Here's a look at what's going on with Canadian housing markets.
How will tariffs and interest rates impact Canada's home prices? What places in Canada can offer better affordability? It is a buyer's market? Read on for some answers.
National Canadian home sales and new listings slumped in February 2025 (home prices mostly remained flat) — the reason why is obvious. Trump's tariff threats began on January 20 and have since morphed into an on-off-on scenario that has rocked homeowner expectations both in financial insecurity and rate and home price uncertainty.
Canadian interest rates have fallen since last year, but with trade disruption in the room, market uncertainty is lining the walls.
Next CREA update is coming on April 15, 2025. Grab a BeaverTail® for some Canadian comfort as we gauge how Canadian housing markets will fare heading into a (ordinarily busy) spring.
$713,700 in February 2025 (an increase of 0.6% m/m from January's $709,200)
This stat logged a decline of 1.0% year-over-year and was lower by 16.7% from the $855,800 peak MLS®HPI recorded in March 2022.
(as per MLS® HPI Aggregate Composite Benchmark, not seasonally adjusted)
Tariff trouble is growing in the garden. Cooler housing demand could choke out the usual spring flourish.
Now that interest rates are lower, buyers are back to waiting, concerned about their financial futures with trade disruption (and potentially higher consumer prices) sitting on the living room couch. Sellers are also holding back — why sell when there's no one around to buy or enough demand to secure a better sale price?
So much uncertainty is in the air this spring. Trade disruptions will raise house-building costs as tariffs take hold and supply routes try to realign. The opposing forces of economic weakening and rising inflation are tugging interest rates. Home prices could rise or fall. A recession would see even more demand pull-back as many buyers wistfully ignore lower rates to stay put.
The Canadian Real Estate Association (CREA) has recently upgraded its 2025 housing market prediction, eyeballing a higher 8.6% (from 6.6%) increase in national home sales and an increase of 4.7% (from 4.4%) in national average home prices this year.
Trump's tariffs may have something to say about that — stay tuned.
The federal government brought in two insured mortgage rule changes for home buyers:
Dan Eisner, founder and CEO of True North, commented last year on the new rules: "First-timers finally get some help to bid on a home closer to where they might work. Home buying will likely be more attainable, with mortgage payments that are more affordable."
Despite improved access to insured mortgages, Canadians are still caught in a cat-and-mouse game. Lower interest rates enhance affordability, while higher home prices and budget challenges push back.
Are housing forecasts for real, or are they 'Pin the Tail on the House Donkey' in predicting where home prices might go?
Housing experts can differ widely on what's happening with our housing markets. No doubt, that's partly due to Canada's size, with regional differences often skewing the big 'housing landscape' picture (for example, Vancouver and Toronto's outsized and outlandish prices and housing demand).
Here's how these forecasts for 2024 panned out:
Toronto-based Oxford Economics Canada predicted house prices would take a hit in the second half of 2024 as a result of the growing financial strain on households:
So, as you can see, forecasts are guidelines rather than rules. Stay tuned for this year's industry predictions!
Tight home affordability in Canada has backed off a bit in the last few months as fixed mortgage rates and home prices cool slightly. However, home prices in Canada are still the highest of the G7 countries (led by the major city centres of Vancouver and Toronto).
Here's what may help keep price growth in check to either deter demand or increase supply:
In 2023, we saw a whopping 46% increase in Canadian newbies waving the red maple leaf.
However, the federal government curbed immigration in 2024, and the temporary resident outflow reached over 660K. Increased tightening and outflow are expected to continue for 2025 and beyond.
Still, our rapid population growth over the past few years, combined with not enough housing starts to keep pace, will continue to put forward pressure on Canada's housing supply, which might send home prices up, not down.
Factors that could affect the pace of home building:
Federal, provincial, and city governments are furiously trying to clear the road to increase starts or increase the incentive to increase starts.
NIMBYism (not in my backyard) is another major obstacle to slapping up multi-dwelling housing in existing neighbourhoods that would ease the strain. (Calgary and Edmonton seem to have less trouble getting shovels in the dirt — both these cities have led national starts for months now.)
Many forces in Canada seem to be at odds, interfering with the pace of the Canadian housing inventory needed to keep up with current and future needs. We're not talking here about housing for low-income needs, which is also very urgent and essential — we're talking about enough housing to meet the general demands of an existing and growing population.
