A Slower Spring, but Better Conditions for Buyers

Home sales in Canada saw a significant slowdown this March, reaching their lowest level for the month since 2009. Economic uncertainty, driven in part by ongoing global tariff disputes and recession fears, has many Canadians hitting pause on major financial decisions.

Despite that, some much-needed relief arrived in the form of falling mortgage rates. A 25-basis point cut to the Bank of Canada’s policy rate earlier in the month triggered a drop in bond yields, which in turn helped bring the average five-year fixed mortgage rate down to 4.38%. Additionally, the mortgage stress test rate eased from 6.55% in February to 6.38% in March.

These changes significantly improved purchasing power for many Canadians.

How Much Income Do You Need to Buy a Home in Canada?

Affordability improved in 10 of 13 major Canadian cities in March. Lower mortgage rates, combined with modest price declines in some regions, reduced the income required to purchase an average-priced home.

For example:

• In Toronto, the average home price dropped to $1,068,500. This reduced the monthly mortgage payment by $121 and lowered the required qualifying income by $4,190.

• In Hamilton, the average home price declined slightly to $811,000. The monthly mortgage payment fell by $79, and the required income dropped by $2,700.

• Fredericton, Halifax, and St. John’s also saw notable reductions in both home prices and required incomes.

Even in pricier markets like Vancouver, where home prices inched up slightly, the lower mortgage rates still brought down the required income to qualify for a mortgage.

Where Affordability Worsened

Not every city saw gains. Three Western Canadian cities experienced an increase in the required income to purchase a home:

• Edmonton saw its average home price rise by $9,500, increasing the necessary income by $560.

• In Regina, strong demand pushed prices up by $8,600, raising the qualifying income by $690.

• Winnipeg also posted higher prices, increasing the income required by nearly $1,000.

These examples show how even in lower-priced markets, affordability can be affected by sharp swings in local demand.

What This Means for Buyers

Whether you’re upsizing, downsizing, or buying for the first time, improved mortgage affordability can make a real difference in your budget. A drop in required income by just a few thousand dollars can open the door to more financing options, greater flexibility, or an expanded home search area.

But timing remains critical. The market continues to shift, and while interest rates fell in March, there’s growing uncertainty ahead. Recent volatility in global markets has already started to push bond yields higher again, leading some Canadian lenders to raise fixed mortgage rates by 10 to 15 basis points.

Housing Supply: Ambition Meets Execution

Housing was a dominant theme on the campaign trail, and for good reason. Affordability concerns continue to grip Canadians—especially younger generations trying to enter the market. The Liberals have pledged an aggressive housing agenda, including the creation of a Crown corporation focused on building affordable homes, eliminating the GST on homes under $1 million for first-time buyers, and fast-tracking permitting processes.

If these initiatives are executed effectively, they could significantly increase housing supply, which has been constrained by nearly two decades of under-building. Speeding up municipal approval times will be critical. In cities like Toronto and Vancouver, which are plagued by long development timelines, this could unlock long-awaited projects and gradually bring balance back to the market.

However, execution remains the biggest wildcard. With a minority government, the Liberals will need cooperation from other parties, adding complexity to already ambitious timelines. Moreover, land scarcity, rising construction costs, and labour shortages may temper how quickly new supply comes online.

Interest Rates and Fiscal Policy: What Buyers Should Watch

With the Canadian economy teetering on the edge of a downturn, the Liberals have proposed substantial fiscal stimulus—$225 billion in planned capital investment over four years. This spending will focus on housing, infrastructure, and clean energy, all of which could stimulate jobs and productivity without necessarily stoking inflation.

The Bank of Canada, for its part, is expected to remain cautious. A strong fiscal response could reduce pressure to cut interest rates further, meaning homebuyers hoping for a significant drop in borrowing costs may need to temper expectations in the short term. The real shift could come if fiscal measures successfully lift GDP growth without overheating the economy, potentially stabilizing rates at manageable levels for the housing market.

The U.S. Influence and Trade Disruption: A Subtle Threat to Affordability

While domestic policy dominated headlines, this election was significantly shaped by external pressures—especially from the U.S. The reintroduction of tariffs under the Trump administration has strained Canada-U.S. trade relations, creating ripple effects in pricing, supply chains, and consumer confidence.

For the housing market, this manifests in rising material costs, longer construction timelines, and potential inflationary pressures—all factors that could counteract the benefits of government-led housing initiatives. Investors and developers alike will be watching how Prime Minister Carney navigates diplomatic and economic tensions with Washington. Trade diversification, particularly toward the EU and Indo-Pacific nations, may offer a lifeline, but such pivots take time.

Immigration Policy: Balancing Demand and Supply

Immigration has long supported Canada’s economic growth, and it’s particularly vital for real estate. Newcomers drive demand, but the recent influx—especially of non-permanent residents—has contributed to housing shortages and pressure on public services. The Liberals plan to cap the non-permanent resident population below 5%, aiming to ease the strain while maintaining long-term workforce growth.

In the short term, this could stabilize rental markets in major cities. Over the long run, controlled immigration growth paired with increased housing supply could help rebalance demand and restore some affordability, particularly in urban centers.

What Should Buyers and Sellers Expect?

If you're considering buying or selling a home in Canada, especially in markets like Burlington, here’s what you should take away from this election:

• Short-term affordability challenges may persist, especially while construction bottlenecks remain.

• Increased government investment in housing could translate into more inventory in the next 2–5 years.

• Interest rates are unlikely to fall dramatically, but they are expected to remain relatively stable, barring a severe downturn.

• Tariffs and trade uncertainty could cause temporary price fluctuations in construction materials, indirectly affecting housing prices and renovation costs.

• Immigration caps and infrastructure spending will impact local housing demand, especially in high-growth regions.