Juggling Dynamite

Despite snow banks and cold temps in much of Canada, property owners are getting a jump on what they hope will be strong spring demand.

New property listings leapt 11% nationwide from December to January, the largest monthly increase in almost two years.

The supply influx boosted the inventory of homes for sale in Canada to its highest level since the onset of the pandemic. But so far, it’s failed to attract the desired jump in home sales—the number of transactions dipped in the past two months, including a 3.3% decline in January.

Canada’s annual sales-to-new listings ratio is shown below since 2004. When this ratio dips below .40, market conditions favour buyers over sellers. A full-on buyer’s market has not been seen nationally since this ratio fell to .36 in November 2008. See RBC, Canadian Buyers unfazed by sellers’ early jump into the housing market.

Under the hood, the sales to new listings ratio varies significantly by metropolitan area (shown below). Toronto and Vancouver, at .33 and .37, respectively, were weaker in January than during the 2008-09 recession. In Edmonton, Calgary, and Montreal, supply/demand weightings still favour sellers.

In the first 18 days of February, the sales-to-new listing ratio in Toronto was .31, lower than in 2009 (shown below since 2006). Anyone looking to buy in areas with low sales-to-new listing ratios should not be afraid to make lowball offers and be patient as sellers become more realistic, aka ‘motivated.’In the 2008 global recession, Canada fared better than most countries because it entered the downturn with relatively less inflated home prices and lower levels of household debt.

Unfortunately, what were tailwinds then have reversed into headwinds for Canada in 2025 (Canada’s household debt to GDP shown below since 2005).

The unnatural jump in Canada’s residential property prices from 2008-2022 is shown below (chart since 1970). Previous (lesser) overshoots have been corrected via sharp drops/years of flat prices. This time is unlikely to be different.

Canadians need a new national obsession and investment focus outside counter-productive housing speculation. It’s time to invest in innovation and productivity enhancements that lower costs and improve life quality. MCGA (make Canada great again)?

Despite a 200 basis point drop in the Bank of Canada’s overnight rate, Canadian mortgage rates have more than doubled from the pandemic’s easy credit days when buyers were engulfed in bidding wars (5-year fixed rates offered by banks, below since April 2020, courtesy of WOW.ca). So far, sellers’ high hopes have kept asking prices elevated, even as the supply of new listings (especially in the 1m+ range) is dramatically outpacing sales in most areas. The average price of homes that have sold offers a reality check.

In January, the average home list price in Greater Vancouver was $1,208,415, down 3.6% compared to January 2024, but $193,000 over the average selling price in the past two weeks of $1.15m, down 20.87% year-over-year (the average number of sales in grey and the average sale price in red below since January 2020, courtesy of Property.ca). The average asking price in Toronto was $1,033,742, a 2.7% decrease from the previous year but still $309k over the average sale price for the past two weeks of $724,000 (-33% year over year). Surrounding the Greater Toronto Area, cities show similar gaps between average asking and sold prices.

In Mississauga, west of Toronto, the average asking price is $977,833 + 2.8% compared to January 2024, but the average sale price the past two weeks was $673,000, -33.3% year over year. In Vaughn, just north of Toronto, the average asking price was $1,033,742, down 2.7% from the previous year, while the average sale price was $681,000, down 48% year-over-year. In Barrie, one hour north, the median list price was $764,109 in January, reflecting a 2.72% decrease from December 2024 but $159,000 above the average sale price in February of $605k, -15% year-over-year.

Affordable home prices compare favourably to rents and household income.

Consider a 600-square-foot, one-bedroom, one-bath, one-parking-space Barrie condo, recently marked down from an asking price of $369k to $325k. The monthly maintenance fees are $554, and the property taxes are $2,071 annually. With a 10% downpayment, the monthly carrying costs amount to $2,583 plus utilities and maintenance (as shown below). Where market rents are less than the total monthly carrying costs, buying remains mathematically unattractive for those looking to occupy the property personally or as an investment to rent out to others.

Similar units are offered for rent at $2,100 a month, suggesting a negative carry of $483 a month even before maintenance costs or any special condo fee assessments.

Similar units were selling for closer to $500,000 in the mania of 2021-2022. So anyone who bought back then is underwater. While the current asking price of $325,000 is moving in the right direction, it remains some 4.6x the median Canadian household income, around $70k annually.

Historically, the well-established ‘affordable’ norm is about 3x household income, or a home price of approximately 210K today. So, a $325k list price is still too high.

As more properties are listed for rent and sale, the cost of shelter is coming down. See, Canadian home listings surged in January. That will be a big plus for future buyers and renters as excesses of the recent property bubble reverse. More downside progress is needed, and the spring market is set to be revealing.

The latest Canadian Joe Debtor study finds that the average insolvent debtor owed $60,678 in unsecured debt in 2024, an increase of 12.2% from 2023—the largest annual rise since the study began in 2011.

Driving the surge was a sharp rise in average credit card balances, which increased by 25.9% to $20,398 and accounted for 34% of total unsecured debt.

While balances rose across all age groups, millennials experienced the steepest increase, with credit card debt climbing by 35.0%. Senior debtors (aged 60+) carried the highest average balances at $27,543.

Insolvent homeowners faced a significant erosion of home equity in 2024, with average equity falling from 21% to 10% and 14% of homeowners experiencing negative equity. Vehicle loan shortfalls also re-emerged, with 31% of financed vehicles now underwater—a level not seen since 2016.

“Looking ahead, we expect consumer insolvencies in Canada to rise by 20–30% in 2025, driven by rising unemployment, record-high credit card debt, financial stress from elevated mortgage renewal rates, and challenges in the pre-construction condo market.”

Canada’s national unemployment rate was 6.6% in January and 8.7% in Toronto, the nation’s largest city. The latest Statistics Canada data shows that nearly 1 in 11 Toronto region workers are now unemployed and seeking work—a rate rarely seen outside the worst recessions. See, Toronto’s unemployed population hits 357k.

The threat of U.S. tariffs adds uncertainty to an already delicate economy and over-valued real estate market. RBC Economics notes, “The significant risk that tariffs pose to Canada’s economy casts a potentially dark shadow over the housing market.”

Bankruptcy Trustees Doug Hoyes and Ted Michalos discuss the latest data in the segment below and why they think financial strains will worsen in 2025.

Canadians are being crushed by debt—and we have the data to prove it. In this exclusive episode, we break down the findings from the 2024 Joe Debtor study, Canada’s leading consumer insolvency report. Our research reveals how rising debt levels are impacting Canadians like never before. From millennials facing record-high debt to homeowners running out of options, we analyze the trends, why they matter, and what the average insolvent Canadian looks like in 2024. You won’t hear this anywhere else—tune in for expert insights from Canada’s leading Licensed Insolvency Trustees. Here is a direct video link.