Where Canada’s housing market could go next as summer nears
Springtime in Canada historically means that, like the weather outside, the real estate market in Canada will start to warm up very soon, but things seem a little different this year.
With many experts noting a slower start than normal, those looking to move or even buy their first home could be in a position to find a deal depending on preferences, budgets and how willing you are to compromise.
“Spring has really been off to quite a slow start right across the board,” says research expert Anne-Elise Allegritti at Royal LePage.
“That’s due to just a lack of confidence generally in the economy in the country due to trade relations with the United States. That’s really putting a huge damper on Canadians’ mentality.”
The month of April saw home sales decline nearly 10 per cent compared with 2024, according to the latest report from the Canada Real Estate Association.
However, when factoring out seasonal variations, as most economists do to better gauge the underlying trends, April actually saw few to no changes from March after several months of declines.
“Things haven’t really picked up, but they’re not necessarily getting worse. So this could be the turning point,” Allegritti says.
“I think what we’re seeing (based on April’s report) is that buyers don’t feel a real sense of urgency. I’ll be curious to see what May data looks like.”
Potential home buyers waiting on the sidelines may be waiting for the economic outlook to improve, especially considering what U.S. President Donald Trump’s tariff policies are projected to do to global economies.
Things could change in a few weeks for Canada’s real estate market depending on what the Bank of Canada decides when it meets in June to update its monetary policy.
This means the central bank could leave interest rates where they are, like last time, or potentially bring them down, which would mean lower mortgage rates for many potential buyers. A rate hike is also a possibility.
The next rate decision will be announced on June 4.
Although the Bank of Canada has struck a more cautious tone recently, given the trade war’s anticipated impacts on the economy and affordability in general, some experts are still optimistic for another rate cut soon.
“Mitigating the effects of the trade war, that’s still front of mind for the Bank of Canada. So that would make them more likely to cut,” says mortgage expert Clay Jarvis at NerdWallet.
“Unemployment is rising right now. That might make them want to cut. There aren’t really too many positive signals in the economy that would have the Bank of Canada holding off.“
The Canadian labour market has shown signs of weakness as the trade war develops, and the Bank of Canada may see this as a signal to make borrowing money more affordable because businesses, in theory, would then be more likely to start hiring again.
So, economists generally suggest, lowering interest rates could not only potentially help to reduce unemployment, it may also make mortgages for home buyers more affordable.
If buyers are more able to afford a home, then there could be a spike in offers on available listings soon after any potential next rate cut by the central bank.
Not every region is the same, though, so where buyers end up may depend on affordability as well as available inventories — be it detached houses or condos.
“Ten years ago, it was Toronto and Vancouver were hot and everyone else was not, and now it’s the opposite. It’s places that are more affordable where you can get a house in the $300,000 and $400,000 range that are super hot, so that’s the Prairies, Quebec and the East Coast,” Cathcart says.
“B.C. and Ontario were cool to begin with and they’ve cooled even further, in particular the Greater Toronto Area is sort of topping that list of places where things have really cooled off.”
Not all homes are alike, with demand seemingly higher for single-family houses compared with multi-unit options like a condominium due to a vast difference in available options.
In big cities like Toronto and Vancouver, the past decade or so saw a big surge in multi-unit developments, and now the market is switching gears.
“There’s a lot of condos in the market, which is driving prices way down because investors aren’t purchasing. The buyer pool has dried up because the majority of those were investors in the past, and now the investors are not coming,” says real estate sales representative Stephen Moore at Century 21.
“The condo prices are already inflated. You just need to take the loss if you’re selling and move on. It’s a tricky market for condos.”
All that suggests that depending on preferences and budgets, there could be opportunities in the next few months if buyers are looking for more affordable options. This may include a house in the Prairies, Quebec or the East Coast, or perhaps a condo in Toronto or Vancouver.
With the trade war, Canada’s economic outlook, the Bank of Canada’s upcoming rate decision and so many other variables, there is a lot of uncertainty for investors and home buyers alike, no matter how affordable a deal may seem.
“You really have to look at your current conditions, your current financial conditions and it having some sort of semblance of job security. If you have that, the market is actually pretty inviting right now,” Jarvis says.
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