Canada’s Housing Market Entering 2020: The Last Pre-Pandemic Snapshot
Canada entered 2020 looking as though its housing market had finally regained its footing.
Home sales had increased for nine consecutive months. Prices were rising again in many Ontario, Quebec and Maritime markets. Population growth remained historically strong, borrowing conditions were supportive and national housing construction was running at a healthy pace.
But beneath those national numbers were two very different housing markets.
In much of Central and Eastern Canada, buyers were competing for a shrinking supply of homes. Across parts of the Prairies and Newfoundland and Labrador, buyers had more selection and sellers faced greater pressure on price.
Official forecasts expected the recovery to continue through 2020. None of the major housing outlooks available at the time anticipated the disruption that would arrive only weeks later.
Historical archive note: The main analysis below reconstructs what was publicly known on or before January 1, 2020. Events and statistics published after that date are confined to the separate What Happened Afterwards section.
The short answer
Canada entered 2020 in recovery—but not in a nationwide housing boom.
Demand was strengthening, listings were becoming scarce in several major regions and prices were beginning to accelerate. At the same time, conditions remained considerably softer in several western and resource-dependent markets.
The most important fact was not the national average price. It was the widening difference between markets where buyers had too few homes to choose from and markets where sellers were competing for a smaller pool of buyers.
The national recovery was real
By November 2019, Canadian home sales had risen for nine consecutive months.
Sales increased another 0.6% from October to November and were 11.3% higher than one year earlier. Activity had climbed approximately 20% above the six-year low reached in February 2019, although it remained below the stronger national levels recorded in 2016 and 2017.
The national MLS® Home Price Index also increased 2.6% year over year in November—the strongest annual increase since March 2018.
Those numbers suggested that the weakness seen earlier in the housing cycle was easing. They did not, however, mean that every Canadian market was recovering at the same pace.
Sales gains across much of British Columbia and the Greater Toronto Area offset weaker activity in Calgary. Prices were recovering in the Greater Golden Horseshoe and continued to rise in Ottawa, Montréal and Moncton, while benchmark prices remained below year-earlier levels in Greater Vancouver, the Fraser Valley and several Prairie cities.
The national story was therefore one of recovery. The local story depended heavily on geography.
Canada was becoming a tale of two housing markets
The sharpest divide was visible in the amount of housing available for sale.
New listings fell 2.7% in November 2019. With sales rising and listings declining, the national sales-to-new-listings ratio increased to 66.3%, well above its long-term average of 53.7%.
Canada had only 4.2 months of resale inventory at the end of November—the lowest national reading since the summer of 2007.
That national measure still concealed major regional differences.
Ontario, Quebec and the Maritime provinces generally had inventory levels below their historical norms, creating more competition among buyers. The Prairies and Newfoundland and Labrador had considerably more supply relative to demand, giving purchasers greater negotiating leverage.
This distinction mattered far more to an individual buyer or seller than the national average price.
A buyer in Ottawa or parts of Southern Ontario could encounter limited choice and competing offers. A buyer in a softer Prairie market might have time to compare properties, negotiate conditions and challenge an ambitious asking price.
The country did not have one housing market. It had hundreds of local markets moving in different directions.
Homebuilding was strong, but the type of supply mattered
New-home construction remained an important source of supply entering 2020.
CMHC reported that the six-month trend in Canadian housing starts reached 219,047 units in November 2019, little changed from October. The standalone seasonally adjusted annual rate was 201,318 units.
Urban multi-unit construction accounted for most of that activity. Multiple-unit starts were running at an annualized rate of 141,753 units in November, compared with 46,806 single-detached starts.
That composition was important.
A high national level of construction did not necessarily mean that every community was producing the type, size or location of housing its residents needed. Apartment construction could add substantial unit counts while shortages persisted in particular neighbourhoods or housing categories.
CMHC’s fall 2019 outlook expected total starts to decline during 2019 before stabilizing in 2020 and 2021 near the longer-term historical average. It anticipated relatively stronger construction in British Columbia, while Ontario and the Prairies were expected to remain below some recent peaks.
