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

It used to be, almost everyone’s first home was considered a “starter home.” But between a lack of housing supply, the rising cost of housing, and other economic challenges, is the concept of starter homes even a thing in Canada anymore?

What is a starter home?

Traditionally, starter homes were the first homes most people bought when they were just beginning to build their lives, careers, and families.

Starter homes were usually small, modest, and relatively inexpensive properties that were often located in less sought-after neighbourhoods or needed a few renovations. While they may not have been anyone’s idea of a “forever home,” starter homes were an affordable way for first-time buyers to get a foot on the property ladder, and start building equity without having to save for decades first to afford the down payment.

When it comes to starter homes, think less than 2,000 square feet, liveable, but a DIYer’s canvas of possibility. They became popular following the Second World War when, in 1946, the Canadian Mortgage and Housing Corporation (CMHC) was created. The CMHC helped make homeownership more attainable for Canadians by administering housing programs, offering loans and overseeing social housing, and the boom of single-family homes began (think strawberry box houses).

What’s caused a change in starter homes?

Today, however, Canada’s affordability crisis coupled with a lack of supply has dramatically changed both the kind and price of properties that would’ve once been considered starter homes.

In the 15 years between 2006 and 2021, the average price of a home in Canada more than doubled in value. At the same time, rents in much of the country have also risen significantly, hampering the ability of many renters to save for that all-important down payment.

“The traditional idea of a starter home—a small, affordable property that a buyer stays in for a few years before moving up—has definitely shifted,” says Mike Dirks, REALTOR® and owner of Dirks Real Estate, and Director of Education at Royal LePage Westside in Vancouver, British Columbia.

“With rising prices, higher interest rates and more stringent mortgage qualifications, many first-time buyers are either stretching to buy something they can stay in longer, or holding off on purchasing altogether,” he explains.

What do starter homes look like today?

One outcome of the growing disparity between incomes and home prices is that both starter homes and first-time buyers look very different today than they did a few generations ago.

“A starter home used to be a modest, entry-level property, often a small, detached house,” Dirks says. “Today, the first purchase is often a condo or townhouse, especially in urban areas where detached homes are out of reach.”

According to Christine Cowern, a REALTOR® and Managing Partner of The Christine Cowern Real Estate Team in Toronto, Ontario, starter homes today are both smaller and located farther afield than most buyers would have accepted a decade or two ago.

“Starter homes used to be semi-detached or detached homes that were centrally located,” she explains. “Now, people are having to move outside the large city centres and farther away from work, because urban areas are too expensive. Or if they need to remain in the city, they’re buying condos or townhouses, which are [generally] more affordable.”

What are first-time home buyers looking for now?

Because they have to save for so much longer to afford a down payment, today’s first-time buyers are also typically older and may have larger families than in the past.

Between 1977 and 2000, for example, public records show the average age of a first-time home buyer in Canada increased from 32 to 36 years old. Today, some first-time buyers are waiting until they’re well into their 40s or until they receive an inheritance to buy their first home.

As a result, many traditional starter properties don’t offer enough space for today’s older buyers and their families. In addition, because their budgets are already stretched to the limit, those buyers who do manage to find a home they can afford will often stay there much longer before they can build enough equity to move up the property ladder.

“Many buyers today see their first home as a long-term investment,” Dirks says. “In the past, buyers would get into anything they could afford, assuming they’d trade up in a few years. Now, many buyers want extra bedrooms for future kids or work-from-home setups, outdoor space and proximity to transit, knowing they may be in this home for 10-plus years instead of five.”

According to Crystal Tost—Managing Partner of the Calgary Listings Group in Calgary, Alberta, and a REALTOR® with more than 25 years of experience—price is the main factor driving what most buyers are looking for.

“When I started in real estate in 1997, most first-time buyers were in their 20s, and they were happy just to get into a detached home—even if it had very basic finishes,” she explains. “They saw it as a stepping stone, something they could upgrade over time.

“Back then, a new build in a suburban community could be purchased for around $120,000. Today, those same homes are selling in the $600,000 range,” she adds. “Because of this, there’s been a change in expectations—many buyers today want higher-quality finishes and upgrades from the start, likely because of how much they’re paying compared to past generations.”

Renting vs. buying: what’s more realistic?

In the end, the answer as to rent or buy comes down to your personal financial situation. You’ll need to weigh factors such as job security and whether or not you want to lay roots somewhere for the foreseeable future.

Cowern notes that for many Canadians, renting has become a new form of starter home.

“Years ago, owning a home was considered a higher milestone of financial success and adulthood than it is today,” she says. “With the upward trajectory of prices we’ve seen over the last few years, renting is almost a prelude to homeownership now, whereas in the past, people would go right into buying a home and skip renting altogether.”

According to Tost, another big change is that most first-time buyers who want to enter the housing market simply can’t afford to do it alone.

“Many are purchasing with a spouse, a partner or even a parent,” she says. “A lot of them feel discouraged, especially those who dream of owning a detached home but find it out of reach.”

Getting into the Canadian housing market

There is some good news, however. The combination of lower interest rates and recent changes to the federal rules governing mortgages could make it easier for first-time home buyers to enter the market over the next few years.

Plus, there are still a few things buyers can do to help make buying their first home more affordable.

• Make a firm distinction between the things you want and things you need in a home.

• Open your search to include condos, apartments, and townhouses instead of only traditional detached single-family homes.

• Consider buying a fixer-upper or a smaller property than you’d ideally prefer, or look for desirable homes in lesser-known neighbourhoods that are farther from the city centre.

• If your circumstances allow, consider moving to a town or city where housing is relatively more affordable.

• If you do find a home you can afford, consider staying there for a few years longer to let your equity grow before you move up the property ladder.

Lastly—but perhaps most importantly—if you’re a first-time home buyer (or hope to become one), ask a REALTOR® for guidance! In addition to answering any questions you may have, a REALTOR® can walk you through all the options that are available in your price range, and help you find a home that fits your needs wherever you are in your real estate journey.

Source: https://www.realtor.ca/blog/starter-homes-are-they-a-thing-of-the-past/38418/1362