The last few months of national, provincial and municipal housing stats suggest there is a slump in housing sales. Is this the bursting of the housing bubble? Or is it the result of poor weather? Or is it simply because real estate is expensive?

One statistic isn’t enough to paint the full picture of the reasons behind any market shift. Yet, it’s done all the time. Just take, for example this recent headline: Canadian home prices just had worst February since the financial crisis. The story, from the Financial Post, says, “The Teranet-National Bank Composite House Price Index, which measures changes for repeat sales of single-family homes, showed prices fell 0.4 per cent last month from January. ‘Except for 2009, when there was a global financial crisis, the decline was the largest for February in 19 years of index history,’ said Marc Pinsonneault, senior economist at National Bank of Canada.”

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If you are a buyer in Toronto, I doubt if you see the market crashing and affordability rising.

Some real estate salespeople cancel open houses and even refuse to list a home due to weather. The theory is that poor weather will dissuade buyers from visiting the property, thereby not stimulating the interest and competition needed to secure a favourable price for the seller. With the advent of online shopping and technology supporting the buying and selling of homes, weather may not be an issue. In fact, it may be a benefit as several studies show that people tend to buy more online when the weather is terrible.

As an interesting aside, a recent study by National Bureau of Economic Research showed that we tend to overvalue certain characteristics of a home depending on the weather. For example, we will overpay for a pool during hot months, but not place as much value over heated floors during the winter (note to all homeowners – if you have a pool, list in the summer and if you have heated floors, list in the winter!). However, these marginal price differences don’t add up the difference between 2018 and 2019 February sales.

Is it that Canadians simply don’t want to buy and that they’d prefer to rent? Is this the reason behind slowing sales? No. The research simply doesn’t support this. Rather, it’s the obvious – homes are too pricey for the population that, historically, should be buying – 20 and 30 somethings getting married and having families.

Despite popular belief, it’s not avocado toast that’s the core reason for millennials failing to scrounge together a decent down payment and pay off a mortgage. Unlike their parents, millennials spend more of their income on housing, regardless of whether they’re buying or renting, because housing prices have risen much more aggressively than wages. In other words, millennial wages are eaten up by rent and groceries, leaving little left over to invest in one illiquid asset.

The affordability issue is further compounded by the fact that millennials want to live in the areas in Canada where owning a home is now reserved for those who have the financial backing of the “Bank of Mom and Dad”.

So why don’t millennials and young gen-Xers just leave for more affordable pastures?

For one, today’s generation is “more constrained to a bigger urban environment for jobs than previous generations were,” says Paul Kershaw, associate professor at UBC’s School of Population and Public Health and founder of Generation Squeeze, a group that advocates for young Canadians.

Headlines screaming about an impending crash due to lagging demand drown out the whispers of a bigger story: demand isn’t the problem, it’s wages. And if we don’t correct the latter, the former will not be the only things that will suffer. So will our quality of life.


  1. Another Mythical presentation of housing market intell presented by someone not qualified or trained in how housing markets work.

    What’s next Zoocasa letting their secretary appear on TV claiming Median Families Can’t Afford to Pay what the Average Buyer is paying for a home? How about Debt to Income? How about HELOC debt? What maybe Student Loans?

    A Millenial couple working at McDs who have 2 kids get a FREE home bought and Paid for by Taxpayers that they will own in 17 yrs. Millenials can get a full ride free post-secondary education and living expenses covered while doing so paid by Taxpayers.

    Did you know a Millenial buying in 1990 actually signed on the dotted line paying more for a home than a Millenial in 2019 buying the identical home would be doing today.

    How this nonsense makes it into REM I have no idea but maybe the author should concentrate on the legal aspect of real estate when giving advice as that is what a Lawyer does best.

  2. Great article Natalka, thanks. I wonder if our government has given any thought to allowing land transfer tax to be amortized as part of the mortgage similar to what CMHC does for their fees and to also bring longer amortization back in. The qualification Stress Test is one hurdle, having to come up with the money to pay our government is another.

  3. I am reading this article wondering what Canada she is talking about. 0.4% growth! Ottawa has seen double digits growth in many neighborhoods and multiple offers is the new reality.

  4. In my opinion “The slow down is due to the poor distribution of info regarding mortgages & the ability for the 1st time buyer to qualify. Most people believe they need 25% down.”

  5. I am not sure a “slump” is an accurate analysis. The markets in and around the GTA values are up from one year ago and sales are robust. Multiple offers becoming more feequent. As for weather conditions , I have never seen a market dependant on the weather conditions. As a matter of fact when I was working in Toronto in 1998 we had a huge snow storm. Mel Lastman called in the military to help clear snow. Well during that snow I had buyers walking three blocks in two feet snow to look at properties. Come hell or high water or ten feet of snow motivated buyer’s will be out to buy. Canada is a large country. Second largest by land mass however most is uninhabitable. We have but a hand full of cities where people want to live and where the jobs are. The result is high real estate values. As long as there are buyer’s paying the price nothing will change. And Canada is one of the world leaders in immigration taking in more immigrants then tbe U.S. so with limited product and and influx of wealthy buyer’s values in Canada will remain high.

    • There surely is no slump in the Kitchener Waterloo area. We have hit the highest average prices last month and the only thing that is slowing us down is supply. Multiple offers on a large portion of the listings. People are paying ridiculous amounts of money for sub-par properties.


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