Overview of the Canadian Real Estate Market Dynamics

The real estate market dynamics currently reflect a gradual recovery phase characterized by stronger job and income growth combined with lower mortgage rates, which improve housing affordability and stimulate demand. This has led to rising home prices, particularly for ground-oriented homes, with prices expected to grow faster in the near term before slowing down in the medium term (2026-2027).

Key factors shaping the market include:

• Demand and Price Trends: Demand is increasing due to improved economic conditions and lower borrowing costs, pushing prices up in 2025. However, some regions with affordability challenges, especially in more expensive urban markets, are seeing slower price growth and subdued sales compared to their historical averages.

• Regional Variations: More affordable regions have experienced earlier and stronger recoveries in sales and price growth, while highly unaffordable markets continue to face challenges with sales below long-term averages and slower price appreciation.

• Supply Dynamics: New housing supply is increasing, notably through record condominium completions, which is expected to ease some pressure on the rental market and housing availability.

• Market Uncertainty and Constraints: Despite signs of recovery, factors such as fragile labour markets, reduced immigration targets, and persistent affordability issues continue to constrain the pace of market growth. Economic uncertainties, including trade tensions and export declines, have also dampened buyer confidence and slowed activity earlier in the year, though recent months show modest improvements in sales.

• Forecasts: Home sales are projected to rebound moderately in 2026 but remain below pre-pandemic averages. Prices are expected to rise modestly in 2025 but may decline slightly in 2026 due to increased inventory and competitive conditions in certain markets.

In summary, the market is transitioning from a period of cooling and uncertainty to a phase of cautious recovery, with regional disparities driven largely by affordability and supply factors. The interplay of economic growth, mortgage rates, and housing supply will continue to influence market dynamics over the next few years.