'Neither bust nor boom': Here's what's in store for Canadian home prices

Canadian home prices are set for a brief dip before stabilizing and recovering modestly, according to the latest Canada Housing Quarterly Chartbook from Oxford Economics.

The report, authored by Tony Stillo, director of Canada economics, and Michael Davenport, senior economist, projected that nominal prices would “briefly slide lower in the near term before recovering at a modest pace over the medium term.”

Adjusted for inflation, real house prices are expected to remain essentially flat through 2030. Market fundamentals, especially chronic undersupply, are expected to provide a floor for prices, even as new supply gradually comes online.

“Neither a bust nor a boom is likely for house prices over the next few years,” Stillo and Davenport said.

“Chronic undersupply will provide a floor for prices in the near term, but stronger growth in housing supply, particularly of lower-priced multi-unit dwellings, combined with muted investor demand, will put a ceiling on prices over the medium term. The current elevated house price-to-income ratio will also limit the upside for future price increases.”

This outlook stands in contrast to the early-to-mid 1990s, when a surge in newly completed, unabsorbed units and double-digit unemployment drove prices down. Today, while unabsorbed units are rising, the market remains undersupplied overall.

Metro markets diverge as affordability stalls

Toronto and Vancouver continue to weigh on the national picture, with prices in both metros expected to slide further in the second half of 2025 before finding a bottom in early 2026.

“Lacklustre investor demand has also contributed to weak market conditions in Canada’s largest metros, especially for condos in Greater Toronto, where Q3 prices have fallen 20% from the early 2022 peak and 6.5% since late 2024,” the report noted.

In contrast, markets in the Prairies, Eastern Canada, and Quebec have shown more resilience.

Affordability, which had improved thanks to falling prices and lower mortgage rates, is expected to stall as prices bottom and fixed rates edge higher.

Oxford’s Housing Affordability Index fell to its lowest since late 2020, but “major metros like Toronto and Vancouver will remain severely unaffordable over the long term.”

Resale and new housing outlook

Resale activity picked up over the summer, but prices continued to drift lower. Two 25-basis-point rate cuts by the Bank of Canada are expected to bring buyers and sellers back to the market, but “listings will rise faster than demand amid a deteriorating labour market and slowing population growth,” the report said.

New home construction has held up, with 139,400 starts from January to August 2025, but is expected to soften as job losses and high costs weigh on demand. Government programs such as the Build Canada Homes initiative are expected to support a medium-term recovery in building.

Risks remain, but no crash expected

While the baseline forecast is for stability, Stillo and Davenport flagged significant downside risks in the event of a global trade war or financial market correction: “Canada would suffer a deeper downturn and lower house prices under a worst-case global trade war or a financial market correction.”

The Canadian housing market appears set for a period of modest adjustment rather than upheaval. Chronic undersupply and policy support are expected to prevent a crash, but affordability challenges and regional disparities will persist. Market participants should prepare for a slow recovery, not a dramatic rebound.

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Toronto condo meltdown: Prices are sliding, but ‘I can’t imagine it will last forever’

t’s a safe bet that Toronto’s pummelled condo market won’t be rebounding tomorrow, or even by the end of the year.

Buyers are showing few signs of rushing to that market as prices slide, and even more inventory is set to come onstream in the months ahead – adding to the mountain of condo units currently sitting empty across the city.

There are plenty of reasons for that continuing buyer caution: the expectation that prices have even further to fall, potential lower mortgage rates down the line, and the suspicion that current prices still don’t offer value for money even despite their recent dip.

“I think what we have a lot of specifically in Toronto right now is supply in the smaller end,” Anne-Elise Cugliari Allegritti, Royal LePage’s vice president, research and communications, told Canadian Mortgage Professional. “So 500 or 600 square feet, maybe a one-bedroom or a bachelor. It may or may not have a parking spot. It’s not the most desirable unit.

“People are entering the market a little bit older. They have different needs. They might already be living with their partner or starting a family. Likely in this day and age, they need some dedicated space for working – so that size of a unit is not as desirable as it once was, even for a first-time buyer.”

That’s the bad news for those hoping Toronto’s condo market will start to recover soon. But a glimmer of optimism for that cohort, according to Cugliari Allegritti, is that the market won’t be in freefall forever – and a likely plunge in new construction and condo projects in the city will probably see that supply eventually picked up.

