Canada Housing Market in 2025 A Tale of Two Realities and Looming Challenges

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Canada's housing market is poised for a split in 2025, with low-rise homes recovering and high-rise condos facing persistent struggles. According to CIBC economists Benjamin Tal and Katherine Judge, low-rise homes will benefit from lower mortgage rates and limited inventory, leading to price growth. Meanwhile, oversupply, reduced investor interest, and affordability issues will weigh down the condo market, which has been in a downturn and is expected to remain sluggish through much of the year.

Canada's revised immigration targets aim to reduce housing demand but face skepticism regarding population projections. Tal and Judge foresee population growth of about 1% in 2025, contradicting government expectations of a decline. This increase will drive the need for 200,000 additional housing units, primarily rentals, even as rental price growth begins to stabilize due to affordability limits.

Long-term challenges loom, especially for the condo market in Ontario and British Columbia, where unsold inventory and weak pre-construction activity threaten future supply. While falling mortgage rates may revive demand, the resulting supply crunch could drive price surges by 2026. With demand for low-rise housing expected to outpace supply, Canada’s housing landscape remains fraught with imbalances despite some short-term stabilization.

Read the full article on: REAL ESTATE MAGAZINE