The Rate Shock
Anatomy

Same policy rate. Same country. Wildly different outcomes. The 2022 rate shock exposed how unevenly Canada's housing markets were built.

March 2022: the market peaks

Before the Bank of Canada moved, prices were at all-time highs across the board. Toronto hit 175 — 75% above its 2016 baseline. Ottawa and Vancouver were not far behind. Only Calgary and Edmonton were still rising from a low base.

7 hikes in 10 months — the fastest cycle in 40 years

The Bank of Canada raised the policy rate from 0.25% to 4.25% between March and December 2022 — the steepest tightening since the 1980s. Variable-rate mortgage holders saw payments jump by 40–60% virtually overnight.

Toronto leads the fall

Toronto dropped 16 index points from peak to trough — the sharpest correction of any major city. Its extreme leverage made it the most exposed. Vancouver fell 11 points; Ottawa and Montréal 8–13 points.

Calgary: the rate shock didn't land

Calgary's index rose through the entire rate cycle — from 116 in 2022 to 128 in 2024. Alberta's economy was insulated: high oil revenues, net inter-provincial migration, and a lower leverage base meant rate hikes landed softly.

2024: partial recovery, permanent affordability damage

By 2024 most markets had recovered 40–60% of their correction. But with rates still above 4%, affordability didn't improve — prices stopped falling before they became affordable again.

Sources

Data is approximate and for illustrative purposes only. Verify against official publications before any decision-making use.