Canada Housing Market

Despite record listings and slowing sales, housing affordability in Toronto continues to worsen, according to a new report by Ratehub.ca. Based on May 2025 average home prices and current mortgage rates, a household would need to earn $206,500 annually to afford a typical home in the city.

Toronto Home Prices Still Among the Highest in Canada

The average home price in Toronto rose slightly from $1,009,400 in April to $1,012,800 in May, pushing the estimated monthly mortgage payment to $5,129. This figure assumes a 10% down payment, a 25-year amortization, and current rates of 4.38% (lending) and 6.38% (stress test).

For comparison:

• Vancouver remains the most expensive market, requiring an income of $237,550 for a $1.177M home.
• Fredericton is the most affordable large market, with homes averaging $334,700 and requiring an income of just $78,200.
• Other cities include:
  • Regina: $340,800 home / $79,350 income
  • St. John’s: $378,300 home / $86,450 income
  • Winnipeg: $387,800 home / $88,250 income

National Market Trends

Across Canada, the average home price is now $691,299, a 1.8% drop from May 2024 but 1.9% increase from April 2025. Ratehub notes that affordability shifts are largely tied to home price changes, with demand firming up in smaller regional markets while prices in larger urban centres remain volatile.

Cities like Hamilton continue to post price drops and improved affordability, while sales in moderately priced regions remain steady or rising.

Signs the Market May Be Reawakening

According to Ratehub’s analysts, May 2025 marked the first month of rising home sales in over six months, suggesting the Canadian housing market may be showing early signs of recovery. They caution that this trend may be linked to buyers adjusting to rate stability and easing uncertainty around tariffs.

“While early, this could pose evidence that the market is starting to defrost,” the report states.

How the Estimate Is Calculated

Ratehub’s affordability model is based on:

• A 10% down payment
• 25-year amortization
• $4,000 in annual property taxes
• $150/month in heating costs
• Lending and stress test rates sourced from Canada’s Big Five banks

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