Let’s be candid: If you bought a home during the pandemic rush, especially in one of Canada’s “boomtowns,” you might be feeling the pressure today. A growing number of homeowners are finding themselves in a tough spot — owing more on their mortgage than what their home is currently worth.
What happened?
When COVID-19 hit, a lot changed — including how Canadians viewed their living space. With record-low interest rates, remote work becoming the norm, and a desire for more space, people made big moves. Literally.
From the Greater Toronto Area to suburban pockets in Ontario, B.C., and Alberta, buyers jumped into the market, hoping to lock in a low rate and ride the price wave. And for a while, that worked.
But now that wave has pulled back.
According to the Canada Mortgage and Housing Corporation (CMHC), the pandemic-driven housing boom saw home prices in many regions spike by over 50% between 2020 and early 2022. Now, in 2024–2025, some of those same markets have seen values dip anywhere from 10% to 20% depending on location and property type.
The result?
A growing number of homeowners are “underwater” — meaning their mortgage balance is higher than their home’s current market value. That makes selling difficult and refinancing even tougher.
Recent data from Equifax Canada shows that mortgage delinquencies are starting to rise, particularly among newer homeowners and in provinces that saw the sharpest price increases and subsequent declines.
In some Ontario suburbs, like Durham Region, Barrie, and Niagara, values are down significantly from their peak. And if you put less than 20% down — or took on a variable-rate mortgage — the numbers might not be in your favour right now.
What’s causing this imbalance?
It’s a combination of:
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Higher interest rates: The Bank of Canada has pushed its key rate from 0.25% in 2021 to 5% by mid-2025. That’s cooled demand — fast.
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Increased inventory: Builders responded to the pandemic demand by ramping up construction. Now some of those homes are sitting on the market longer.
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Price correction: After the frenzy of 2021, many markets are simply rebalancing. This isn’t a crash — it’s a recalibration.
What does this mean if you’re looking to sell?
If you’re underwater, selling might not cover your mortgage. That means you’d have to make up the shortfall out-of-pocket — a tough pill to swallow, especially in a time of higher cost of living.
So, should you panic?
No. Let’s keep things in perspective.
While some buyers are underwater on paper, that doesn’t necessarily mean disaster. If you plan to stay in your home and ride this out, time is on your side. Canada’s population is growing (thanks to strong immigration), and long-term housing demand remains solid — especially in cities like Toronto, Ottawa, Calgary, and Halifax.
But if you need to sell or refinance soon, it’s important to get the right advice. There are options — including second mortgages, equity take-outs, or alternative lending strategies — but you need to approach it smartly.
Bottom line?
The pandemic housing frenzy left some scars. But if you’re feeling stuck, don’t stress in silence. Reach out. Let’s talk strategy, not panic. You’ve got options — even if things feel tight right now.
— Mortgage With Mike