Canadian Real Estate Association Forecasts Surge in Home Sales for 2025

The Canadian real estate market is gearing up for a busy spring in 2025, with a surge in home sales expected as more first-time homebuyers enter the market. This shift comes after more than two years of slower market activity, with the Canadian Real Estate Association (CREA) predicting a boost in sales as buyers take advantage of lower mortgage rates.

Mortgage rates are now more affordable than they were a year ago, and with the Bank of Canada potentially halting rate cuts soon, this could be a prime time for first-time buyers to secure a home. In addition, new policies introduced last year are making it easier for first-time buyers to purchase homes with smaller down payments and longer repayment periods, which is expected to fuel the market in 2025.

According to Shaun Cathcart, senior economist at CREA, "We expect a significant increase in demand this spring." Millennials, who are eager to buy their first homes, and record levels of immigration are adding pressure to the housing market. As a result, CREA forecasts 532,704 home sales for 2025, marking an 8.6% increase from 2024, as sales rebounded after the Bank of Canada's interest rate cuts in the summer of 2024. The Bank has since reduced its key interest rate five times, dropping it from 5% to 3.25%.

The average five-year fixed mortgage rate now stands at 4.25%, down from 5.07% last year, which has made mortgages more affordable for potential buyers. However, CREA also notes that interest rates may not fall much further. If the Bank of Canada signals that rates have bottomed out, it could encourage hesitant buyers to lock in their rates before they rise again.

While sales are expected to rise across the country, CREA predicts a larger rebound in British Columbia and Ontario, where sales had been slower in 2024. In B.C., sales grew by 2.1%, and in Ontario, they rose 3.1% year-over-year. Conversely, Alberta and Saskatchewan saw stronger sales, with an increase of about 9% year-over-year. However, despite robust demand in these provinces, the limited availability of homes for sale could prevent a significant jump in transactions in 2025. This shortage of inventory is expected to drive up prices, intensifying competition among buyers.

Despite the overall positive outlook for the housing market, CREA anticipates continued challenges for the condo market. Demand for condos has decreased as more buyers prefer larger, more spacious homes, and a surge in new condo buildings hitting the market is putting pressure on condo sales. As a result, condo owners may struggle to sell their units.

For the national housing market, CREA forecasts a 4.7% increase in the average home price, bringing it to $722,221 in 2025. Home prices saw gains in most regions last year, with Alberta experiencing a 9.6% increase and Quebec seeing a 7.3% rise. Newfoundland and Labrador also saw significant growth, with a price increase of 8.9%. However, Ontario saw a slight dip in average home prices, declining by 0.6%, while British Columbia's average home price increased by just 1.1%.

Nationally, 490,376 homes were sold in 2024, marking a 7.3% increase from 2023. The average home price across Canada was $689,783, up by 0.9% from the previous year.

As the spring of 2025 approaches, the Canadian real estate market is expected to see an uptick in demand, particularly from first-time buyers. However, condo sales are likely to remain subdued as buyers continue to favor larger homes. It’s important for potential buyers and investors to keep a close eye on market trends and adjust their strategies accordingly.

If you're looking to buy or invest in the GTA real estate market, now is the time to act! Whether you're a first-time homebuyer or exploring options in the condo market, we’re here to help. Contact us today to get expert guidance and personalized advice tailored to your needs.