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The Office of the Superintendent of Financial Institutions (OSFI) is considering replacing Canada’s controversial mortgage stress test with a new risk management approach focused on the overall mortgage portfolios of banks rather than individual borrower qualifications. This shift could significantly reshape the housing market by moving from evaluating individual borrowers to managing institutional risk.

Introduced in 2016, the mortgage stress test has been both praised for protecting Canada’s financial system during periods of low interest rates and criticized for limiting homeownership opportunities. It requires borrowers to qualify at either 5.25% or their contract rate plus 2%, whichever is higher. While it helped maintain low default rates during recent rate hikes, economic changes like inflation and trade tensions suggest a more flexible, portfolio-based approach could better address current market challenges.

OSFI’s proposed new method would limit banks to issuing no more than 15% of their mortgages to borrowers with mortgage debt exceeding 450% of their annual income. This shift would move risk management responsibility from individual borrowers to banks, encouraging more strategic lending practices.

The potential changes could affect Canada’s real estate market in various ways, including making mortgages more accessible for some while creating new challenges for borrowers with high debt-to-income ratios. The shift also reflects Canada’s cautious history with mortgage regulation, influenced by past market crashes.

As OSFI continues to evaluate this change, its impact on affordability and overall market stability will be significant. Whether this represents the end of the stress test or the start of a new hybrid approach remains to be seen, but it’s clear that Canada's mortgage regulation will evolve in response to emerging economic realities.

Ontario is facing a severe housing and cost of living crisis, worsened by multiple challenges for home builders.

Housing Shortage and Declining Housing Starts:
Housing starts have sharply dropped, putting Ontario far from its goal of 1.5 million new homes by 2031. In some municipalities, starts have fallen by over 35%, creating a supply shortage and pressure on future homebuyers.

Impact of Development Charges:
Development charges in the Greater Toronto Area (GTA) have risen significantly, with some municipalities charging over $200,000 per home. These costs are passed to consumers, inflating home prices. Additionally, delays in permitting further hinder homebuilding.

Rising Construction Costs and Economic Uncertainty:
Tariffs are escalating material costs, on top of inflation and interest rate hikes, making construction less viable. Disruptions in the supply chain are causing delays in projects, and higher costs may deter future investments.

Risks of Economic Decline and Currency Depreciation:
A weakened Canadian dollar could further increase the cost of imported materials, raising home prices and discouraging new construction.

Increased Infrastructure Costs:
Tariffs also impact essential infrastructure for new housing, such as water, wastewater, and transit. Rising costs could delay infrastructure projects, reducing the number of homes being built.

Potential Solutions:
Reducing municipal delays and lowering development charges could ease the burden on builders. Exploring ways to reduce land costs and make more land available for development could also help. However, these measures would take time to implement.

Long-Term Opportunities:
While the immediate outlook is challenging, focusing on building Canadian resources and fostering interprovincial trade could strengthen Canada's economy in the future. For now, the housing sector faces significant risks from tariffs and rising construction costs.

The situation is urgent, but it presents an opportunity for long-term economic resilience. However, the immediate impact of tariffs and construction cost increases remains a critical concern for Ontario’s housing market.

Canadian home sales took a sharp dip from January to February, with many buyers sitting out as the trade tensions with the United States continued. According to the latest data from Canadian MLS® Systems, sales dropped by 9.8% month-over-month in February 2025, hitting the lowest point since November 2023. This was the biggest decline in sales activity since May 2022.

Senior Economist at CREA, shared, “When tariffs were announced on January 20, we started to see a gap between this year’s sales and last year’s, and it kept growing through February. This led to a significant, though not unexpected, drop in sales activity.” He also noted that this slowdown is showing up in home prices, especially in Ontario’s region.

The sales slump was widespread, with nearly three-quarters of local markets seeing declines. The biggest drops were in the Greater Toronto Area and the Greater Golden Horseshoe areas.

Key February Takeaways:

• National home sales were down by 9.8% compared to January.

• February’s sales were 10.4% lower than the same time last year.

• New listings fell by 12.7% month-over-month.

• The MLS® Home Price Index (HPI) dropped 0.8% from January and 1% compared to February 2024.

