Is the golden age of high-rise condos behind us?

Statistics Canada thinks that might be the case. The agency put out two reports this week in which it predicted that the shift to working from home, and the bust-out of short-term rentals amid the pandemic, will depress demand for condos in the longer run.

“As working from home becomes more prevalent, we may see an increase in the demand for larger living spaces that single-family homes can offer, causing a shift in demand from condominium apartments towards single houses,” StatCan said in a rare bit of crystal ball-gazing this week.

“Builders may start catering to buyers’ preferences by offering additional office space in the design of their new homes to accommodate remote working arrangements.”

Watch: Some families leaving big cities after coronavirus pandemic. Story continues below.


In an outlook published this week, the agency predicted that in the country’s three largest housing markets ― Toronto, Montreal and Vancouver ― condos will come under pressure.

“Prior to the pandemic, Toronto was experiencing an exodus of middle class families to surrounding cities. This population outflow was previously overshadowed by immigration which has now decreased due to the impacts of the pandemic. This will likely also drive down the price of condominiums in the medium to long term,” the agency said.

“Similarly to Toronto, Vancouver has a potential of short term rentals flooding the market and thus causing a decline in condominium prices in the short to medium term.”

Recent data from real estate groups is pointing in the same direction.

An analysis from real estate portal Zoocasa found that in June there was a 257-per-cent spike in available condo rentals in Toronto buildings known to be “Airbnb-friendly.” That compares to an 83-per-cent increase, versus a year ago, in available rentals in the city as a whole.

“A significantly slower tourism industry is forcing many short-term rental investors to consider recalibrating their income strategy to either seek long-term tenants or consider offloading their investment entirely,” Zoocasa’s head of communications, Jannine Rane, wrote on the portal’s blog.

Meanwhile, a large share of homebuyers is looking to purchase on the edges of the city, or outside the city altogether, a phenomenon that seems to be happening in cities around the world, including in New York, London and the San Francisco Bay Area. As with Toronto, in many cases, it’s an acceleration of existing trends.

In a recent Nanos poll for the Ontario Real Estate Association, 60 per cent of respondents said they found rural living more appealing than before the pandemic. 

Exodus to cottage country

Near Greater Toronto, real estate agents are reporting a “full-on frenzy” in the Muskoka cottage-country region north of the city. Home sales were up 30 per cent in June at the real estate board that covers the area, compared to the same month a year earlier.

“This is the highest demand we’ve seen for waterfront properties on record, with sales activity bouncing from recent lows to hit the largest sales record for any month in history,” Lakelands Association of Realtors president Catharine Inniss said in a statement.

And while Toronto’s real estate board cheerily reported a rebound in sales and a nearly 12-per-cent increase in the average selling price in June, the condo market there is showing signs of softening.

Condo sales were 16.3 per cent lower in June than a year earlier, while detached home sales were up 5.6 per cent. 

The MLS home price index shows condo prices have fallen or stopped growing in the past few months in Toronto, Montreal and Vancouver.

In a recent report, Toronto real estate agent Doug Vukasovic noted that the very high prices in city cores are also driving people to look further outside the city.

“But bang for your buck may no longer be telling the whole story,” Vukasovic wrote. “Anticipating a post-pandemic ‘new normal’ of more flexible work and commuting arrangements, could buyers be prioritizing a bit more space ― and even a bit of backyard ― over being in the midst of the action downtown? 

“Time will tell if this trend continues and Toronto’s suburbs continue their growing appeal.”



TORONTO — The Toronto Regional Real Estate Board says the number of homes sold in the region in June was just shy of the mark set a year ago as the average selling price rose nearly 12 per cent compared with June 2019.

Home sales plunged earlier this year as the COVID-19 pandemic forced buyers to the sidelines, however, sales have picked up as businesses have started to reopen.

The real estate board says there were 8,701 homes sale in June, down 1.4 per cent compared with the same month last year.

On a seasonally adjusted basis, sales in June were up 84 per cent compared with May.

The average selling price was $930,869, up 11.9 per cent compared with June 2019.

Toronto board president Lisa Patel says it’s still the early days of recovery, but barring any setbacks, she expects to see stronger market conditions in the second half of the year.

This report by The Canadian Press was first published July 7, 2020.

