2025 Canadian Housing Market Outlook

Published By: , January 6, 2025

The Canadian real estate market, particularly in Ontario, is poised for notable developments in 2025. Here’s an overview of key factors influencing the market:

Housing Sales and Inventory

• Sales Activity: After a subdued 2024, the Greater Toronto Area (GTA) saw an 18.7% decline in home sales in December, marking a five-month low. Despite this, total home sales for 2024 increased by 2.6% to 67,610 units.
   Reuters
• New Listings: New listings in the GTA rose by 16.4% in 2024, providing buyers with more options and increased negotiating power, especially in the condo market.
   Reuters

Condominium Market Dynamics

• Toronto’s Condo Surge: The influx of condo listings in Toronto has created opportunities for first-time buyers to secure favorable deals. This trend is expected to continue into the first half of 2025, with prices projected to rise by 3.5% year-over-year to approximately $605,993.
  Renx Homes

Interest Rates and Buyer Behavior

• Interest Rate Cuts: The Bank of Canada reduced its policy rate to 4.5% in 2024, with further cuts anticipated in 2025, potentially lowering it to 2% by fall.
  Wall Street Journal
  Morningstar
  These reductions have improved mortgage affordability, spurring increased market activity.
• Buyer Sentiment: Despite rate cuts, many potential buyers remain cautious, awaiting further reductions to enhance affordability. This cautious approach may temper immediate market acceleration.
  Reuters

Pricing Trends

• Average Sale Prices: In the GTA, the average selling price in December 2024 was approximately $1,094,000, showing slight month-over-month and year-over-year increases.
  Reuters
• Freehold Market: Single-detached homes, semi-detached houses, and townhomes are experiencing tighter market conditions due to limited inventory. Prices in this segment are relatively flat, with expectations of a 7% increase in 2025, reaching around $900,833.
  Renx Homes
• Condo Market: Condo prices have seen reductions, but with increased inventory and buyer interest, a modest price appreciation of 3.5% is anticipated in 2025.
   Renx Homes

Market Outlook

• Spring Inventory Surge: A significant increase in housing inventory is expected in spring 2025, potentially easing market pressures and offering more choices to buyers.
• Transition from Renting to Buying: As rental prices stabilize due to slowed immigration and increased rental inventory, more renters may consider purchasing homes, particularly condos, as a more affordable entry into homeownership.
  Global News

Policy and Economic Factors

• Support for First-Time Buyers: Positive policy measures, including increased price caps for insured mortgages, are aiding first-time buyers. Continued policy support is crucial for maintaining market accessibility.
  Global News
• Immigration Trends: Canada’s recent reduction in immigration levels may lead to a slight decrease in rental demand, contributing to stabilized or reduced rent prices.
   Global News

In summary, Ontario’s real estate market in 2025 is characterized by increased inventory, particularly in the condo sector, favorable interest rates, and supportive policies for first-time buyers. These factors collectively create a conducive environment for buyers, especially those entering the market for the first time.