No single year in recent memory has swung as violently as 2022. The Canadian housing market began at a record high amid a final buying frenzy and ended it deep in correction, its trajectory reversed almost entirely by the Bank of Canada's rapid tightening. It was, in the truest sense, a year of two halves. As it closes, we look back at how the market turned, what drove the reversal, and what the coming year may hold for buyers, sellers, and borrowers.
Verified · 2022
Beginning March 2, 2022, the Bank of Canada raised its policy rate from 0.25% to 4.25% by year-end — the fastest tightening cycle in decades.
The first half: peak and pivot
The year opened at fever pitch. January and February saw record prices, bidding wars across every price point, and inventory at historic lows, all fuelled by cheap money and a rush to buy before rates rose. Then, in March, the Bank of Canada delivered its first hike, and the pivot began. The frenzy that had defined the winter gave way almost immediately to caution, and by spring the market had begun its turn.
The second half: correction and rate shock
From spring onward, the story was correction. Rates climbed relentlessly — the Bank of Canada's overnight rate went from 0.25% in March to 4.25% by December — and effective borrowing costs roughly doubled over the year. Prices fell meaningfully from the February peak, most sharply in the GTA, its commuter belt, and Ontario's pandemic boomtowns. Sales volumes collapsed, bidding wars vanished, and buyer hesitancy became the market's defining mood.
Bank of Canada policy rate, 2022
Overnight target rate at each 2022 decision. Source: Bank of Canada.
By the numbers
A few figures capture the arithmetic of the year: the pace of the Bank of Canada's tightening, where the policy rate landed, and the correction that followed across the hottest markets. The rate figures are verified; the price and volume figures are directional estimates.
Rate: verified. Other figures: Homicity Research estimate.
The regional divergence
The correction was far from uniform. The markets that had run hottest fell hardest, while Calgary and much of Alberta proved resilient, insulated by affordability, energy strength, and migration from higher-cost provinces. Montreal, Ottawa, and Halifax cooled from healthier starting points. The year underscored a durable truth: markets grounded in fundamentals withstand rate shocks far better than those inflated by cheap credit.
Estimated peak-to-December 2022 price change by market
Illustrative - Homicity Research estimate.
The affordability reckoning
For all the price declines, affordability did not straightforwardly improve. The stress test at higher qualifying rates priced many buyers out even as prices fell, and variable-rate borrowers absorbed genuine payment shock. The paradox of 2022 was that a home could cost less than it did in February yet remain harder to finance, because carrying cost is driven as much by the interest rate as by the price itself.
The trigger rate: 2022's defining payment shock
The year's most consequential mechanic was one most borrowers had never heard of before 2022: the trigger rate. Many Canadians held variable-rate mortgages with fixed monthly payments, an arrangement in which the payment stays constant while the split between principal and interest shifts as rates move. As the Bank of Canada lifted its policy rate from 0.25% to 4.25%, the interest portion of those payments swelled until, for a large share of borrowers, the fixed payment no longer covered even the interest owed. That inflection point is the trigger rate. Once a borrower reaches it, their loan stops amortizing and can begin to grow — negative amortization — as unpaid interest is added to the balance. Lenders responded by extending amortizations, requiring lump-sum payments, or raising monthly payments outright, and by year-end a meaningful share of variable-rate holders faced exactly that reckoning. It was the payment-shock story that defined 2022, quietly reshaping household budgets even where headline prices had already fallen.
Verified
As the Bank of Canada raised its policy rate by 4.00 percentage points across 2022, many variable-rate borrowers with fixed payments hit their trigger rate — the point at which the payment no longer covers the interest, forcing extended amortizations or higher payments.
A year that reshaped the platform
For Homicity, 2022 was also a year of building. In the summer we launched Homeprint, our instant property-intelligence report, and Lenderoo, our mortgage and lending platform, extending our work from data into consumer-facing tools. We built them for exactly this kind of market, one where clarity about what a home is worth and what it costs to finance matters more than it does in any boom.
Looking ahead to 2023
The market enters 2023 in a very different place than it entered 2022. Much depends on whether the Bank of Canada nears the end of its tightening cycle, as many expect. If rates stabilize, buyer confidence could gradually return, though a rapid rebound seems unlikely given how stretched affordability remains. We expect a cautious, rate-sensitive market in the year ahead, one that rewards preparation, patience, and good data over speed and speculation.
This analysis is built on Neighbourly.io — the real estate data API for Canada. Standardized addresses, boundaries, demographics, permits and market signals through a single interface.
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