Earlier on HuffPost:



For the past few years, you could hear the crickets chirp in the housing market in York Region, north of Toronto. Prices had come down after the province introduced a foreign buyers’ tax, and this time last year, the area was a “buyer’s market,” with relatively few sales.

Today, amid a pandemic and a major economic slowdown, home sales there are almost back to pre-pandemic levels. And with fewer homes listed, the market has bounced back to “balanced” territory, real estate portal Zoocasa declared this week.

“There seems to be a resurgence in demand for York Region detached properties due to the pandemic,” said Claudio Castro, a Zoocasa agent who works in the area. “As more people recognize that they may not need to be in the office five days a week for the foreseeable future, many are revisiting detached properties in the region so they can have more space.” 

Watch: Make like a tree? The top 3 U.S. cities millennials are leaving. Story continues below.


In Durham Region, east of Toronto, sales were actually up 8 per cent compared to a year ago, while in Halton Region, west of the city, sales were up 22 per cent at the end of June, according to a Zoocasa analysis of data from the local real estate board.

Both Durham and Halton were “seller’s markets” in recent weeks, Zoocasa said, with sales rising faster than new listings. Meanwhile, in the City of Toronto sales were down 13 per cent in the same period, and Zoocasa called it a balanced market.

“It may be too early to say with certainty, but based on what our agents are experiencing and what the market data shows us thus far, the uptick in interest in outlying regions like York, for example … could be attributed at least in part to the pandemic,” a Zoocasa spokesperson told HuffPost Canada.

“That being said, the pandemic and the economic and health-care conditions that it has created are unprecedented, so it remains to be seen what kind of broader, long term impact it will have on housing demand across the GTA.”

One thing is certain: Toronto is not alone. A similar trend is playing out in major cities around the world, where certain people ― particularly high income earners and youth ― have headed out of the city and into the suburbs or further afield as the pandemic spread through major metro areas.

House prices in metropolitan New York are down 1 per cent in the past year, while in nearby New Jersey, they are up 2 per cent, according to data from Zillow, which rates New Jersey’s market as “very hot” and New York’s as “cool.”

For New York, this isn’t actually new. In fact, data shows that the U.S.’s three largest metro areas have all been losing population in recent years, in the case of New York and L.A. due to high living costs, and in Chicago’s case due to a weak economy.

Population boom turns to bust

But for Toronto, the shift could be more disruptive. Last year the area became the fastest-growing metro in North America, beating out previous champion Dallas, according to recent data from Ryerson University’s Centre for Urban Research.

But right now, population growth has likely ground to a halt with borders shut to most immigrants and international students. 

“Without immigration, the Greater Toronto Area’s population would be declining,” CUR researchers Diana Petramala and Hannah Chan Smyth wrote in a recent report. In an earlier report, issued in March, Petramala showed that Toronto is the largest net loser of people to out-migration, with the regions around Toronto ― including Simcoe, Halton and Durham ― among the largest beneficiaries.

The lack of new residents means that condos in the City of Toronto will be the property type that will suffer most in this year’s slowdown, the researchers predicted. Though they expect home prices to remain stable in Greater Toronto over the next year, the City of Toronto will likely under-perform the rest of the area, they predicted. 

And because low-income Canadians were much more likely to lose their jobs in this crisis, condos will under-perform detached homes, Petramala and Chan Smyth wrote.

What next?

The questions on observers’ minds include: Is this a temporary or a permanent shift? Will city dwellers return to town once the pandemic is behind us?

Richard Florida of the University of Toronto’s Rotman School of Management believes the answer is yes. In an analysis for Bloomberg CityLab, Florida argued the trend is less pronounced than real estate agents and media reports make it out to be.

He cited data showing only 1.6 per cent of New Yorkers had their mail forwarded outside of the city during the height of the pandemic, and concluded that “most who are likely to stay away from the city are families with children who would have left the city anyway in the coming year or two.”

Florida expects the pandemic to do little to change major cities’ cultural and economic dominance in our world.

“New York and London will still be its leading financial centers; the San Francisco Bay Area its hub of high technology; and Los Angeles its center for entertainment and film. Shanghai, Tokyo, Hong Kong, Singapore, Paris, Toronto, and Sydney will all continue to be great global cities,” he argued.




