By Tom Parkin
July 17th, 2025
BURLINGTON, ON
Falling prices are welcome news for house buyers and renters, but the unchecked price surge from 2020 to 2022 created an affordability crisis and economic decline.
GTA real estate crash continues, house prices now down 22% from peak
There is no sign the downward slide in GTA house purchase prices is coming to an end, bringing the hope of affordability to those in the housing purchase and rental markets after the massive and unchecked price surge of 2020 to 2022.
The Canadian Real Estate Association’s June composite benchmark price for the Greater Toronto Area was under one million dollars for the first time since March 2021 and is now down 22 per cent from the February 2022 peak.
While restoring some housing market sanity is welcome news, the massive economic destruction caused by a massive 53 per cent price increase in 23 months is still being wrought, showing the cost of trust markets to self-correct even when clearly overheated and irrational.
Act 1: creating the crisis potential with zero interest rates
On January 2, the Bank’s policy rate sat at 1.75 per cent and its estimate of the average variable mortgage rate was 2.90 per cent, already low by historic standards.
Then on March 30, 2020, at its first meeting after the COVID-19 pandemic was declared, the Bank of Canada cut its policy interest rate to just 0.25 per cent, sending mortgage rates down. The Bank’s estimated average variable mortgage rate hit just 1.26 per cent on December 9, 2021 — almost free money.
Act 2: unchecked surge inflates prices 53% in 23 months
Lower rates qualified thousands of Canadians for bigger mortgages, bringing a surge of buyers to the market. But in Ontario, no action was taken to intervene in a obviously overheated real estate market and, in the 23 months from the Bank’s rate cut in March 2020 to the real estate peak in February 2022, the average GTA house price increased a massive 53 per cent.
While house prices in Vancouver also rose dramatically in a near-zero mortgage rate environment, from the March 2020 Bank rate cut to the Vancouver market’s price peak in March 2022, the average benchmark house price increased only 35 per cent. The B.C. government’s numerous market interventions included adding luxury taxes to high end properties, introducing a speculation tax, adding a foreign buyers tax and limiting the transition of property to short term rental use, such as through Airbnb.
Act 3: the affordability crisis hits consumer demand and tanks Ontario’s economy
Rising rents and mortgages rates — alongside grocery store inflation — put a squeeze on household budgets, putting consumers into retreat, as show by retail data.
After the real estate crash started, Statistics Canada reports retail sales in Toronto have fallen $280 million, or 2.4 per cent, from a peak in June 2022 to the most recent reported month. Vancouver retail sales have grown by $215 million, or 4.5 per cent.
In 2024, Ontario GDP lagged the national average while British Columbia’s economy grew fastest in Canada. June unemployment data from Statistics Canada reports an unemployment rate of 6.2 per cent in Vancouver and 8.7 per cent in Toronto.
Political leaders who do nothing while markets spin out of control have a heavy and lasting impact.
Retail sales from start of market crash to present
“Political leaders who do nothing while markets spin out of control have a heavy and lasting impact.” In a nutshell, Parkin would have you believe that Ontario is doing far worse than BC based solely on his political bias. Once again, the impact of tariffs on Ontario’s manufacturing based economy and the subsequent impact on consumer confidence are totally ignored.
With the 2026 City Budget coming up, let’s please sternly resist trying to do anything more about this result of the Ford utter failed Growth Plan to pretend any more we can fix it. We just don’t have any more DC or other subsidy money for Ford, so Mayor, please tell Ford you can do your job just fine without his blackmail Strong Mayor Powers.
He has failed to deliver. Not even with the dictator OLT, whose big money 96% in developer favour decisions, are much of the time – 10 years overall of OLT, now have been sitting not started.
Inflation over that time, plus City adding height and density to the growing dollar planning pie, are just being turned over as tax-payer past political OLT approvals subsidized down payments to resales, that seem to be invisible to the politicians reading this failure story the basic underlying reason for it.
It certainly won’t fix and as noted will just have multiplier impacts work through the economy as Act 3 of the story. I live in Ward 1, and I see a lot of empty lots on Plains Rd, E and W.; and in the large area MTSA, most of what are OLT territory. All of these are getting political favors, subsidies and planning policies galore. They are coming back and wanting ever more.
This will not work – you can look up Parkin in the Gazette archive. What I would like to see is the Council, and the Mayor especially, tell Ford, that you can manage the affairs of the City 2026 City budget just fine, and don’t need the Strong Mayor status.
So please, I don’t need Mr. Ford him telling me what my expenditure package should look like, I have many unhappy taxpayers already that think that is their responsibility..
What I really need, is for Mr.Ford to get out of my fiscal and subsidy spending face. I also have experienced planning and development staff that residents and Council expect should be able to achieve feasible and successful approvable projects without giving away the farm.
They need to get the politicians out of their face too, because those politicians have brought this ruin down on us with their nettling. As said, they have messed it up for 10 years – please go away.