his wife plan to move from British Columbia to Ontario to be closer to his employer’s office in Mississauga. But the process of selling their current home and buying a new one was a struggle, the 36-year-old said.

After 30 days on the market, the 167 square meter home listed at $1.15 million had still not sold, despite being listed $50,000 below similar homes in the area, said Bhandari. In mid-June, he took the house off the market.

« At that time, sellers expected yesterday’s price and buyers wanted tomorrow’s price, » Bhandari said.

After securing an extension from her employer to work from home until December, Bhandari now plans to re-list her home in October with the aim of selling before the end of the year.

Bhandari is one of many Canadians who have written to about the impact of Canada’s housing correction on their decisions to buy or sell a home. According to a new report from the Royal Bank of Canada (RBC), after a series of interest rate hikes implemented by the Bank of Canada, housing markets are now facing a correction that « extends from afar” across the country.

A drop in house prices, combined with a drop in resale activity, shows that housing markets across Canada are now cooling. RBC forecasts that average home prices in Canada are expected to fall through the remainder of 2022, eventually falling 12% by mid-2023 from their peak in February.

« [This] would be considered a very significant correction,” Robert Hogue, deputy chief economist at RBC, told in a phone interview Wednesday. « We rarely see this type of double-digit price drop nationwide. »

Rising interest rates have played a key role in correcting some of the extraordinary house price gains Canadians have seen during the pandemic, said James Laird, co-CEO of

« The last few years have been irrational and some rationality in correcting that exuberance is happening right now, » Laird told in a phone interview Wednesday. « Given the frenetic pace of the last two and a half years, it seems logical now that we take a break. »

After hitting a record high of $816,720 in February, national average home prices have been on a steady decline, according to data from the Canadian Real Estate Association (CREA). The average price of a house in Canada for the month of June was $665,849, not seasonally adjusted.

The lack of certainty about what to expect from the Bank of Canada regarding further interest rate hikes could also encourage some Canadians to stay away from the market, Laird said.

« With the central bank still in a period of transition from pandemic rate policy … to post-pandemic inflation rate policy, we don’t know exactly where the bank wants to go, » Laird said.

Faced with a changing market driven by falling house prices, Hogue said sellers today need to be pragmatic and recognize that the market is very different than it was just a few months ago.

« Prices are expected to continue to decline in the coming months, so the market is unlikely to become more seller-friendly in the near term, » Hogue said. « Buyers are coming to market with less budget… They have tighter limits when it comes to [how much they can afford].”


According to the RBC report, the major housing markets of Ontario and British Columbia are expected to experience some of the largest corrections relative to other regions in Canada. The reason for this is the exorbitant housing prices that have characterized these areas for most of the COVID-19 pandemic. Hogue said these areas are therefore more sensitive to interest rate increases.

According to data compiled by CREA, average home prices in Ontario and British Columbia peaked in February at $1,086,493 and $1,104,098, respectively. Both figures are not seasonally adjusted.

Since then, activity has plunged at its slowest pace in more than 13 years – excluding pandemic lockdowns. That leaves room for more negotiation between buyers and sellers as the market clears, said Frank Clayton, an economist and senior fellow at Toronto Metropolitan University.

« [Buyers] should keep an eye out because…there are always people who have to sell,” he told in a phone interview Wednesday. « Some people won’t want to wait six or eight weeks and hope their house will sell, they might want the money right away. »

While it’s not yet a buyers’ market in parts of southern Ontario, Clayton said, markets appear to be more balanced. This is also the case in the Greater Vancouver area, according to the RBC report. Real estate activity in the area is down 40% over the past four months, and home prices for all home types have also fallen 4.5% since April.

It’s also important to understand that some areas of these regions will feel the effects of a correction differently than others, Laird said.

« [Prices in] suburbs and more rural properties have grown the most in the two years of pandemic exuberance…and these are the places [where] prices correct the most,” Laird said. « [But] urban cores have not grown as much as surrounding suburbs [so] they also don’t correct as much.


A real estate outlook from Desjardins also indicates that New Brunswick, Nova Scotia and Prince Edward Island face significant corrections, after house prices soared during the pandemic.

However, parts of Alberta should be more resilient. Despite lower prices, the correction in this part of Canada is expected to be milder than in others, Hogue said.

While average home prices may have fallen nationally, that doesn’t mean homes have become more affordable for Canadians, Laird said.

Lower house prices have been driven by higher interest rates, which are forcing homeowners to pay more interest on their mortgages. With a higher cost of borrowing, those looking to buy a home are likely to qualify for less of a mortgage, Hogue said. This makes it especially difficult for homebuyers looking to enter the housing market for the first time.

Taylor Wright and her fiancé are currently renting a one-bedroom apartment as they look for a new home. Looking to buy in Ajax, Ont. or Whitby, Ont., with a budget of $800,000, Wright said she and her fiancé are staying out of the market.

“Each home we go to visit always costs almost $100,000 more than the asking price, and we are not willing to engage in a bidding war and overpay for a home,” Wright wrote in an email to on Thursday.

Having kept tabs on the province’s housing market since the start of the pandemic, Wright said he’s seen home prices « climb further and further out of reach. » Still, she said rising interest rates and falling prices gave her hope that in six months she might be able to buy a house.

Diordan Svelander and his wife are looking to buy a home in the Greater Vancouver area. With sky-high house prices, he said they couldn’t afford a down payment on a house despite working two full-time jobs.

Svelander said he and his family tried to search north of town in the town of Chetwynd, B.C. The couple had their sights set on a home, but as interest rates rose throughout the year, they could no longer afford it.

« The money we had saved was not enough to withstand the stress tests, and we had exhausted all our options trying to buy, » Svelander wrote in an email to on Wednesday.

As a result, the couple are now renting a two-bedroom unit with their two young children and pets, Svelander said.

A recent report by assessed the income required to buy an average home in different Canadian cities. So far, financial losses from rising interest rates have not been offset by gains from falling house prices, Laird said. In all of the Canadian cities included in the report, residents needed more income, on average, to afford a typical home.

“You were more likely to buy a house a year ago with those high prices but lower mortgage rates … than with more modest house prices but higher mortgage rates,” Laird said. « It actually means everything is less affordable than it ever was. »


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