OTTAWA ― Canada’s housing market is headed into a period of “severe declines″ in sales and construction, but the full effect of COVID-19 on real estate is far from certain at this point, according to a new report by the Canada Mortgage and Housing Corp.

CMHC deputy chief economist Aled ab Iorwerth described an uneven recovery that will “vary considerably″ across different parts the country, and urged that forecasts be taken in the context of an “extreme uncertainty″ that lies ahead.

Average home prices in Toronto, Montreal and Ottawa are expected to rebound sooner, starting in late 2020 and rolling into early 2021. Prices in Vancouver, Edmonton and Calgary may not bounce back until later in the forecast period, the report said.

Watch: Parts of New York rife with empty apartments. Story continues below.

Calgary and Edmonton will see average home prices decline due to uncertainty around oil prices and economic recovery in the region.

Volatile factors, such as a potential second wave of the virus, higher unemployment and the pace of an economic recovery, could influence the direction of the housing market in the coming months, ab Iorwerth explained.

“We are still at the early stage of understanding the impact of COVID-19 on the economy in general, and on the housing market in particular,″ he said on Tuesday in a conference call.

“Limited data availability means we will remain in the zone of considerable uncertainty.″

He said the CMHC is relying on its own housing market outlook from late May as its central forecast for the coming months. It expects the housing market likely won’t see a return to pre-pandemic levels before the end of 2022.

Cultural shifts

Greater cultural shifts may also affect the speed of recovery, he said, and many of those developments are so recent that they’re hard to fully comprehend or quantify.

Cities which lend themselves to industries that allow for working from home, could prove to make those regions “more resilient,″ which could have ripple effects on housing, ab Iorwerth said.

“We do not yet have a grasp on the answers to questions, such as the impact of greater work from home, differing impacts across industries, the effect of less mobility across provincial boundaries and the decline in immigration following cutbacks and international aviation,″ he added.

There are also substantial questions about how rental markets will be affected.

He noted that a decline in immigration and interprovincial activity will lower demand for rental units, which combined with a “significant new supply in rental properties close to being completed,″ could mean that vacancy rates are likely to jump.

“Such increases in vacancy rates, however, will be from historically low levels in Toronto and Vancouver, in particular,″ he noted.

Earlier this month, CMHC reported the annual pace of housing starts, excluding Quebec, fell 20.4 per cent in May compared with April.

The Canadian Real Estate Association reported in May that home sales had their worst April in 36 years, with home sales falling 57.6 per cent from a year earlier to 20,630 sales for the month.

This report by The Canadian Press was first published June 23, 2020.

OTTAWA — A new analysis of the country’s stock of affordable housing suggests the Liberals’ decade-long strategy to provide more of it is starting in a deeper hole than previously thought, and may be further behind once the COVID-19 pandemic passes.

But the pandemic could also mean an opportunity for governments to pick up rental units cheaply.

Carleton University researcher Steve Pomeroy, whom housing groups and governments both rely on for advice, found a decline of 322,600 affordable rental units in the private market between 2011 and 2016.

Over the same period, federal and provincial investments in affordable housing created about 20,000 affordable units, meaning that for every new unit governments created, 15 were lost.

What that means is the Liberals’ national housing strategy and its plans to create 150,000 affordable units over a 10-year stretch would only be replacing about half of what had just been lost.


The new concern is that the situation will repeat following the current economic crisis brought on by the pandemic, as tenants’ problems paying rents put a squeeze on small landlords and their assets are scooped up by larger real-estate funds with little interest in keeping them affordable.

It’s why the federal government is now considering purchasing those assets as part of the next phase of the government’s response to the pandemic.

“My position on this has been, if you can’t beat ’em, join ’em,” said Pomeroy, a senior research fellow at Carleton’s Centre for Urban Research and Education.

“If the (real-estate investment trusts) are coming along and buying up these properties, why don’t we let non-profits do the same thing, or enable non-profits to do the same thing?”

In recent days, Social Development Minister Ahmed Hussen has suggested in meetings with housing advocates that he’s open to putting federal dollars behind the idea.

“If this is an opportunity to really put a serious dent in homelessness, then that’s an opportunity we should be taking,” said Jeff Morrison, executive director of the Canadian Housing and Renewal Association.

