The only thing colder than Toronto in January is the city’s housing market.

While the bleak midwinter is never the best time to sell a home in Canada, a string of open houses in the country’s largest city were chillingly empty on a recent Saturday afternoon.

Tougher mortgage rules went into effect on Jan. 1 — just as higher interest rates began to bite, and the market’s on edge, waiting to see whether a downturn that began last year will accelerate under the added pressure.

“Lots of people are sitting on the sidelines waiting or hoping that prices would fall,” said John Pasalis, president of Toronto-based Realosophy Realty Inc. “I don’t expect to see a rapid increase in prices or a big turnaround this year.”

Toronto’s housing market has cooled for seven months, with prices falling and listings surging. The market has begun to buckle under a raft of measures to curb prices that were soaring at a 20 percent clip a year ago and saddling Canadians with debt, part of a global real estate boom that’s swept cities from Hong Kong to New York.

The latest move requires that even people with a 20 percent down payment, who don’t need mortgage insurance, prove that they can make payments at much higher rates. The so-called stress tests, which already exist for insured mortgages, will be calculated at a rate of at least 2 percentage points above the contracted rate.

And those rates are going up.

The country’s central bank increased its overnight target rate three times in the past year, to 1.25 percent. The country’s big banks have followed suit, nudging mortgage rates to a four-year high.

Reality is sinking in as buyers update their preapproved mortgages at the higher rates, Dawna Borg, a sales representative at ReMax Premier Inc., said in an e-mail.

“They seem to feel defeated,” she said. “They feel they will fail the stress tests and they will be forced out of the market.”

Analysts at Macquarie Capital Markets Canada Ltd. said the new stress tests and mortgage-rate hikes in Canada’s environment of “hyper-leveraging” will have a more severe effect than policymakers expect. The rules alone will reduce purchasing power by as much as 17 percent, the bank said in a report. Add in the mortgage-rate increase and that number jumps to about 23 percent.

The Magnelli family is feeling the effects. Loredana Magnelli has saved for a few years to help her two children, age 30 and 26, put together down payments to purchase apartments in Toronto. Their price point of about $300,000 each seemed like a viable opportunity two years ago. Now, that seems impossible.

“When you’re looking at a $400,000 to $450,000 mortgage and your interest rate is going to be higher, that’s huge money,” Magnelli said. She considered adding another mortgage to her own house to help get her children their dream homes, but ultimately decided against it. They have stopped their search for now in hopes that home prices will fall to more affordable levels.

Amid the crunch in single-family houses, Tim Syrianos, president of the Toronto Real Estate Board, said he has seen a “tremendous spike” in interest for more affordable housing types like condominiums, townhouses and semidetached homes. While the city’s detached-house segment tumbled in the second half of 2017, condominium sales rose at a double-digit pace.

Activity is also seeping out into surrounding suburbs that are near public transit and far more affordable than the city core, real estate agents said.

And just when you think the Canadian housing market is down for the count, it tends to find a second wind.

Vancouver’s housing market plunged for five months after policymakers introduced a foreign-buyers tax in 2016 but has been recovering steadily since last year.

Toronto’s economy, meanwhile, is booming with the unemployment rate falling to 4.3 percent in December from 5.5 percent a year ago even as the city remains a magnet for immigrants.

Syrianos’ big worry isn’t a cooling market but the lack of supply. “If supply continues to be as tight as it is, we will see double-digit increase in values.”

Two of his clients, for example, were looking to buy a new house after having a baby but no longer qualify for a bigger mortgage under the new stress tests. They’re renovating instead.