Canada is down by over 5 million homes needed by 2030 (on top of annual construction). The lack of inventory won't help stabilize home prices unless reasonably addressed in the coming years.
Typically, lowering interest rates attracts buyers and stokes housing demand. But this time around, a brand new trade war with the U.S. is already sending shockwaves through economic channels that may further spook buyers. Despite lower rates, it has the potential to reduce demand compared to the original forecast for 2025.
However, home affordability is currently (still) at an all-time low in Canada. Home prices are down only about 17% from the 45% peak of March 2022, and prices are elevated all around.
It remains to be seen whether a potential recession from trade disruption would continue to dissuade home buyers.
Home prices are seen through the eyes of the beholder. Many new buyers want prices to decrease to better afford a home, but sellers want them to stay higher (for obvious equity reasons).
According to National Bank stats, mortgage affordability improved again in Q4 2024, with lower interest rates and increased income seeing 9 of 10 Canadian centres eased:
And, according to BMO (Bank of Montreal), a mortgage rate below 4.0% plus a 30-year amortization brings us back to pre-pandemic levels for mortgage payments as a percentage of household income.
Use our great calculator below for an idea, then give us a shout for your numbers.
National average home prices in Canada are among the highest in the G7 countries. There's been talk of housing bubbles here for years. Yet, nothing has burst (yet), and homeowners take tremendous pride in owning a home, riding local price waves up or down.
To help you time your home-buying or selling decisions, here's a snapshot of our nation's current housing market trends and a look ahead to what experts say is coming to a market near you.
February 2025 — The three Canadian centres with the highest average MLS® home prices are:
Based on the MLS®HPI Composite Benchmark (not seasonally adjusted)
February 2025 — The six Canadian centres with the lowest average MLS® home price.
We're not saying you should (or could) move there, but you can dream about how much home you'd get for the price.
Based on the MLS®HPI Composite Benchmark (not seasonally adjusted)
BALANCED – The national SNLR (sales to new listing ratio) edged up slightly to 49.9% in February from 48.3% last month.
Both sales and new listings declined for the month. The properties listed on the Canadian MLS® Systems at the end of February 2025 were up 13.1% from a year earlier but still below the long-term average for that time of the year.
A few other details:
Why did the market balance tighten? Housing markets are tight right now, period, with the edge-up not necessarily a trend but simply a boil-down of activity due to economic uncertainty from the U.S. trade war. Check back next month for an update!
Market disparity? Always. Regardless of national or even provincial sales and listing averages, Canada is a big country (area-wise), and home shoppers and sellers can find very different market conditions depending on where they're buying or selling.
According to CREA (Canadian Real Estate Association), a strong buyer's market is when the sales-to-new-listings ratio (SNLR) is 45% or below.
At that ratio percentage, there are typically more properties for sale than buyers, offering more choice and bargaining power — especially in placing purchase offers with conditions that protect a buyer's rights and finances.
When the SNLR falls between 45% and 65%, market conditions are considered 'balanced' in buyer demand, available listings, and sales levels. This state helps to keep prices relatively stable, allowing reasonable purchase and sale terms.
The middle ground of housing competition — balanced markets can lean more towards the buyer's or seller's spectrum. And despite any prevailing national or local trends, a particular house, street or area can defy it (you know who you are).
An SNLR of 65% or higher is a market that strongly favours the seller.
In a seller's market, there are more buyers than sellers, and the properties sell quickly and at higher prices, giving the seller more power to set their price and terms of sale.
When the demand for housing exceeds supply, buyers often resort to a gamut of strategies to snap up a house before others, such as engaging in bidding wars or feeling pressured to place no-condition offers.
This graphic offers a provincial snapshot of prices in Q4 2024 compared to 1 year, 3 years, and 5 years ago.
As you can see, most home prices in Canada have increased over the past 5 years.
Want an even more interesting stat? The average Canadian MLS®HPI composite benchmark home price has risen almost 200% since 2005 (over 20 years)!
Here are a few multi-numbered sources to keep you busy and in the know:
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We can also offer unbiased advice for first-time and next-time buyers for affordability strategies that may make the difference in owning and keeping a home in Canada.
Make sure to ask about features such as portability, free payment frequency changes and mortgage recasting, as well as products like Purchase + Improvements when looking to buy your next home.
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