• The national average sale price was down by 3.3% year-over-year.

New listings also saw a big drop, falling 12.7% from January, reversing the unexpected spike from the month before. With both sales and new listings decreasing at similar rates, the national sales-to-new listings ratio ticked up slightly to 49.9%, compared to 48.3% in January. Typically, a ratio between 45% and 65% is considered balanced.

By the end of February 2025, there were 146,250 homes listed for sale across Canadian MLS® Systems, a 13.1% increase from last year but still below the long-term average of around 174,000 listings for this time.

CREA Chair, mentioned, “The uncertainty over the past few weeks has made some buyers more cautious. However, for others, the softer pricing and lower interest rates could be a great opportunity.”

At the end of February, there were 4.7 months of inventory, up from 4.1 months in January. With a long-term average of five months, this suggests that the market is slowly moving toward more balanced conditions.

Making a larger down payment usually results in smaller mortgage payments, and this is particularly true in Calgary's current, pricier resale housing market.

A recent study shows that making a larger down payment can significantly reduce monthly mortgage payments by lowering the overall loan amount. Many first-time buyers manage to save up a 5% down payment, but if they receive additional help from family, which is becoming more common in Calgary, it can make a big difference in reducing their future monthly payments.

The study, conducted by a national realty firm, examined the impact of larger down payments on mortgage payments in several Canadian cities, including Calgary. For example, in Calgary, where the average home price at the end of 2024 was approximately $624,000, a $50,000 down payment (around 8%) would result in a monthly mortgage payment of roughly $3,104. Calgary ranked lower than other cities, where $50,000 would cover a larger portion of the purchase price.

In Canada, to qualify for mortgage insurance, a minimum 5% down payment is required. This insurance is necessary unless the buyer can make a down payment of at least 20%. For comparison, Thunder Bay had the lowest average home price in the study at $282,000. A $50,000 down payment there would cover nearly 18% of the home’s price, resulting in a monthly payment of just $1,240.

The study also looked at larger down payments, increasing by $50,000 increments up to $250,000. In Calgary, a $250,000 down payment would cover 40% of the average home price, lowering the monthly mortgage payment to around $1,945. Meanwhile, in Greater Vancouver, where the average home price is significantly higher, $250,000 would only cover about 21% of the $1.2 million price, leading to a monthly payment of $5,009.

Some realtors advise that first-time buyers carefully consider their mortgage options before committing to a 20% down payment to avoid insurance premiums. In some cases, putting down just under 20% can secure a better mortgage rate, and buyers may also be able to arrange bridge financing to assist with the down payment.

With the spring market approaching, it's crucial for buyers to ensure their finances are in order, especially given Calgary's competitive market for single-family detached homes. The benchmark price for these homes rose 5% to $760,500 in February year-over-year.

Experts suggest that buyers should consider using the maximum amount they are approved for to purchase a home that meets their needs. Instead of buying a fixer-upper for $600,000, it might be wiser to use the full borrowing limit to buy a home that doesn’t need repairs, even if it means a slightly higher monthly mortgage payment. Everyone's financial situation is unique, but it's important not to be afraid to stretch your budget if it’s affordable.

In February 2025, the Greater Edmonton Area real estate market saw 1,825 residential units sold, marking a 14.3% increase from January, although down by 7.1% compared to February 2024. New residential listings reached 2,723, up by 13.2% from January but down slightly by 0.4% from the same month last year. Overall, inventory in the Edmonton area grew by 11.4% month-over-month, although it’s still down by 13.4% compared to February 2024.

Breaking it down by property type, 1,015 detached homes were sold, an 18.6% increase from January, but 12.3% fewer than last year. Semi-detached sales were up 7.5% from January and 11.4% higher than February 2024, with 215 units sold. Row/townhouses saw a strong 23.4% increase from the previous month, as well as a 3.9% rise from last year. However, apartment condominium sales dropped 9.2% from last year and 0.3% from January.

