The Canadian housing market started 2025 on two very different paths—some areas are heating up, while others are cooling down.

Let’s start with the big picture. Home prices across Canada went up slightly in the first few months of the year. On average, prices rose 2.1% compared to last year, and 1.2% compared to the end of 2024. But not every area is following the same trend.

In expensive cities like Toronto and Vancouver, home prices have actually gone down a bit. In the Greater Toronto Area (GTA), prices dropped by 2.7% year-over-year, and condos saw an even bigger drop of 4%. Many buyers in these cities are feeling unsure because of ongoing political and economic issues—especially the trade tensions with the U.S. As a result, some people are waiting to buy, hoping for more clarity or better deals.

On the other hand, more affordable areas like Quebec, the Prairies, and Atlantic Canada are seeing steady growth. Quebec City is leading the way with a 17% price increase compared to last year. Montreal is also seeing strong growth. These regions are benefiting from a mix of lower interest rates, fewer homes for sale, and strong demand from buyers looking for more budget-friendly options.

When it comes to how Canadians feel about the economy, it’s a mixed bag. About half of Canadians say they’re confident in the country’s economic future, while the other half are not. People in Quebec are the most optimistic, while those in Manitoba, Saskatchewan, and Alberta feel the least confident—especially in places like Fort McMurray.

Despite the uncertainty, Canada’s real estate market is holding up well. Our financial system is strong, and even with all the global challenges, home prices remain fairly stable. Interest rates have come down quite a bit since last year, making it a better time for some buyers to borrow money. Experts say more rate cuts could come later this year if things stay on the current path.

With a federal election coming soon, housing affordability is a big issue. Each political party has a plan to make housing more accessible—whether that’s building more homes, cutting taxes, or helping first-time buyers. While these ideas could help over time, real change will take cooperation and long-term effort from all levels of government.

Looking ahead, Royal LePage expects home prices across Canada to rise about 5% by the end of the year. In the GTA, prices are expected to rise by 3.5%, though that’s a bit lower than earlier forecasts because the market has been slower than usual.

Canada’s housing market is split. Expensive cities are seeing a slowdown, while smaller, more affordable regions are picking up speed. If you’re buying or selling, it’s important to understand your local market. In quieter markets like Toronto, there may be good opportunities for buyers to negotiate. In faster-moving areas like Quebec, acting quickly could make a big difference.

No matter where you are, the real estate market continues to be a solid long-term investment—and those who stay informed and prepared will be in the best position to make smart decisions.

Check out the Royal LePage Q1 2025 report here.

The Bank of Canada has decided to keep its main interest rate at 2.75%, as concerns about global trade and economic uncertainty continue to grow.

A big reason for the cautious approach? Ongoing trade tensions, especially coming from the U.S., have made the economic outlook unpredictable. Depending on how things play out, Canada could either stay on a steady path—or face a recession if trade conflicts drag on.

BOC is Considering Two Possible Scenarios Ahead

Scenario 1: If tariffs stay limited, Canada’s economy may slow temporarily, but inflation will stay close to the 2% target.

Scenario 2: If tensions escalate, we could see a recession in Canada with inflation possibly rising above 3% next year.

There’s no clear path forward yet, and a lot depends on decisions made outside of Canada.

What’s Happening Globally?

• In the U.S., growth is slowing, and inflation worries are rising.

• In Europe, growth remains weak.

• China was doing well but is starting to cool down.

• Markets everywhere are shaky due to constant tariff changes and uncertainty.

• Oil prices have dropped, signaling weaker global growth.

What’s Canada’s Situation?

The economy is showing signs of slowing down:

• People and businesses are spending less.

• Hiring is slowing, and March saw a drop in employment.

• Inflation was 2.3% in March, but expected to dip a bit due to lower oil prices and the removal of the carbon tax. Still, higher prices may come back due to tariffs and supply issues.

Looking Forward

The Bank of Canada says it’s staying cautious. They want to support economic growth while keeping inflation under control. They’ll keep an eye on how rising costs, weaker demand, and changing expectations affect things over time.

Check out the Bank of Canada's recent policy rate release here.

The Bank’s next interest rate announcement is set for June 4, 2025, and we’ll get another full economic update in July.

March 2025 saw a continued shift toward buyer advantage in the GTA real estate market. Home sales dropped 23.1% compared to last year, while new listings surged by 28.6%, giving buyers more choice and negotiation power. The average selling price came in at $1.09M, down 2.5% year-over-year, with the MLS® HPI benchmark also down 3.8%.

Improved affordability—thanks to softer prices and lower borrowing costs—is giving households more breathing room, but economic uncertainty and the upcoming federal election are keeping many buyers cautious. TRREB expects potential rate cuts this spring, which could help boost confidence and activity.

Thinking of making a move? Buyers have more leverage, and sellers need to stay competitive.

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March 2025 brought a mix of positive news and continued caution to the Greater Toronto Area (GTA) real estate market. While affordability has improved thanks to lower borrowing costs and softer home prices, many buyers are still sitting on the sidelines—waiting for greater economic certainty and more favorable conditions.

Homeownership Gets Slightly More Affordable

Compared to March 2024, homeownership in the GTA became more financially accessible. According to the Toronto Regional Real Estate Board (TRREB), both home prices and borrowing costs declined over the past year, making monthly mortgage payments more manageable for potential buyers.

TRREB President Elechia Barry-Sproule noted that “homeownership has become more affordable over the past 12 months,” and with expected interest rate cuts this spring, affordability may continue to improve. Increased inventory is also giving buyers more options—and more negotiating power.

Prices Down, Listings Up

The average selling price in March 2025 was $1,093,254, a 2.5% decrease compared to the same month last year. Meanwhile, the MLS® Home Price Index Composite benchmark dropped 3.8% year-over-year, pointing to a gradual correction in home values.

On the listing side, sellers were more active. The GTA saw 17,263 new listings hit the market—a 28.6% increase from March 2024. This means buyers now have more selection, which could further ease competition and keep prices from spiking in the short term.

Sales Activity Slows Amid Cautious Optimism

Despite improving affordability, home sales were down by 23.1% year-over-year, with 5,011 transactions recorded through TRREB’s MLS® System in March 2025. Even on a seasonally adjusted basis, sales dipped compared to February.

Why the hesitation?

A lot of it comes down to uncertainty. TRREB Chief Information Officer Jason Mercer pointed out that concerns around job security and broader economic conditions—especially Canada’s trade relationships and the upcoming federal election—are prompting many households to wait and see before making big financial commitments like buying a home.

What This Means for Buyers & Sellers

For Buyers:

If you’re financially ready, this could be a window of opportunity. With more listings and softening prices, you have room to negotiate and find the right fit. And if interest rates drop later this year, you may have the chance to refinance for better terms.

For Sellers:

With more competition on the market, pricing your home strategically is crucial. Presentation matters too—homes that show well tend to sell faster. Work with an agent who understands the nuances of today’s market and can help you stand out.

What Could Shift the Market?

Spring 2025 may bring some momentum back to the market if interest rates begin to fall and if economic confidence improves. According to TRREB CEO John DiMichele, access to affordable housing remains a top priority among Canadians, and government action post-election could play a role in supporting both supply and demand.

In the meantime, the GTA remains a buyer-friendly market—but one that could shift quickly depending on economic and policy developments.

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