Market Insight for August 29

According to the Canadian Real Estate Association (CREA), the average Canadian home price fell by close to $150,000 between February 2022 and July of this year.

For many Canadians, home ownership has long felt out of reach in some of the country’s largest markets.

That outlook, however, seems to be shifting in places like Toronto, Vancouver, and nearby regions, as values stay relatively soft and interest rates hold steady.

We’re beginning to notice first-time buyers slowly coming back to see what’s available.

It’s very much a buyer’s market — particularly for condo shoppers — since supply is high and the pressure to make quick decisions is limited.

For the first time in years, buyers can negotiate, take their time, and choose from a wide range of properties before making an offer.

Last fall, Canada’s housing market began to turn upward as lower borrowing costs kicked in.

By late 2024, the key interest rate had dropped to 3.25 per cent after holding at five per cent for nearly a year. Today it stands at 2.75 per cent.

Still, analysts say Canada’s trade tensions with the U.S., which escalated earlier this year, gave some homebuyers second thoughts.

As uncertainty begins to fade, it should allow the recovery that started in fall 2024 to take hold.

RBC economist Robert Hogue believes that created pent-up demand is now re-entering the market Over the past few months, we’ve seen resales increase across Canada, including in Ontario and B.C.,” he explained.

“Our perspective is that this could be the turning point, with pent-up demand finally being released as buyers re-engage.”

Hogue also points out that slower housing construction in Ontario and British Columbia may push prices higher down the road.

The risk for many would-be buyers is that conditions quickly flip into a seller’s market.

Other forces suggest more volatility could be ahead, including slower population growth, continued trade uncertainty with the U.S., and the unknown path of interest rates.

While the Bank of Canada was supportive of homeowners last year, that can’t be taken for granted. Interest rates remain unpredictable.

The job market is under strain right now and many households are financially stretched.

Roughly half of mortgage holders who locked in at low rates will renew this year, which could add more listings to the market if some are forced to sell. Pinpointing the bottom of the market is difficult.

For renters weighing ownership, prices in Toronto and Vancouver still feel largely out of reach.

According to CREA, the national average home price climbed from about $243,000 in January 2005 to $710,000 in January 2025.

For example, to purchase an entry-level one-bedroom in Toronto priced around $600,000, even with 20 per cent down, you would need to earn about $100,000 annually to qualify for the mortgage.

Beyond the mortgage, buyers must also factor in property taxes, insurance, and maintenance fees — especially in the condo sector. Those costs are not decreasing, and many young buyers overlook them.

The condo market offers a mix of resale units, but there are also many cases of investors who bought pre-construction and are now struggling to sell.

Price remains the strongest market signal. It’s designed to spark interest and sales. For some, lower values will finally align with their budget.

The best advice for first-time buyers: weigh your options, stay prepared, but don’t feel pressured to rush.