Balvir Singh

This Rental Market Update report provides an update on rental market conditions across Canada building on insights from our 2024 Rental Market Report, using alternative data sources. It also includes insights obtained through market intelligence from industry experts. Highlights Since October 2024, advertised rents are declining due to increased supply, while rents for occupied dwellings continue to rise at a slower pace than a year ago. Sluggish job markets and decelerating migration are creating challenging environments for landlords and property managers. Purpose-built rental supply is growing. CMHC construction financing programs and products supported an estimated 88% of Canadas new purpose-built rental apartment starts in 2024. Vacancy rates are expected to rise in most major markets this year. Despite easing rent growth and increasing supply, rental affordability isnt improving especially in Vancouver and Toronto as turnover rents are driving increases. Calgary, however, has shown a slight improvement. https://www.cmhc-schl.gc.ca/observer/2025/2025-mid-year-rental-market-update

From CMHC Canada faces a housing affordability challenge. For many years, housing prices and rents in Vancouver and Toronto attracted attention from all over the world. Over time, these increases came to burden many Canadians and their children. Low-income and some middle-class households struggle to even find a place to live, let alone at a price they can afford. On a wider scale, the productivity of the Canadian economy suffers from unaffordable housing as the capacity to attract skilled workers is diminished and the young are deterred from staying in our largest cities partly because of the lack of attainable housing. And Canadas enormous level of household debt creates a vulnerability in the event of a global economic crisis. Preview of results We find that housing starts need to double over the next decade. Compared to a projected rate of about 250,000 new housing units annually until 2035, Canada needs to increase housing starts to around 430,000 to 480,000 units per year to restore affordability (depending on parameters). This can only be possible with: a significantly greater workforce more private-sector investment changes in technology and productivity such as more automation and modular construction The need to increase housing supply remains critical. https://www.cmhc-schl.gc.ca/professionals/housing-markets-data-and-research/housing-research/research-reports/accelerate-supply/canadas-housing-supply-shortages-a-new-framework

Highlights Mortgage lenders entered 2025 in a healthy position, but economic uncertainty is increasing risk to the residential mortgage market. At the household level, unemployment is the most common cause of late mortgage payments. Variable rate mortgages became the most popular mortgage type in early 2025, reaching 42% of new mortgages in February, as the premium for variable-rate mortgages largely disappeared. Terms between 3 and less than 5 years were also still popular with new borrowers (32%). This speeds up the impact of future interest rate changes on borrower payments. New borrowers have taken advantage of lower interest rates to reduce their monthly payments. They havent shortened their amortization periods to the levels prior to the increase in interest rates. Mortgage lending by the largest alternative lenders outpaced the growth of national mortgage credit in 2024. These lenders risk profile has increased moderately due to higher delinquency rates, leading them to increase their loan loss allowance. https://www.cmhc-schl.gc.ca/professionals/housing-markets-data-and-research/housing-research/research-reports/housing-finance/residential-mortgage-industry-report

At a Glance In 2025, more first-time home buyers entered the market and about 60% used mortgage loan insurance. Renovation activity is growing, with 55% of homeowners doing renovations in the last 3 years. Websites are still the top source for mortgage information, but social media use has nearly doubled, with YouTube becoming more popular than Facebook. 2025 Housing Market Trends Canadas housing market is changing from more first-time homebuyers to a stronger focus on eco-friendly living. This year, there was an increase in first-time homebuyers. Most of them said they decided to buy because they were financially ready. They had saved up their down payment, qualified for a mortgage and felt prepared to become homeowners. On average, it took homebuyers 3.4 years to save for a down payment, compared to 4.2 years the previous year. Gifted money provided homebuyers with an average of about $80,000 to help them purchase a home. Renovations are gaining momentum. Over half of mortgage consumers completed upgrades within the last 3 years and 75% plan to renovate in the next 5 years (excluding those who dont know). Energy-efficient changes stand out due to high satisfaction levels (93%) and about 80% of homeowners reported saving money on energy bills. Mortgage consumers are turning to new ways to gather information. While websites remain the top choice, social media usage has surged, nearly doubling compared to last year. YouTube has replaced Facebook as the most-used social platform for this purpose. Younger audiences and first-time homebuyers are leading this shift to explore digital channels for advice and insights. https://www.cmhc-schl.gc.ca/blog/2025/a-fresh-look-at-canadas-mortgage-consumers