The Ontario Housing Collapse is Worse Than You Think

While the national headlines are talking about a housing market that's cooling but stable, the real story is buried in the fine print of Ontario's mortgage data. There’s a dangerous split happening right under our noses—a divergence between what the rest of Canada is seeing and the financial nightmare that's quietly unfolding for homeowners across Toronto and the GTA.
These aren't just numbers; they're warning signs. There are specific charts and data points you won't see on the nightly news that reveal a silent crisis about to get very, very loud. What they show is a perfect storm of economic pain and policy disaster that goes way beyond simple interest rate hikes. And as I’ve been saying on this channel for months, the pressure building under the surface was bound to show some cracks. Today, we’re looking at those cracks as they spread.

Let's start with the most critical piece of data, the one that’s hiding the real story. According to a recent report from the Canada Mortgage and Housing Corporation (CMHC), the national mortgage delinquency rate—that’s people falling behind on their payments—actually decreased in the second quarter of 2025 for the first time in three years, landing at 0.22%. On the surface, that sounds like good news. It suggests stability.

But that national number is a mask. It’s hiding a regional disaster. Because in that very same report, we see the truth. While the rest of the country improved, Ontario’s mortgage delinquency rate climbed to 0.23%, pushing it above the national average for the first time in over a decade. Let that sink in. The economic engine of Canada is now performing worse than the country it’s supposed to be leading.

And if you zoom in on the epicentre of this crisis, Toronto, the numbers get truly alarming. Toronto’s mortgage delinquency rate didn’t just climb; it exploded. It jumped from 0.15% in the second quarter of 2024 to 0.24% in the second quarter of 2025. That is a staggering 60% year-over-year increase, hitting a level the city hasn't seen since the third quarter of 2012. While the rest of Canada breathes a sigh of relief, Toronto is suffocating.

A recent Bank of Canada report laid it out in stark terms: roughly 60% of all mortgage holders in Canada are set to renew in 2025 and 2026. For the majority of these homeowners, especially the 40% who took out a five-year fixed-rate mortgage back in 2020 or 2021, the payment shock will be brutal. They locked in at record-low rates, some below two percent. Now, they are facing renewals at significantly higher rates. The Bank of Canada’s own analysis states that these homeowners face an average payment increase of around 15% to 20%. Let me translate that for you: that's an extra $5,000, or more, per year just to keep the exact same home.

But this payment shock isn't happening in a vacuum. It's happening at the exact moment the job market in Ontario is showing signs of trouble. In October 2025, while the national unemployment rate was 6.9%, Ontario's was significantly higher at 7.6%. And again, zoom into the GTA, and it gets worse. The unemployment rate in the Toronto region for October was a staggering 8.9%.

In the GTA, new listings were up 2.7% year-over-year, but sales plummeted, dropping 9.5% compared to last year. More supply and less demand—that's the classic recipe for a buyer's market, and it’s putting serious downward pressure on prices. The average selling price in the GTA was down 7.2% year-over-year to just over $1,054,000. Detached homes saw their average price fall 7.3%, and the average price for condos dropped 4.9% to around $660,000.

But don’t let anyone tell you this is a "soft landing." A soft landing doesn't come with a 60% explosion in mortgage defaults. A healthy correction doesn't happen while the job market is sputtering and a massive wave of payment shock is still building.

What we are seeing is not a collapse in prices—not yet. What we are seeing is a collapse in the financial health of the homeowner. That’s the hidden crisis. The prices are just a lagging indicator. The real story is in the delinquency rates, the unemployment figures, and the sheer number of people who are about to find out their mortgage is unaffordable.

If you're a homeowner trying to navigate this uncertainty, a buyer who's seeing opportunity, or a seller who needs a data-driven strategy in this market, the time for guessing is over. You need a clear, fact-based plan.

Book a free, no-obligation call with me at 416-845-9872. I can walk you through what this data means for your specific situation.

John Karimzad Broker
Direct 416-845-9872
Office 905-475-4750
Re/Max Excel Realty Ltd, Brokerage

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