‘My financial life was turned upside down’: Toronto homeowners stuck in a market shift

A woman looks out at the Toronto skyline from Sheldon Lookout during sunrise in Toronto on Friday, November 5, 2021. THE CANADIAN PRESS/Evan Buhler

For a while, Jordan Baechler thought he was doing everything right.

At 26, he bought his first home; a one-bedroom condo in Toronto’s King West neighbourhood for about $600,000. A high school teacher and coach, he says he was determined to build equity and eventually move into a house before turning 30.

“That was my goal,” he said.

But that dream began to unravel only months later.

“I bought with a variable rate mortgage and my financial life was turned upside down by the year 2022,” said Baechler. “I waited too long to lock in… I was advised the variable rate has long been more competitive than a fixed rate.”

Instead, interest rates surged. After the pandemic, the central bank raised interest rates to five per cent for 11 months, in an effort to curb inflation which peaked at a whopping 8.1 per cent.

Baechler‘s monthly mortgage costs soared as a result going up by approximately $500 a month and prompting him to lock in with a fixed rate due to fear.

At the time, Baechler took on a second job as a server just to stay afloat, working from 7 a.m. to 11 p.m. for months. At one point, he left the country to live in Australia for over a year so he could rent out the unit and pay his mortgage from afar.

Now 29, he’s back in Toronto with his girlfriend but they still feel stuck in the same unit amid a tepid real estate market.

The average price of a Toronto home across all property types was down four per cent year-over-year in April at $1,107,463 and is now far from the peak of $1,334,062 reached in February 2022 before the central bank started raising interest rates, according to the Toronto Regional Real Estate Board (TRREB).

The board also says the condo market, saw the steepest decline in sales last month, where 30.4 per cent fewer properties were sold compared to last year.

“We are planning on getting married and having kids, but want to buy a house first. The issue we feel is that we would have to take a significant loss on our condo to sell it, but of course can’t buy a new house without selling the condo,” Baechler said.

Baechler is just one of thousands of Ontarians struggling to keep up with mortgage payments as debt levels rise. In the past week, CTV News Toronto has heard from dozens of GTA residents who expressed feeling stuck with a ‘forever mortgage’ despite interest rates now stabilizing.

Experts suggest the mix of falling home values, high debt, and economic uncertainty is creating a new wave of “mortgage-trapped” homeowners — people who can’t afford to stay, but also can’t afford to sell.

According to Equifax Canada, more than 11,000 Ontario mortgages recorded missed payments in the last quarter of 2024. Just this week, the Bank of Canada warned that if the trade war continues, households could fall further behind on mortgage payments at levels that exceed the 2008 financial crisis.

More borrowers asking for re-amortization

Already, the Bank of Canada has cut its policy rate seven times since last June, holding its policy rate steady at 2.75 per cent in April. But for some like Baechler who locked in at higher rates, that has been of little relief.

“The tariffs have caused a lot of instability in the economy,” said Justin Herlick, co-founder of Pine, a Canadian mortgage lender and brokerage. “Mortgage rates have gone down steadily over the last year, but it’s very hard for Canadians to plan… They don’t know what’s going to happen to their costs.”

Herlick says his firm is seeing more borrowers ask for re-amortizations; an effort to stretch mortgages from 20 or 25 to 30 years so they can lower monthly payments. It’s a tactic that buys time but also increases long-term debt, he warned.

“It kind of puts them on this hamster wheel,” he said. “They don’t have to sell the home at a loss but they’re just paying more interest.”

Federal officials also say that tactic could “add up to thousands or tens of thousands of dollars” in interest payments over the years.

Why small condo owners are ‘very exposed’

Baechler says the idea of upgrading now feels impossible. He and his girlfriend want to start a family but fear they’ll be trapped in a one-bedroom unit forever.

“We really want to get married, we really want to have kids, and we really want to buy a house,” he said. “We can’t do any of those things right now.”

He’s not alone. Herlick says many small condo owners, particularly in the GTA, are “very exposed” in the current market.

“There are so many listings,” he said. “People want to buy them, but their costs are so high… Property tax, maintenance fees, insurance — it’s not just the mortgage.”

Buyers misled?

Mya Elango, a newcomer to Canada, moved her family to Mississauga in 2018. After years of saving, they bought a three-bedroom home in Kitchener-Waterloo for about $900,000. But she says they were pressured to bid far above asking and enter the market during a peak and competitive period.

“Due to misguidance we bought a property for $100,000 more than asking price in a high interest rate. Then the struggle started,” she said.

Their monthly mortgage now tops $4,000, not including insurance or other costs.

“Most of our income is going to pay the interest,” she said. “We were not lucky enough to buy at lower interest rates.”

Real estate agents push back

Some realtors acknowledge the risks of the previous market but suggest that the right agent can help steer buyers towards properties that they can actually afford.

“There are two types of realtors in this market: transactional and relationship-based,” said James Milonas, a Toronto-based real estate agent. “Most are transactional, they’re on to the next one real quick. A relationship-based agent will tell you: this is not the right deal for you.”

He says, at the time, many buyers were desperate to get into the market at any cost.

“Some people were spending a million dollars over asking,” he said. “There was no inventory… people just wanted in.”

Milonas adds that homeowners who feel “trapped” should try to wait it out if they can.

“If you can, hold tight until the market corrects itself,” he said.

Debt keeps growing

Even as interest rates fall, personal debt continues to climb. The average non-mortgage debt in Toronto is now over $21,000, up 3.34 per cent from a year ago, according to the Equifax Canada report. Meanwhile, new buyers are getting older. A recent report from Teranet found the average first-time buyer in Ontario is now nearly 40.

Jessica Moorhouse, a personal finance expert, says she’s hearing more anxiety in 2025 than at any point in the past two years.

“I’ve been getting more questions about cashflow and anxiety,” she said. “What can I do, how can I prepare… I’m definitely hearing more of these conversations than I have in the past. If you feel trapped and the mortgage is your biggest bill every month and there’s hardly anything left over, that can feel very much like you’re in a prison where there’s no way out.”

A younger generation feeling boxed out

Baechler says the economic reality has left him and many of his peers in limbo. Of his 15 friends around the same age — all university-educated — only one owns a home, he said. The rest are still renting.

“We both have our masters, we’re working two jobs, and we still feel behind,” he said. “The rules of the game have changed… and we weren’t given the awareness of how those rules were changing.”

He and his girlfriend are now looking to relocate outside the city; Orangeville, Halton, maybe Cambridge, but even that feels out of reach.

“When I think about buying a house and having a kid, I can’t guarantee I would be able to provide all of those things,” he said. “It’s scary.”

READ MORE: Is it finally cheaper to rent than buy in Toronto? Here’s what experts have to say