COVID-19 crisis could make situation worse

There is no specific program under the national housing strategy to enable acquisitions, said Pomeroy, who also works as a consultant. Public support like that would be needed to help smaller, non-profit housing providers gain the necessary capital to purchase properties.

So far, few affordable housing renters are behind on payments. Morrison said that about 10 per cent of units are in arrears or non-payment.

Tim Richter, president of the Canadian Alliance to End Homelessness, told MPs on a Commons committee this week that there’s very real worry that the economic crisis created by COVID-19 could accelerate the losses in affordable units Pomeroy noted, “making Canada’s housing crisis even worse.”

“If we’re in a hole, we have to stop digging,” Richter said.

Pomeroy estimated a realistic target for a federal program would be to buy about 7,500 units annually, which would cost over $1 billion in a mix of equity, loans and grants to purchase and refurbish units.

Those units could be a mix of apartments that could quickly be available as affordable or social housing units, plus other assets like strip malls or commercial office space that could be repurposed into housing, said Leilani Farha, global director of The Shift, a housing-rights group.

“If it’s the case that all of these different possible property types become distressed, it’s then an amazing opportunity for governments at all — local, provincial, and national — levels to consider moving in and buying those assets to increase public access.”

Additionally, there are concerns that motels and hotels will shut down, pushing out homeless people housed in them to avoid overcrowding in shelters and slow the spread of COVID-19.

This report by The Canadian Press was first published June 14, 2020.

Also on HuffPost:



ACH-DP via Getty ImagesHigh-rise condo towers at Humber Bay Park in the Toronto borough of Etobicoke. House prices in many parts of Canada are rising amid the pandemic, even as rental rates drop.

MONTREAL ― The COVID-19 lockdowns have exposed a divide in Canada’s job market, with low-income earners getting hit much harder than high-income earners in the wave of layoffs that has taken place since March.

Now that divide is making itself felt in the housing market. As those on the lower rungs of the income ladder struggle to make rent, middle and higher-income Canadians are jumping back into the housing market.

The result? Rental rates rates are falling steeply across Canada, even as the housing market shows signs of life, with prices even rising in some markets.

WATCH: Plunge in sales, low inventory, high prices: Economist on the spring housing market. Story continues below.

Rental rates across Canada have fallen for three straight months and are down 7.8 per cent, on average, from before the pandemic, rental site reported this week.

“Tenants have been more dramatically impacted by pandemic-related job loss than homeowners, and are not currently looking for apartments or other rental accommodation,” Bullpen Research president Ben Myers said in a statement. “This sharp drop in demand has resulted in landlords dropping their asking rents in most major markets across the country.”

Rentals.caRental rates have come down in many municipalities, according to this chart from, with Victoria, B.C., and suburban cities in Greater Toronto leading the way.

Larger cities have been hit particularly hard. Rents per square foot have dropped steeply in Toronto since the pandemic and are now 9.5 per cent below their levels from a year ago, reported. 

Average asking rents jumped 3.8 per cent in May in Vancouver in May, but on a per square foot basis, condo rents fell 2.4 per cent in May, and are 5.4 per cent lower than a year ago, said.

House prices rising in many markets

It’s a different story in the housing market, where real estate agents say they are seeing a sharp pick-up in activity since lockdowns started lifting. Buyers and sellers have become more comfortable with virtual tours and with social distancing measures taken during viewings, they note.

Many people pulled their houses off the market during the lockdowns, and as buyers come back, pressure is building on the market.

“The story lately has been a lack of overall inventory,” Toronto real estate Doug Vukasovic wrote in a recent report looking at the local housing market. 

“For the year to date, a downward trend in pricing has already been corrected. … Even now, most properties are ripe for bidding wars, and many are getting snatched up within a few days of their being listed.”

Will the barrier break?

But the divide between the rental and housing markets could soon break down. That’s because a significant chunk of Canada’s homes, particularly condos, is in the hands of investors who rely on the rental market to pay their mortgages. 

That could be a problem, especially for those investors who bought their properties in recent years at high prices. A recent report from found that units in many of Toronto’s new condo buildings are losing money at current rental rates

Some experts have warned that if this continues long enough, it could lead to forced selling in the housing market, driving up the supply and pushing down prices. 

