Canada’s Housing Market Outlook — Resilience or Reckoning?
Canada’s housing market is once again at a crossroads. After a rollercoaster few years marked by pandemic booms, rate-hike crashes, and policy pivots, the national outlook remains clouded by uncertainty. As of March 2025, national home prices showed modest recovery, yet beneath the surface, market fatigue and consumer anxiety still loom large.
Where the Market Stands Today
The Canadian Real Estate Association (CREA) reported an average national home price of $678,331 in March — up 1.5% from February but still down 2.9% year-over-year. Sales volumes fell 4% month-over-month and nearly 8% year-over-year, indicating continued weakness in buyer demand despite moderate price rebounds in some provinces.
Toronto and Vancouver, once the anchors of Canada’s housing juggernaut, are now facing stubborn stagnation. In the GTA, the average sale price fell to $1.06 million, and sales volumes remain 23% below April 2024 levels. In contrast, smaller markets like Halifax and Regina saw modest gains, driven by affordability and migration from more expensive regions.
Interest Rates and Buyer Confidence
Interest rates remain the single biggest factor shaping Canada’s real estate market. With the Bank of Canada’s policy rate holding steady at 4.75%, mortgage costs have priced out many first-time buyers. According to RBC Economics, the monthly mortgage payment on an average home now consumes over 62% of a typical household’s pre-tax income — far above the long-term affordability threshold of 40%.
“What we’re seeing is a wait-and-watch approach,” says real estate analyst Romina Bhatia. “Buyers are cautious. They’re waiting for either prices to drop further or rates to ease. Until one of those happens, we’ll likely stay in this holding pattern.”
Policy Responses — Enough to Turn the Tide?
The federal government has introduced a mix of demand-side incentives and supply-side reforms in the 2025 budget. These include a first-time homebuyer top-up credit, accelerated development approvals for cities, and low-interest loans for purpose-built rental construction.
At the provincial level, Ontario and British Columbia are revisiting zoning rules to allow multi-unit housing on formerly single-family lots. However, housing advocates argue that these changes are incremental and won’t address short-term supply shortages or affordability pressures.
Renters Feeling the Squeeze
While ownership markets cool, the rental market is heating up. In cities like Calgary and Montreal, vacancy rates have dropped below 1.5%, and average rent has jumped 8–10% year-over-year. Immigrants, students, and younger workers are bearing the brunt, as competition for rental units intensifies amidst rising population inflows.
“We’re facing a rental crisis parallel to the ownership crisis,” says Jacob Martin, a housing policy researcher at UBC. “Without stronger rent controls or accelerated housing builds, we’re going to see deeper inequality — not just among buyers, but renters too.”
The Economic Wildcards
Trade tensions with the U.S., inflation volatility, and labor market softness continue to weigh on buyer sentiment. With unemployment rising and disposable incomes under pressure, the broader economic backdrop remains too fragile to ignite a sustained housing rebound — at least for now.
And with another Bank of Canada rate decision due in June, the path forward will likely hinge on whether borrowing costs finally begin to ease — or hold higher for longer.
Conclusion: Resilience or Reckoning?
Canada’s housing market is no longer in free fall — but it’s not bouncing back either. The next few months may offer clarity on whether this is a soft landing, or just a calm before another storm. Either way, the market’s resilience will be tested not only by interest rates but by whether policy and affordability can align with real human need.