Canada’s Housing Market at a Crossroads: Will Summer 2025 Spark a Rebound or Deepen the Slump?

The housing market’s spring performance has been lackluster, with CREA’s April data revealing a sales-to-new-listings ratio of 47%, up marginally from 46% in March, indicating a balanced but buyer-leaning market.

The national average home price crept up 0.2% to $679,866, yet high-cost urban centers like Toronto and Vancouver saw condo prices plummet, with Toronto’s benchmark condo price dropping 3.7% year-over-year to $614,000, according to the Toronto Regional Real Estate Board (TRREB).

Social media buzz highlights opportunities in affordable regions like Fredericton and Calgary, where homes priced between $300,000 and $400,000 are gaining traction.

Despite the Bank of Canada’s rate cuts since June 2024, which lowered variable-rate mortgages by 1.5%, the 25% U.S. tariff on Canadian steel and aluminum exports continues to erode buyer confidence, contributing to a cautious market.

Trade Tensions Cast a Long Shadow

U.S. trade policies, particularly the threat of escalating tariffs, are a dominant force weighing on Canada’s housing market. Although the U.S. paused blanket tariffs in February 2025, targeted 25% duties on steel and aluminum persist, with TD Economics projecting a potential 5% hit to Canadian export volumes if broader tariffs materialize.

This uncertainty has hit export-driven regions like Alberta and New Brunswick the hardest, where housing demand risks softening amid fears of job losses.

The Canadian dollar’s 2.8% decline against the U.S. dollar in 2025, as reported by Bloomberg, further undermines investor sentiment. CREA’s pre-tariff forecast of an 8.6% sales increase to 532,704 units and a 4.7% price rise to $722,221 by year-end now appears optimistic, with social media reflecting concerns that trade disputes could mute the anticipated spring rebound.

Interest Rates: A Beacon of Hope?

The Bank of Canada’s upcoming June 4 rate decision is a critical pivot point, with economists like Clay Jarvis of NerdWallet anticipating a cut from the current 3.25% policy rate to 2.75% by late 2025 to address unemployment, which climbed to 6.8% in April, per Statistics Canada.

Such a move could lower five-year fixed-rate mortgages, averaging 4.7%, enhancing affordability. The Canada Mortgage and Housing Corporation (CMHC) projects a 12% surge in resale transactions to 551,000 units if rates decline, particularly benefiting first-time buyers in Quebec and the Prairies.

However, RBC warns that mortgage renewals for low-rate loans from 2020-2021 will challenge households, potentially capping demand. Social media discussions underscore optimism for a rate-driven sales boost, especially in Atlantic Canada, where 65,000 new housing units are planned.

Did You Know?
Calgary’s housing market is outpacing national trends, with a 5.2% price increase in 2025, while Toronto’s condo prices have hit their lowest point since 2021, creating rare opportunities for urban buyers.

Regional Markets: A Tale of Two Canadas

The housing landscape in Canada exhibits sharp divisions. Affordable markets like Calgary, Edmonton, and Halifax are thriving, with Calgary’s benchmark price rising 5.2% to $572,900 in April, per CREA.

Conversely, Toronto and Vancouver grapple with oversupply, with Ontario’s active listings jumping 38.8% to 49,284 and months of inventory doubling to 5.0, according to D’Angelo & Sons. Condo markets are particularly weak, with Vancouver’s condo prices down 2.9% to $748,000, driven by a retreat in investor demand.

Real estate agent Stephen Moore notes that condo oversupply in urban centers is creating discounts, offering opportunities for budget-conscious buyers. Social media posts highlight the Prairies and East Coast as top destinations for value and livability, with Fredericton and Saint John ranking high in Ratehub’s 2025 buyer guide.

Summer 2025: A Season of Opportunity or Stagnation?

As summer approaches, Canada's housing market hovers on the brink of either recovery or further stagnation. A Bank of Canada rate cut could ignite demand, particularly in affordable regions, but Goldman Sachs estimates a 0.1-0.3% GDP hit from tariffs could temper growth.

Buyers in Toronto and Vancouver may snag condo deals, while single-family homes in the Prairies and Atlantic Canada remain in demand. Sellers face a competitive market, with TRREB advising strategic pricing to attract hesitant buyers.

CMHC projects 244,800 annual housing starts, potentially easing supply constraints, but affordability remains a hurdle. The summer’s outcome depends on whether rate cuts and trade negotiations restore confidence or if economic fears deepen, making 2025 a defining moment for Canada’s real estate.