That could also happen if tourists don’t return to Canada’s cities, economists at National Bank of Canada wrote in a report at the end of May.

“Tourism is likely to be slow for some time, and the possibility cannot be excluded that lodgings currently marketed to tourists on short-term-rental platforms such as Airbnb will be put up for sale for lack of revenue,” economists Matthieu Arseneau and Alexandra Ducharme wrote.

Arseneau and Ducharme are forecasting a 10-per-cent drop in the Teranet house price index over the next year, which would make it the steepest one-year drop in Canadian house prices in decades.

National Bank FinancialEconomists at National Bank of Canada predict a steeper house price decline in this downturn than in the previous three recessions.

Among major cities, the National Bank economists predict that Toronto will see the steepest price decline, with its price index dropping 13 per cent.

House prices will also fall in Vancouver (down 12 per cent), Calgary (down 10 per cent) and Montreal (down 7 per cent), they forecast.

However, prices could fall more than that if immigration to Canada comes in below expectations after the pandemic, Arseneau and Ducharme wrote. Immigration has fallen after three of the past four recessions, they noted.

They also noted that prices could fall further than expected if Canada Mortgage and Housing Corp. (CMHC) tightens standards for mortgage insurance.

Days after the report came out, CMHC did just that, tightening the standards for the maximum amount of debt borrowers of insured mortgages can carry.

Experts estimate the change will reduce the maximum purchase price for a home with an insured mortgage by up to 12 per cent. Canada’s two privately-run mortgage insurers, Genworth and Canada Guaranty, have said they will not follow the CMHC’s move.

MONTREAL ― Interest rates around the world have fallen sharply amid a pandemic-induced economic crisis, and the result is that it has never cost less to borrow money to buy a house in Canada. 

Rates on Canadian mortgages have fallen to their lowest levels ever, with one bank ― HSBC Canada ― now offering a five-year, fixed-rate mortgage at 1.99 per cent.

HSBC’s offer is “Canada’s lowest bank-advertised five-year fixed rate ever, according to our records,” mortgage comparison site RateSpy wrote on its blog, noting also that it’s the first time this type of mortgage has been offered below 2 per cent.

Watch: Parents need to plan carefully if they are going to help their kids buy a house. Story continues below.

“HSBC’s move not only reflects historically low funding costs, but its continued drive to brand itself as Canada’s most competitive lender,” RateSpy said. “The likes of RBC, TD, Scotiabank, BMO and CIBC could easily undercut this rate if they wanted to, but they likely won’t near-term.”

But with interest rates falling around the world, other lenders are also cutting their rates, and mortgages in general are “at an all-time low now,” said James Laird, co-founder of Ratehub.

That, coupled with emergency lockdowns lifting, has Laird expecting to see a pick-up in home sales in June.

“We’re seeing a ‘mini’ spring home-purchase market emerging right now, which is interesting to watch,” he said. “It’s going to be a far better month from a home sales perspective than the last two months have been.”

New rules cut maximum purchase price

Unfortunately for buyers, those rock-bottom rates come just as new mortgage insurance rules come into place that will reduce the maximum purchase price for those who have less than 20 per cent for a down payment.

The new rules to qualify for mortgage insurance from Canada Mortgage and Housing Corp. (CMHC) are expected to cut the maximum purchase price for borrowers of insured mortgages by up to 12 per cent, more than offsetting the drop in mortgage rates for those who can’t come up with a 20-per-cent down payment.

CMHC head Evan Siddall recently warned that Canada risks financial instability because of high and rising household debt levels.

With hundreds of thousands of unpaid mortgages piling up, Canadian households are headed for their highest ever debt levels, Siddall told parliamentarians in May. Household debt could be as high as $2.30 for every dollar of disposable income by the end of this year, well above the record $1.78 set several years ago.

Siddall said one in eight Canadian mortgages are currently in deferral, and that could rise to one in five.

Laird noted that Canada Guaranty ― a private mortgage insurer ― is almost there already, with 17 per cent of the mortgages it insures in deferral. 

Mortgage deferrals soared in Canada this spring, after the major lenders put in place emergency programs that allow borrowers to halt payments for six months. The payments are then tacked on to the end of the mortgage term, and borrowers are on the hook for interest during the deferral period.

