What’s shaping the Canadian real estate market in 2025?
In 2024, home buyers remained cautious, as many waited for mortgage interest rates to fall. While borrowing costs did decrease throughout the year, many prospective buyers held off on buying until they were confident that rates had reached their lowest point.
“The typical urgency to enter the spring market diminished in 2024,” says Carrie Lysenko, chief executive officer of Zoocasa. “This widespread hesitancy fostered a rare balance in the housing market—buyers re-engaged at a measured pace, which maintained a stable equilibrium between supply and demand that we hadn’t seen in years. With rates expected to stabilize in 2025, buyers will be emboldened with more confidence in their borrowing decisions.”
At the start of 2025, the average five-year fixed mortgage rate was just above 4%, marking a refreshing change from a year earlier, when it was closer to 5%. Consecutive rate cuts in 2024 boosted seller confidence and resulted in an increase of new listings across most major markets—momentum that has carried into 2025. From December 2024 to January 2025, new listings across Canada increased 11% month-over-month, and months of inventory jumped from 3.9 months to 4.2 months.
Meanwhile, on a national level, the number of home sales grew at a moderate pace throughout 2024. Whereas real estate activity slumped in cities across Ontario during the spring, markets in Western Canada saw increased activity. The pace of sales growth was particularly notable in Edmonton and Regina, with each market experiencing year-over-year increases of more than 50% in April.
Sales activity slowed in most markets at the beginning of 2025, but several Western Canadian cities still experienced sales breakthroughs. In January 2025, year-over-year sales surged 25% in Victoria, 12% in Edmonton and 4% in Winnipeg. In contrast, year-over-year sales dropped 9% in Toronto.
“Due to home prices maintaining relative stability in our most populated cities, home buyers are continuing to recognize the value in less saturated markets, like the Prairies. Ultimately, they are being viewed as new real estate hotspots,” explains Lysenko. “While the core areas of Toronto and Vancouver represent a significant portion of national home sales, we continue to witness a notable shift in interest as people re-evaluate their living situations and the costs associated with urban life that began in earnest during the pandemic.”
In the majority of the markets we analyzed, the average home price rose by less than 3% annually throughout 2024. Only a handful of markets, all located well beyond the Toronto and Vancouver areas, finished the year with more than a 5% year-over-year increase in average home price.
Outside of the core Toronto and Vancouver areas, the markets with the most sales growth are poised for the largest price gains this year. The Quebec Census Metropolitan Area (which encompasses Quebec City and Lévis), Regina, Saskatoon, Saint John and Edmonton have all had strong starts. Each saw a bump of over 9% in its year-over-year average home price in January. So far this year, prices have been stable in Toronto and Vancouver, but as the spring market unfolds, price growth could accelerate.
