At the start of the year, Canadian economists made their predictions of how they thought the national housing market would move for 2025. Yet, just like with the weather, sometimes there are fluctuations no one can quite predict. In this case those changes started south of the border. 

So where is the housing market going for the rest of the year? First we need to look back a bit in order to get a clearer picture moving forward.

How tariffs changed real estate markets for 2025 

The initial predictions for the market were a 8.6% rebound year-over-year from a sluggish 2024, says Ryan Biln, Economist with the Canadian Real Estate Association (CREA). With interest rates steadily declining and pent-up demand waiting for more affordable pricing, it would seem that 2025 would have been the year for home buyers to enter the market in impressive numbers. 

Instead, the first half of the year started slowly, in large part thanks to concerns about tariffs imposed by President Donald Trump. The unpredictability of the tariff announcements meant buyers were skittish about locking in investments, especially if they worked in industries that were threatened by large-scale job losses. Those economic worries ultimately translated into broader uncertainty, particularly when Canadians were already impacted by rising inflation and wage stagnation. 

Aside from our neighbours, influences from around the world changed the market as well. Restrictions on foreign buyers purchasing residential real estate had led to a drop in overseas investment. 

Changes in foreign involvement in Canada’s real estate markets have impacted the rental market as well. Over the last several months, restrictions on foreign students obtaining study permits for Canadian schools has led to a significant cooling off in the rental market, particularly near colleges and universities. 

Biln notes there have also been significant changes in Canada’s condo markets, particularly in larger cities like Toronto and Vancouver. Sale prices on condo units have decreased significantly, but the inventory that is flooding the market is not for everyone. For example, a one-bedroom or two-bedroom unit holds little appeal for a family with several children. For some pre-construction properties, Biln says buyers have begun walking away from their deposit so as not to lose more money on their investment.

Canadian home sales are rebounding heading into fall

While the year may have started off slowly, things may be looking up, albeit cautiously. Biln explains the national market just reached its fifth month of rising sales in a row, and the busiest August nationwide since 2021. 

Biln says the market is in a balanced state across the country at the moment, although that does not paint an entirely accurate picture. Ontario and British Columbia, for example, are experiencing more buyers’ markets, while the Prairies and Atlantic Canada are leaning towards sellers’ markets. And with the latest Bank of Canada move to lower interest rates, it should mean a modest increase in market activity.

Biln notes buyers still have concerns. Continuous headlines about a potential recession has many buyers shopping more cautiously, or still waiting for further signs of stability. While economic headlines have been less prevalent last summer, uncertainty is still there, and that anxiety is definitely having some impact.

How will local real estate markets fare to close out 2025?

It is nearly impossible to determine the forecast for the Canadian housing market because, as Biln notes, it does not exist—at least not in that way. The country is highly regional, and so the market in Vancouver may look different than it does in Edmonton, which is different from Toronto which can be entirely different from Halifax. 

In Toronto and Vancouver, the condo markets have taken a significant hit as noted earlier, which in those markets represents a sizable portion of the market. In parts of the Greater Toronto Area and Greater Golden Horseshoe there are signs of stabilization, and lower prices in some areas, but even these two cities are not identical. In Vancouver, affordability is still a challenge, but in the suburbs, the family-oriented housing market is, as Biln describes, “holding up better.”

In Edmonton, the market had started the year high, but appears to be cooling down moving into the fall. Housing prices are more affordable than nearby Calgary, and that affordability has made for a stronger market overall. However, the numbers show that local demand is still somewhat cautious. The Halifax market had seen a boom during the pandemic due to remote work and migration, and it remains active. While it has slowed slightly, other more-affordable markets throughout Nova Scotia have experienced a surge. 

No one has a crystal ball, and it is impossible to determine with any certainty what’s coming down the pipeline next. One thing is for sure though, a REALTOR® is still your best guide in the buying process. A licensed REALTOR® knows your local market, understands local trends, and can advise you on the things that are most important to you. 

Source: https://www.realtor.ca/blog/what-the-2025-fall-market-could-look-like/39634/1362

The Bank of Canada just made its first interest rate move since March. As of today, September 17, the key overnight policy rate has been lowered by 25 basis points, from 2.75% to 2.5%, its lowest level in three years.

Here’s what that means for Canadians who are watching real estate markets and why this shift could matter more than it seems to home buyers and homeowners.

What did the Bank of Canada do on Sept. 17?

The Bank lowered its benchmark rate, citing signs of a weakening economy, a softening labour market, lower inflationary pressures, and concerns about external risks, such as trade and tariff instability.

Because the overnight rate influences many borrowing costs (including the prime rate), changes here tend to ripple through to mortgage rates, lines of credit, and other variable-rate debt. The prime rate serves as the baseline for variable-rate mortgages and is increased or decreased in increments that match the Bank of Canada’s policy changes.

Screenshot from the Bank of Canada.

How homeowners benefit from a lower interest rate

One of the most immediate effects of a rate cut is for homeowners whose mortgages are variable, or whose payments adjust with the prime rate. The 2024 Canada Mortgage and Housing Corporation Mortgage Consumer Survey states about 23% of Canadian mortgage holders have a variable rate, while 69% opted for a fixed rate.

That means the September cut should translate into some instant savings for about one in every four Canadian mortgage holders.

What this means for people entering the housing market

Even though fixed rates aren’t directly tied to every move of the Bank’s policy rate, they are influenced by bond yields, market expectations, and overall borrowing costs. When the key rate falls, fixed rates tend to drift downward (or at least stabilize), especially if markets believe this is part of a broader easing cycle.

This means some home buyers who were previously priced out because of high interest costs may now qualify for the home they want. Lower interest payments mean a given income can support a somewhat larger mortgage.

Recent data from mortgage-rate aggregators show typical five-year fixed rates in many parts of Canada are now in the 3.7% to 4.5% range, and variable offers are close behind.

The outlook ahead: what CREA’s data says

The outlook for fall 2025 remains cautiously optimistic. The Canadian Real Estate Association’s (CREA) recent housing market report assumes that pent-up demand, combined with lower borrowing costs and a surge in listings could lead to a rebound in market activity across Canada. August proved to be the fifth straight month of increased home sales and new listings are up 8.8% compared to this time last year.

CREA Senior Economist Shaun Cathcart said if you’re a first-time home buyer this could be a sweet spot to time your purchase.

“I think we’re going to see a lot of (buyers) start to show up and start to pick these listings off any day now,” he said during the latest Housing Market Report.

Are further interest rate cuts likely to come?

Many economists had been betting on more rate easing later in 2025, depending on inflation behavior, economic output, and global uncertainty. With its move to 2.5%, the Bank has room, but will likely be cautious. Markets will be watching upcoming inflation reports, employment data, and international developments.

Why you should use a REALTOR® now

Your REALTOR® is your personal real estate MVP. While you’re figuring out financing, they can already get to work behind the scenes.

If you’re buying, this means setting up searches for you, attending open houses on your behalf, and asking around to their connections about what might be coming available.

If you’re selling, your REALTOR® can get to work marketing your property right away, getting it ready for staging and compiling documentation, all without severely disrupting your routines.

By now you know interest rates impact the Canadian real estate landscape and that likely isn’t about to change any time soon. Making the right decision at the right moment seems like a lot of pressure when you don’t know where interest rates will be on a month-to-month basis.

Thankfully REALTORS® monitor market trends and housing data to make sure, whether you’re buying or selling, your best interests are kept top of mind.

Don’t put it off any longer.

Source: https://www.realtor.ca/blog/what-the-bank-of-canadas-rate-cut-means-for-housing-markets/39555/1362