Posted on
May 20, 2025
by
Charlotte Ferguson
Experts see stability returning, with growth hinging on Bank of Canada's June decision
By Candyd Mendoza
20 May 2025
With the summer market approaching, Canada’s housing sector is showing signs of cautious momentum after a sluggish spring.
Market watchers point to subdued activity, persistent affordability concerns, and an uncertain economic outlook driven by trade tensions and interest rate speculation as key factors shaping the landscape.
“Spring has really been off to quite a slow start right across the board,” says Anne-Elise Allegritti, research expert at Royal LePage. “That’s due to just a lack of confidence generally in the economy in the country due to trade relations with the United States. That’s really putting a huge damper on Canadians’ mentality.”
The Canada Real Estate Association’s latest data shows home sales dropped nearly 10% year over year in April. However, once adjusted for seasonal variation, sales levels were stable compared to March.
“Things haven’t really picked up, but they’re not necessarily getting worse. So this could be the turning point,” Allegritti noted. “I think what we’re seeing (based on April’s report) is that buyers don’t feel a real sense of urgency. I’ll be curious to see what May data looks like.”
Rate cut hopes may stir activity
Much now hinges on the Bank of Canada’s upcoming rate decision scheduled for June 4. While the central bank has signaled a cautious stance in recent months, some economists believe deteriorating economic indicators could prompt a cut.
“Mitigating the effects of the trade war, that’s still front of mind for the Bank of Canada. So that would make them more likely to cut,” said Clay Jarvis, a mortgage expert with NerdWallet. “Unemployment is rising right now. That might make them want to cut. There aren’t really too many positive signals in the economy that would have the Bank of Canada holding off.”
If a rate cut materializes, it could lead to a drop in mortgage rates, improving affordability for would-be buyers and possibly prompting an uptick in demand. However, any increase in activity would likely vary widely by region and housing type.
The country’s most expensive urban markets, notably Toronto and Vancouver, have seen notable cooling, while more affordable regions are gaining traction.
“Ten years ago, it was Toronto and Vancouver were hot and everyone else was not, and now it’s the opposite,” said Christopher Cathcart, referencing strong activity in the Prairies, Quebec, and the East Coast. “It’s places that are more affordable where you can get a house in the $300,000 and $400,000 range that are super hot.”
In the Greater Toronto Area, the slowdown is particularly pronounced for condominiums. A surplus in inventory — combined with a pullback from investors — has weighed heavily on prices.
Read next: From bidding wars to bargaining: Toronto home sellers slash prices
“There’s a lot of condos in the market, which is driving prices way down because investors aren’t purchasing,” said Stephen Moore, a sales representative at Century 21. “The buyer pool has dried up… and now the investors are not coming.
“The condo prices are already inflated. You just need to take the loss if you’re selling and move on. It’s a tricky market for condos.”
Buyers weigh opportunity against risk
While pockets of affordability exist, especially for detached homes in less saturated markets, economists advise buyers to tread carefully given economic volatility.
“You really have to look at your current conditions, your current financial conditions and it having some sort of semblance of job security,” said Jarvis. “If you have that, the market is actually pretty inviting right now.”
With a Bank of Canada rate decision looming and macroeconomic indicators shifting rapidly, the path forward for Canada’s housing market remains highly uncertain, but for some qualified buyers, opportunities may emerge in the months ahead.
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