The supply picture was therefore healthier than the resale inventory numbers alone suggested—but it remained uneven and increasingly weighted toward multi-unit development.
Population growth was reinforcing housing demand
Canada’s population growth supplied another powerful source of housing demand.
Statistics Canada estimated the country’s population at 37,589,262 on July 1, 2019—an increase of 531,497 people in one year. At the time, that was the largest annual population increase ever recorded in absolute numbers.
Growth continued during the third quarter. Canada added another 208,234 people between July 1 and October 1, driven mainly by immigrants and non-permanent residents.
Population growth does not translate immediately or evenly into home purchases. New residents may rent, live with family or settle disproportionately in certain urban areas.
It does, however, increase the underlying need for housing.
In communities already facing low resale inventory, sustained population growth could intensify competition for both ownership and rental homes unless construction and listings kept pace.
Interest rates supported demand—but debt remained a risk
The Bank of Canada entered the new year with its target for the overnight rate at 1.75%.
The Bank held that rate on December 4, 2019, describing the global economy as showing early signs of stabilization while warning that international trade conflicts remained a significant risk.
CREA also noted that mortgage rates had declined during 2019, including the benchmark rate used in the federal mortgage stress test. That modest reduction made it somewhat easier for borrowers to qualify for financing.
For buyers, the environment was supportive—but not without constraints.
Borrowers still needed to pass the stress test, assemble a down payment and carry housing costs that could be substantial in Canada’s more expensive markets. Higher household debt also left homeowners sensitive to future changes in income, employment or borrowing costs.
Low rates supported demand. They did not eliminate financial risk.
What forecasters expected for 2020
By December 2019, the dominant forecast was continued improvement.
CREA projected approximately 530,000 home sales in 2020, an 8.9% increase from its forecast for 2019. It expected the national average sale price to rise 6.2% to approximately $531,000.
CREA anticipated solid price gains in Ontario, Quebec and the Maritimes, a rebound in British Columbia and small declines in Alberta, Saskatchewan and Newfoundland and Labrador.
CMHC’s outlook was also constructive, though more measured in tone. It expected existing-home sales and prices to recover during 2020 and 2021, supported by household income growth and borrowing conditions, while housing starts stabilized near their long-run average.
The forecasts differed in magnitude, but they shared the same broad premise:
- Canada’s housing market was improving.
- Population and employment would continue supporting demand.
- Interest rates were unlikely to derail the recovery.
- Regional differences would remain substantial.
- Limited supply could push prices higher in already-tight markets.
It was a reasonable outlook based on the information available at the time.
It was also about to be overtaken by events no conventional housing forecast had incorporated.
What the market meant for Canadians at the time
For buyers
A national statistic could not tell a buyer whether a particular home was fairly priced.
In tight Ontario, Quebec and Maritime markets, buyers needed firm financing, realistic expectations and a clear understanding of comparable local sales. In softer Prairie and Newfoundland and Labrador markets, buyers generally had more room to negotiate price, conditions and closing terms.
The practical question was not simply, “Are Canadian prices rising?”
It was, “How much inventory is available in the specific market and property category where I am buying?”
For sellers
Pricing power depended on local supply.
A seller in a low-inventory market could benefit from increased competition, but an aggressive price still risked discouraging qualified buyers. In markets with excess inventory, accurate pricing and property presentation mattered even more because buyers had alternatives.
The national recovery did not guarantee a fast or profitable sale in every neighbourhood.
For homeowners
The 1.75% policy rate supported borrowing conditions, but highly indebted households remained vulnerable to income interruptions and future rate changes.
Homeowners considering refinancing, renovating or taking on additional debt still needed room in their budgets for unexpected expenses or economic weakness.
For investors
Strong population growth and constrained inventory supported the long-term demand case in several urban markets.
But the regional divide was a warning against treating “Canadian real estate” as a single investment. Rental demand, new construction, condominium completions, local employment and financing costs could produce very different results from one city—or even one neighbourhood—to another.
What Happened Afterwards
The outlook changed dramatically after the historical cutoff date.
