Canada’s real estate market is expected to make a strong comeback in 2025, with activity set to increase as early as March, as reported by online brokerage Zoocasa.
In a recent report, Lauren Haw, broker of record and industry relations officer at Zoocasa, points out several key factors that include stabilizing interest rates, the return of sidelined buyers, and a potential increase in inventory.
“Next year, Canadians can look forward to a lively spring market starting as soon as March,” Haw explains. “With interest rates stabilizing and strong pent-up demand among buyers, we are likely to see a return to a more traditional spring surge in real estate activity.”
This resurgence follows a lackluster spring market in 2024, where sales remained low despite an uptick in listings. Zoocasa predicts that increased buyer activity will also motivate more sellers to list their properties.
Mortgage Renewals May Lead to Downsizing
Zoocasa forecasts a wave of mortgage renewals in 2025 will contribute to the rise in listings. Haw suggests that a “wave” of renewals could prompt some homeowners to downsize.
According to CMHC, around 1.2 million mortgages will be up for renewal next year, with many homeowners transitioning from historically low rates secured in 2020-2021 to rates above 3 percent.
This surge in listings would help meet buyer demand, especially in major markets like Toronto and Vancouver, where conditions have recently shifted in favor of buyers.
Anticipated Increase in Buyer Competition
With interest rates stabilizing, Zoocasa predicts a renewed sense of urgency among buyers, particularly in the first half of 2025. With rates currently hovering around 3.75 percent and possibly dropping further, buyers may act swiftly to secure properties before prices rise.
“First-time buyers and end-users will drive next year’s sales,” says Haw, who foresees the potential resurgence of “FOMO” in the housing market.
Challenges for Investors Persist
The condo market is expected to remain challenging for investors in 2025, according to Zoocasa’s analysis. High borrowing costs and limited profitability have already led to an increase in listings, a trend that is expected to continue.
“Investors are likely to encounter a surplus of supply as multi-residential mortgage renewal rates push many condos and multiplexes into financial difficulty,” says Haw. “Simultaneously, the difficulties of making land investments financially feasible continue to deter new development.”
Recent data reflects these challenges. In Q3 2024, new condo sales in the GTA and Hamilton Area plummeted by 81 percent year-over-year, marking the lowest quarterly total since Q1 1995, according to Urbanation. Additionally, ownership costs for condos have risen by nearly 60 percent since 2020, while rental income growth has significantly lagged behind.
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