Many of those six-month deferrals will end in the fall, and the question on everyone’s mind is how many of those people will be able to start paying again.

“That’s going to be the story for the second half of 2020,” Laird said.

Falling prices ahead?

Siddall ruffled some feathers in May with a forecast predicting the average house price would fall by 9 to 18 per cent this year ― a forecast many in the industry saw as too pessimistic.

Some forecasts issued in April predicted rising prices this year, despite the economic crisis.

But more recently, others have added their voice to the pessimistic argument, with economists at National Bank of Canada predicting a “sharp decline in Canadian home prices” over the next year. 

They predicted the Teranet house price index ― a different measure than the average resale price cited by CMHC ― would fall “in the neighbourhood of 9 per cent this year.”

They don’t see lower mortgage rates helping much.

“In past recessions, substantial declines in interest rates have favoured stabilization of the housing market, but this time the effect … could be much smaller,” economists Matthieu Arseneau and Alexandra Ducharme wrote.

“Interest rates were already very low before the crisis, and (central banks around the world) have very little room to maneuver.”

RandyRomano via Getty Images

MONTREAL ― Evan Siddall, the president and CEO of Canada’s government-run mortgage insurer, appears to be a master of the ancient art of misdirection.

He threw the real estate industry a head-fake several weeks ago, when he hinted to a parliamentary finance committee that Canada Mortgage and Housing Corp. (CMHC) was considering raising the minimum down payment on an insured mortgage to 10 per cent from the current five per cent.

That sent a collective shudder through the industry, already reeling from a steep drop in home sales amid COVID-19 pandemic lockdowns. A move like that could seriously depress demand from first-time homebuyers, requiring them to save up twice as much money for a down payment.

So when CMHC announced new mortgage underwriting rules this week, and there was no increase in the minimum down payment, the industry responded with a sigh of relief.

Watch: Landlord offers indefinite rent relief to tenants during COVID-19 crisis. Story continues below.

But while Siddall may have expertly softened industry backlash with his misdirect, the rules he introduced still have a major impact on first-time homebuyers.

Any mortgage with less than 20 per cent down requires insurance, and to qualify for that insurance, borrowers will need to have a lower debt load than they used to.

Under the new rules, the percentage of income a household spends on housing costs, including the mortgage, can be no more than 35 per cent, down from 39 per cent under the current rules. The maximum share of income spent on all debt payments drops to 42 per cent, from 44.

That change might not sound like much, but according to mortgage comparison site Ratehub, it reduces the maximum purchase price for first-time homebuyers by up to 12 per cent.

A household with $100,000 in income and a 10-per-cent down payment can currently afford a house of $524,980, but would have a maximum purchase price of $462,860 under the new rules, Ratehub said.

That has some criticizing CMHC for picking what they say is a bad time to tighten lending standards.

“Normally, you don’t rock the boat when you’re already taking on water, but that’s what CMHC has done,” mortgage site RateSpy wrote on its blog. RateSpy’s estimate is that the new rules will cut maximum purchase prices by 11 per cent.

CIBC economist Benjamin Tal estimates the rule means 5 per cent of homebuyers will not be able to qualify for a mortgage. Another one per cent will be affected by another rule change: CMHC is raising the minimum credit score for an insured mortgage to 680, from 600.

One other change ― effectively barring people from borrowing money for the down payment ― isn’t expected to have much impact. Homebuyers more often get cash gifts from family than loans, and rules around private loans can be hard to enforce. 

Temporary rush of buyers?

“CMHC’s move to tighten mortgage lending standards will almost certainly reduce home sales to some extent,” TD Bank economists Ksenia Bushmeneva and Rishi Sondhi wrote

But in the short term, Canada could see a rush of homebuying in June, ahead of the July 1 implementation date ― what the economists called a “pull-forward of activity.”

They also suggested that Canadians who don’t qualify for mortgage insurance at CMHC could still turn to the two private mortgage insurers in Canada ― Canada Guaranty and Genworth Financial. However, only CMHC insures mortgages for homes in multi-unit buildings.

“Anecdotal reports suggest that it is likely that private default insurers will not match CMHC’s lower debt ratios. They might, however, be more selective in their approval processes,” wrote Sherry Cooper, chief economist at Dominion Lending Centres.