The average price of a residential property in Edmonton was $449,554, up 2.6% from January and 10.5% higher than February 2024. Detached homes sold for an average of $567,913, a 1.2% increase from January and 11.9% higher than last year. Semi-detached homes averaged $420,786, a slight 0.1% decrease from the previous month, but up 8.9% compared to last year. Row/townhouses had an average price of $300,818, down 3.5% from January, but up 9.1% year-over-year. Apartment condos saw a significant 7.3% increase from January, averaging $217,373, and a 19.9% rise from the previous year.

The MLS® Home Price Index composite benchmark price in the Edmonton area stood at $428,800, reflecting a 2.3% increase from January and a 12.3% increase from February 2024.

Detached homes were on the market for an average of 39 days, a 12-day reduction from January. Semi-detached homes averaged 26 days on the market, 11 days less than the previous month. Row/townhouses took 28 days on average, down nine days from January, while apartment condos were on the market for 48 days, reflecting a nine-day decrease. In total, all residential listings spent an average of 37 days on the market, down 11 days from January and 13 days from February 2024.

Cochrane
In February, Cochrane saw a rise in both sales and new listings. Sales reached 75 units, and new listings climbed to 126, both higher than last year and above the long-term averages. Inventory increased by more than 48%, totaling 196 units— the highest seen since spring 2021, though still below typical February levels. This uptick in inventory brought the months of supply to 2.6 months, the highest since the pandemic, but still lower than historical levels. Despite tighter conditions, prices picked up, with the benchmark price increasing by over 5% year-over-year to $577,100.

Okotoks
In Okotoks, February saw a 4% decline in sales, with 45 units sold, but this was still in line with long-term trends for the month. New listings increased by 7%, reaching 60 units, though still below typical February levels. Inventory rose by 19% from 2024 to 69 units, but it was still much lower than the historical average for the month. With tighter inventory, the months of supply dropped to just 1.5 months, well below the usual February levels. Even with these tighter conditions, the benchmark price remained flat compared to January and was just slightly up by under 1% from last year.

Airdrie
The Airdrie market in February followed typical trends, with a slight dip in sales while new listings and inventories rose. Sales dropped by about 9%, totaling 123 units, while new listings increased by nearly 23%, reaching 225 units. This combination of fewer sales and more listings pushed inventory up to 345 homes, more than double what was seen last year. As a result, months of supply went up to nearly three months, which is in line with long-term averages and the highest level since before the pandemic. The benchmark price stayed stable at $537,600, only 1.6% higher than February 2024 but still below fall prices

Inventory levels saw a significant year-over-year increase for the second consecutive month, rising by 76% to 4,145 units in February. Most of the growth was in homes priced under $500,000, driven by an increase in more affordable apartments and townhouses. The overall months of supply remained steady at 2.4 months, double what it was a year ago. Apartment-style units had the most supply, at 3.1 months.

February saw 1,721 sales, which, while above average for the month, were 19% lower than last year and well below the post-pandemic peak. New listings reached 2,830, in line with typical February numbers. The sales-to-new listings ratio was 61%, higher than average but lower than the past three years.

While more homes were listed, fewer were sold compared to February 2024, signaling the easing of the seller’s market. This shift has slowed price increases, which is good news for buyers.

The unadjusted benchmark price for residential properties in February was $587,600, relatively stable compared to late 2024 and about 1% higher than last year. Prices varied across districts, with the City Centre and North seeing declines, while the East district saw the highest growth at over 3%.

For detached homes, sales dropped by nearly 20% to 765 units, but new listings rose by almost 6%. This led to a 61% increase in inventory, reaching 1,698 units. Prices rose across all districts, with the City Centre seeing the largest increase at nearly 8%. The benchmark price for detached homes was $760,500, up about 5% from last year.

In the semi-detached market, new listings increased by 7%, but sales dropped by nearly 14%, pushing inventories up by 46%. The benchmark price rose by 7% to $683,500, driven by gains across most districts, with the City Centre and South districts seeing the biggest increases.

Row housing saw a 9% drop in sales and a 4% increase in new listings, raising inventory to 655 units, more than double last year’s levels. The benchmark price increased nearly 3% year-over-year to $446,880.

For apartment condominiums, sales fell by 26%, but new listings reached a record high. Inventory rose by 90%, and the benchmark price increased by almost 4% to $334,200, with the West district seeing the most significant growth at over 8%.