Home prices are slipping in many major markets. Fixed and variable interest rates are down. The housing market has cooled, meaning less competition and more negotiating power. But first-time homebuyers still aren’t entering the fray in droves, with plenty choosing to continue biding their time on the sidelines.
Among the small share of Canadian adults actively working towards buying a home, a tiny percentage plans to purchase imminently – and a huge 82% of that hopeful-buyer cohort is instead targeting a move in the next 12 to 24 months, according to a new Royal LePage survey.
That’s not to say homebuying aspirations among younger Canadians have dimmed. But even the recent downturn in prices and mortgage rates hasn’t shifted the affordability outlook significantly for many of those buyers: recent Ratehub.ca research showed a grim picture persists across several of Canada’s biggest markets, even as the outlook brightens in others.
And the expectation that home values and interest rates could have some way further to fall means many prospective first-time buyers are in no rush to jump into the market, according to Royal LePage’s Anne-Elise Cugliari Allegritti, vice president of research and communications.
She told Canadian Mortgage Professional that while sellers normally follow the lead of buyers – listing their homes when an uptick in demand arrives – the opposite appeared to be the case this year.
“A lot of inventory has come onto the market, but buyers are not feeling a sense of urgency because there’s so much opportunity,” Cugliari Allegritti said. “At the same time, prices have flattened or come down, and interest rates continue to fall. There’s really a lot of negotiating power and opportunity for buyers. First-time buyers are really acting no differently than the rest of the general market.
“They’re doing the research. They’re getting prepared. They’re getting their ducks in a row. They’re looking for listings. They’re visiting open houses. They’re speaking with agents. They’re getting preapproved for mortgages. But they’re saying, ‘I don’t have to buy this month because every indicator is telling me that home prices will stay the same or even come down a little bit in the next six to 12 months.’”
Prices, rates could have a while to slide yet
While national home sales have ticked marginally upwards in recent months, most housing market watchers aren’t expecting activity to roar back anytime soon.
Despite signs of a slow recovery, significant factors will continue to weigh on near-term prospects, according to Royal Bank of Canada (RBC) assistant chief economist Robert Hogue – including the glut of inventory still available in major markets like Toronto and Vancouver.
The Canadian Real Estate Association (CREA), meanwhile, expects the national average home price to have declined by 1.7% by the end of the year compared with 2024, spurred largely by decreases in British Columbia and Ontario.
And interest rates could be on the way lower, too. The Bank of Canada recently trimmed its benchmark rate by 25 basis points, with some market watchers predicting further reductions ahead.
Buyers are still keeping a close eye on Trump
The current economic outlook is also giving some would-be buyers room for pause, according to Cugliari Allegritti.
While fears of a sharp downturn have eased since the turn of the year, when the threat of a US tariff barrage loomed large, Canadians are still keeping an eye on the headlines and the chance of a fresh deterioration in cross-border relations.
“[Buyers are] getting ready – but they’re not necessarily jumping in out of a sense of urgency,” Cugliari Allegritti said. “At the same time, even though our economy has been fairly resilient to trade relations and everything that’s happening between Canada and the US right now, there’s still a sense of uncertainty in the air.
“And consumer confidence is lower because I think there’s still a little bit of hesitation around the question of whether things could change. Could things get worse? So give that they don’t have to make that massive decision right now, a lot of them are holding off. And in the meantime, they’re just building up bigger savings for their downpayment.”
CMP
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