“By the time we get to the end of 2027, 2028, we know there’s going to be a lot fewer completions because there just haven’t been any new starts in the last year or so,” she said. “And we expect that will continue because developers are having a really hard time breaking even on those types of projects.”

A recovery isn’t imminent, but the crisis will have an endpoint

Canada Mortgage and Housing Corporation (CMHC) expects the market won’t recover until 2028 at the earliest. But Cugliari Allegritti warned condo buyers not to assume they have forever to make a purchase at the right price, even if it makes sense to wait out the market for now.

“There could be another year or so of this sort of sweet spot of opportunity for anyone who’s looking to get into a condo in Toronto,” she said. “But I can’t imagine it will last forever because we’ll get to a point where there’s just no new supply coming on the market.

“And once the economic outlook and consumer confidence bounces back, I think we’ll see investors start to come back into the market as well in that segment.”

First-time buyers still priced out of many property types

What’s more, the housing market across Toronto might not be booming, but sales have seen a recovery of sorts in recent months. Detached sales activity across the Greater Toronto Area (GTA) was up by 5.9% in August compared with the same time last year, while semi-detached sales rose by 2.6% and townhouse purchases increased by 2.4%.

And while prices have slipped from last year, they’re still well out of reach for scores of hopeful buyers, particularly those intending to purchase for the first time. Average detached sales prices came in at a cool $1.31 million in the GTA last month, while the average semi-detached price was $980,102 and townhouses came in at $860,178.

“It’s just more likely that a first-time buyer can get into a condo than anything else,” Cugliari Allegritti said. “So in other words, they don’t have much other option except for condos.”

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Why plenty of first-time buyers still aren’t stepping off the sidelines

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

We hope you are finding our Blog informative and enjoyable to read while keeping you up to date with the ever changing real estate market. 

Please feel free to contact me via Direct/Text or e-mail at any time and my team will be pleased to assist you, family members and friends with all your real estate needs. Referrals are always welcome and rewarded!

Toronto's condo market pain likely isn't ending anytime soon

The flailing Toronto condo market probably won’t suffer the same fate as it did during a hard crash in the 1990s, according to a Canada Mortgage and Housing Corporation (CMHC) report released this week.

But the sector, which is seeing prices slide and demand plunge, is still far from a rebound – and the next couple of years look set to bring further woes for investors and landlords in the city.

In August, new condo sales slumped to just 118 across the Greater Toronto Area (GTA) – 59% below the same time last year and 90% under the 10-year average, according to an Altus Group report for the Building Industry and Land Development Association (BILD).

Here’s when experts expect a rebound

Jordan Nanowski (pictured top), CMHC’s lead economist for the Toronto market, told Canadian Mortgage Professional he sees the condo sector eventually recovering, but not until 2028 at the earliest.

He said while the millennial demographic appeared to have virtually no interest in buying or renting Toronto’s so-called “dog crate” condos – sub-500-square-foot offerings in the downtown core – those units will eventually find buyers.

“There does seem to be a bit of a disconnect in the sense that millennials make up the largest demographic now and they’re in their peak household formation stage,” he said. “They want bigger units typically, and these condos specifically don’t address that.

“That being said, I do believe that these condos will be occupied over time, and the market will absorb them. Immigration, which is one key dynamic, is declining and our target’s been revised, but it’s not zero.”

That will likely keep a floor under demand even as supply eventually begins to tick lower, Nanowski said. The well-publicized crisis facing preconstruction condos has seen scores of buyers walk away from purchases and developers shelve plans – with barely any new projects currently breaking ground.

The dearth of new construction might eventually narrow the gulf between supply and demand, but not anytime soon. The current slowdown, Nanowski suggested, has some way still to run.

“Pre-construction sales are almost nonexistent so there will be some kind of rebalance,” he said, “and that will likely happen from 2028 onwards, when we’re in a situation where the market has absorbed these units and there’s still demand for more condos. But there’s just an inherent lag with the supply response.

“You can’t just snap your fingers and produce a condo building. There’s a lag of several years to respond. So we do anticipate that the market dynamics will reverse eventually, and that would happen sometime from 2028 onwards.”

What’s next for Toronto condo prices and rents?

The current condo downturn is good news for renters and first-time buyers who previously found themselves priced out of a red-hot Toronto purchase market.

In August, the average condo price in Toronto’s 905 area fell by 10.6% compared with the same time last year, slipping to $594,881. Including the city centre, prices dropped by 5% year over year, to $642,195.

