{"id":916240,"date":"2026-10-01T06:18:17","date_gmt":"2026-10-01T06:18:17","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/916240\/"},"modified":"2026-10-01T06:18:17","modified_gmt":"2026-10-01T06:18:17","slug":"canadian-home-prices-back-to-2016-levels-after-inflation-still-out-of-reach","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/916240\/","title":{"rendered":"Canadian Home Prices Back To 2016 Levels After Inflation, Still Out of Reach"},"content":{"rendered":"

Canadian home prices climbed for the first time in a little over a year, according to Bank for International Settlements (BIS)<\/a> Q2 data. Adjust for inflation, however, and the brief gain disappears. Real home prices fell further, reaching their lowest level in nearly a decade\u2014but that doesn\u2019t mean buyers are finding 2016-era affordability.\u00a0<\/p>\n

Canadian Home Prices Remain Nearly 20% Below Peak<\/p>\n

Canadian home prices climbed 0.78% in Q2 2026, marking the first quarterly increase in over a year. Prices remain 3.97% lower than last year, and 19.50% below the record high. A quarter of growth may be a positive sign, but it doesn\u2019t change that prices have tumbled all the way back to 2021 levels\u2014in nominal terms. As rough as it looks, the picture in real terms isn\u2019t improving.\u00a0<\/p>\n

Canadian Home Prices Have Fallen Nearly 30% After Inflation<\/p>\n

Canadian home prices in nominal and real (inflation-adjusted) terms.\u00a0<\/p>\n

Source: BIS; Better Dwelling.\u00a0<\/p>\n

After inflation, Canadian home prices fell 0.87% in Q2, marking a fifth consecutive quarter lower. Real prices are 6.72% lower than a year earlier, and that 19.50% drop from peak turns into a massive 29.93% plunge once adjusted for purchasing power. That puts them roughly where they were in 2016 in real terms, marking the largest inflation-adjusted peak-to-trough drop in over half a century\u2014and it may not be over.\u00a0<\/p>\n

It\u2019s a tough pill to swallow. Few would consider the market as affordable as it was in 2016. Sales remain slow, with few people scrambling to buy at nearly a decade\u2019s low for real home prices. Part of the explanation lies in the difference between purchasing power and affordability.<\/p>\n

Lower Real Home Prices Don\u2019t Guarantee Affordability<\/p>\n

Canadian incomes have beaten inflation and performed surprisingly well on average. The term \u201con average\u201d is the key term, as a recent Bank of Canada (BoC) paper revealed<\/a>. The researcher found that the bottom 60% of households by disposable income did not see their income rise enough to offset the surge in living expenses. The headline improvement concealed mounting budget pressure across much of the income distribution.\u00a0\u00a0<\/p>\n

The problem is amplified among younger households, with RBC recently warning that parents are helping their adult children buy groceries<\/a>. If the group that\u2019s supposed to be buying a starter home still needs help with groceries into their late 30s, they\u2019re probably not in the market for a home.\u00a0<\/p>\n

Policy has also leaned on expanding borrowing capacity to address affordability. Since the early 1980s, the gross debt service (GDS) ratio ceiling climbed from 32% to 39% of gross household income, allowing more income to be committed to qualifying housing costs. The insured mortgage price cap also rose 50% to $1.5 million, a change pitched as helping first-time buyers. Yet buying near that ceiling with a minimum down and a 30-year amortization requires roughly $300,000 in annual household income at current fixed rates.\u00a0<\/p>\n

Expanding access to larger mortgages that require some of the highest incomes in the country does little to help buyers still struggling with grocery bills. Even if real home prices are back to where they were almost a decade ago, and inflation is \u201clow and stable.\u201d<\/p>\n

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