Cooper described CMHC’s move as “procyclical” ― meaning it’s likely to make the housing market even weaker in a time of weakness. 

Normally, you don’t rock the boat when you’re already taking on water, but that’s what CMHC has done.Mortgage lending site RateSpy

But protecting Canada’s financial system from excessive debt appears to be taking precedence for Siddall. He warned parliamentarians in May that Canadian mortgage borrowers face a “debt deferral cliff” this fall when they have to start paying deferred mortgages again.

He added that as many as one in five Canadian mortgages could be in deferral by this fall.

With so much in unpaid loans, Canadians’ debt burden will soar well past its previous highs, Siddall predicted. Canadians could owe as much as $2.30 of debt for every dollar of disposable income by the end of this year. The previous high, set a few years ago, was $1.78.

Nathan Denette/The Canadian PressCMHC president Evan Siddall speaks to the Canadian Club of Toronto, Thurs. June 1, 2017. Siddall is taking criticism from real estate industry insiders over a pessimistic forecast for Canadian housing.

“Almost everything we’ve done in response to the crisis involves borrowing,” Siddall said. “Just as governments are taking on more debt … mortgage deferrals (are) adding to household debt.

“The resulting combination of higher mortgage debt, declining house prices and increased unemployment is cause for concern for Canada’s long term financial stability.”

But Dominion’s Cooper says this will put more downward pressure on the market.

“Suffice it to say that this batters buyer and seller confidence and, all other things equal, has a net negative impact on the near-term housing outlook,” she wrote in a client note.  

Canada’s mortgage default rate is low, and is likely to remain low even by CMHC’s projections, so “in my view, these changes are unnecessary to protect the prudence of Canada’s home lending practices,” she concluded.


CMHC Reviews Underwriting Criteria

The COVID-19 pandemic is affecting all sectors of Canada’s economy, including housing. Job losses, business closures and a drop in immigration are adversely impacting Canada’s housing markets, and CMHC foresees a 9% to 18% decrease in house prices over the next 12 months. In order to protect future home buyers and reduce risk, CMHC is changing its underwriting policies for insured mortgages.

Effective July 1, the following changes will apply for new applications for homeowner transactional and portfolio mortgage insurance:

    • Limiting the Gross/Total Debt Servicing (GDS/TDS) ratios to our standard requirements of 35/42;
    • Establish minimum credit score of 680 for at least one borrower; and
    • Non-traditional sources of down payment that increase indebtedness will no longer be treated as equity for insurance purposes.

To further manage the risk to our insurance business, and ultimately taxpayers, during this uncertain time, we have also suspended refinancing for multi-unit mortgage insurance except when the funds are used for repairs or reinvestment in housing. Consultations have begun on the repositioning of our multi-unit mortgage insurance products.

“COVID-19 has exposed long-standing vulnerabilities in our financial markets, and we must act now to protect the economic futures of Canadians,” said Evan Siddall, CMHC’s President and CEO. “These actions will protect home buyers, reduce government and taxpayer risk and support the stability of housing markets while curtailing excessive demand and unsustainable house price growth.”

These decisions are within CMHC’s authorities under the National Housing Act and are in anticipation of potential house price adjustment. We will continue to monitor market conditions and work with our federal colleagues on potential macro-prudential policy options.

CMHC supports the housing market and financial system stability by providing support for Canadians in housing need, and by offering housing research and advice to all levels of Canadian government, consumers and the housing industry.

For more information, follow us on TwitterYouTubeLinkedInFacebook and Instagram.

For information on this release:

Leonard Catling
Media Relations
Canada Mortgage and Housing Corporation


COVID-19: Refocusing Multi-Unit Market Refinance to Support Investments in Housing

CHMC is implementing a new restriction on use of funds as a condition of insurance for market refinance loans. The restriction ensures investments focus on the supply and preservation of multi-unit residential housing in the immediate term.

Effective immediately, refinance proceeds must be used for a permitted purpose in relation to residential housing.

This could include one or more of the following:

  • purchase,
  • construction,
  • capital repairs/improvements (including for increased energy efficiency and accessibility), or
  • securing permanent financing (take-out financing to pay off a short-term construction loan).

Certain other uses may be permitted on a case-by-case basis; however equity take-out or distributions to equity holders will not be permitted.