Rents, meanwhile, have also been on the way down. Across all unit types, average rents fell by 3% last month in Toronto. One-bedroom units saw a 5% decline, while two-bedroom rents dropped by 7%.

That mirrors a national trend: Vancouver, Halifax, Montreal, Calgary, and Edmonton all saw average rents fall in August, according to Rentals.ca, amid a wider cooldown in the housing and mortgage markets as a whole.

Toronto definitely won’t see strong price appreciation in the condo sector during the next couple of years, according to Nanowski, with rents in the same boat.

“A lot of developers are trying to switch their condo units that aren’t viable, and can’t meet their pre-sales targets, into rental units,” he said. “Additionally, roughly half of condos in the GTA are rented out.

“So the under-construction inventory that’s getting worked through will continue to push down rents as well.”

CMP

We hope you are finding our Blog informative and enjoyable to read while keeping you up to date with the ever changing real estate market. 

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First-time buyers bide their time even as Canada's housing market opens up

First-time buyers are seeing more opportunities as interest rates fall and more homes hit the market, but most are still choosing to wait before making a move.

A new Royal LePage survey found that 13% of Canadian adults are working toward their first home purchase within the next two years, with the majority planning to buy in 12 to 24 months.

“Interest rates are trending lower and prices have stabilized or even softened in some markets, creating favourable conditions for long-awaited entry into home ownership, especially in costly cities like Toronto and Vancouver. Yet, hesitation remains,” said Phil Soper, president and CEO of Royal LePage.

“For some, ongoing economic uncertainty, particularly surrounding trade relations with the United States, is prompting them to hold off until there are signs of stability. Buying a home is the biggest financial decision most people will ever make, and first-time buyers naturally want to do so with as much certainty as possible.”

Some buyers are holding off, hoping for better deals. With possible Bank of Canada rate cuts ahead, those not in a hurry are saving more and carefully planning to buy when the time feels right.

Market conditions and buyer behaviour

While 36% of Royal LePage professionals reported increased first-time buyer activity this year, a significant portion of buyers are still in research mode. More than half (51%) are scoping out affordable neighbourhoods, and only 19% have begun viewing homes in person.

The aggregate price of a Canadian home rose just 0.3% year over year to $826,400 in Q2 2025, with a slight 0.4% dip quarter-over-quarter, according to Royal LePage’s latest market update.

Financial support and affordability

Family assistance remains a key factor for many, but not all, first-time buyers. Forty-one percent said they would receive financial help from family or friends, while 51% would not.

“This transfer of wealth has become increasingly common, as parents look to give their children the same opportunity for stability and long-term financial growth that they themselves experienced through home ownership,” Soper said.

Still, most buyers are finding their own way—cutting back on spending, searching in more affordable areas, or tapping into investments and retirement savings. A new National Payroll Institute survey conducted among 2,320 working Canadians showed that Gen Z workers save an average of 11% of each paycheque, more than any other generation. Nearly 70% of Gen Z respondents reported trying to save more this year, compared to 56% of millennials and just 36% of boomers.

Meanwhile, more than half (53%) of first-time buyers intend to put down at least 20%, but 39% expect to buy with less and will require mortgage insurance. The Canada Mortgage and Housing Corporation (CMHC) reported a 28% year-over-year increase in insured units in Q2 2025.

“The growing number of buyers opting for mortgage insurance suggests that many are willing to accept the added monthly cost in order to get on the property ladder sooner with a smaller down payment, rather than risk being priced out when property values rise,” Soper said.

Regional realities and buyer preferences

Across the country, detached homes remain the top choice for first-time buyers, though budget realities often lead to compromises. In Ontario, 15% of adults are working toward a first purchase, with 54% targeting detached homes and a typical budget between $500,000 and $750,000. In British Columbia, nearly half of first-time buyers are looking at condos or apartments, reflecting higher prices and affordability challenges.

Move-in ready homes are the most sought-after non-price feature, cited by 21% of Royal LePage professionals, followed by outdoor space and access to amenities. “With many employers requiring staff to return to the office, proximity to transit and other amenities has become an increasingly important factor in the search,” Soper said.

CMP

We hope you are finding our Blog informative and enjoyable to read while keeping you up to date with the ever changing real estate market. 

Please feel free to contact me via Direct/Text or e-mail at any time and my team will be pleased to assist you, family members and friends with all your real estate needs. Referrals are always welcome and rewarded!