Housing market update: October 2023

We enter autumn with a red-hot rental market, driven by rising mortgage rates, sluggish home sales, a lag in construction, and surging population growth.

• The Canadian Real Estate Association (CREA) reports the national average home price in August was $650,140, a 3% decrease from last month but up by 2% year over year.

• CREA also reports a 4.1% drop in seasonally adjusted month-over-month home sales in August. As CREA’s Senior Economist Shaun Cathcart pointed out, "August was the first full month of housing data following the Bank of Canada’s July rate hike, so a dip in activity was expected.”

• Total monthly housing starts were flat at 244,507 from July to August, with Ontario and British Columbia seeing the biggest year-over-year gains according to the Canada Mortgage and Housing Corporation.

• Rentals.ca puts the average national asking rent at a new record high of $2,177, up 1.8% from July to August. That is a 9.6% increase year over year.

• The Bank of Canada's efforts to control inflation have led to another spike in mortgage rates. This puts more pressure on property owners, leading landlords to pass on these expenses onto tenants in the form of higher rents, and first-time homebuyers to stay in rented accommodation, adding to demand and price pressure.

• Additionally, some homeowners, facing higher borrowing costs to secure their next home, are delaying selling their current properties, further limiting investment opportunities for landlords.

• And while cities are racing to construct new purpose-built rentals, supply is struggling to keep up with the surging demand from Canada’s ongoing population growth.

More rental market headlines

Canadian poll holds politicians responsible for housing crisis – PayProp

Majority of Canadians worried about paying rent or mortgage over last two months – Storeys

Demovictions are on the rise in Toronto. Some fear they'll make the rental market worse for everyone – CBC