In March 2020, the COVID-19 pandemic disrupted employment, mobility and financial markets. The Bank of Canada reduced its policy rate from 1.75% to 0.25% through a series of emergency decisions, reaching its effective lower bound on March 27.
The initial housing slowdown was followed by a remarkably strong rebound.
A record 551,392 homes changed hands through Canadian MLS® Systems during 2020—12.6% more than in 2019. By December 2020, the national MLS® Home Price Index was 13% higher than a year earlier.
Demand remained intense in 2021 while the supply of homes available for sale repeatedly reached record lows. CREA reported that national prices rose by more than 20% during that year.
The direction changed again in 2022.
To combat inflation, the Bank of Canada raised its policy rate seven times, taking it from 0.25% at the beginning of the tightening cycle to 4.25% by December.
By November 2022, Canadian home sales were 38.9% below their near-record level from one year earlier, and the national MLS® HPI had fallen approximately 11.5% from its peak.
The Bank raised the policy rate to 5% in July 2023, placing additional pressure on mortgage qualification and household affordability.
The sequence was extraordinary:
recovery → pandemic shock → emergency rate cuts → record demand → severe supply shortages → rapid rate increases → market correction
None of that makes the pre-2020 forecasts careless. It demonstrates the limits of any forecast when an unprecedented shock changes employment, interest rates, household priorities and migration patterns at the same time.
The enduring lesson from the start of 2020
The most valuable lesson from this historical snapshot is not that the market moved differently than experts expected.
It is that national housing conditions can change quickly while local differences remain decisive.
Entering 2020, Canada already had many of the forces that would shape the years ahead:
- Strong population growth
- Limited resale inventory in major regions
- Heavy reliance on multi-unit construction
- High household debt
- Large differences between provincial and municipal markets
- Prices that were highly sensitive to borrowing conditions
The pandemic did not create every pressure in Canada’s housing system. It accelerated some, interrupted others and changed how households responded to them.
For buyers and sellers studying the market today, the practical lesson remains the same: national headlines provide context, but sound decisions require current local evidence—inventory, recent comparable sales, days on market, financing costs and the type of housing actually available.
Frequently Asked Questions
Was Canada’s housing market booming on January 1, 2020?
No. It was recovering after a weaker period, but conditions differed widely. Several Ontario, Quebec and Maritime markets were tightening, while parts of the Prairies and Newfoundland and Labrador remained comparatively well supplied.
Were Canadian home prices rising everywhere?
No. National benchmark prices were increasing, but several western markets remained below their year-earlier levels. Prices were generally stronger in Ontario, Quebec and parts of Atlantic Canada.
Why use the MLS® HPI instead of only the national average price?
The national average can change when a greater share of sales occurs in expensive markets such as Greater Toronto or Greater Vancouver. The MLS® HPI is designed to provide a more consistent measure of underlying price trends.
Does this article describe Canada’s housing market today?
No. The main article is a historical reconstruction of information available by January 1, 2020. The aftermath section explains the major events that followed, but anyone making a current decision should use the newest national and local market data.
Source Notes
Main historical narrative—available before January 1, 2020
- Canadian Real Estate Association, November 2019 sales and price release, published December 16, 2019.
- Canadian Real Estate Association, 2020 resale-market forecast, published December 16, 2019.
- Canada Mortgage and Housing Corporation, November 2019 housing-starts release, published December 9, 2019.
- Canada Mortgage and Housing Corporation, Fall 2019 Housing Market Outlook, based on information available September 12, 2019.
- Statistics Canada, July 1 and third-quarter 2019 population estimates.
- Bank of Canada, December 4, 2019 interest-rate decision.
Aftermath sources—published after January 1, 2020
- Bank of Canada, March 27, 2020 emergency interest-rate decision.
- Canadian Real Estate Association, 2020 annual resale-market results.
- Canadian Real Estate Association, December 2021 housing-market forecast.
- Bank of Canada, 2022 interest-rate decisions and annual review.
- Canadian Real Estate Association, November 2022 market statistics.
- Bank of Canada, July 12, 2023 interest-rate decision.
