Entering the Era of Divergence in the Canadian Real Estate Market

Canada’s real estate market is diverse, with national averages often masking important regional variations. CREA’s April data confirms this, showing that housing performance in Canada depends greatly on location.

In Ontario and British Columbia, prices are softening, listings are increasing, and buyers are cautious. However, in Alberta, Quebec, and much of Atlantic Canada, the situation is different, with more stable prices, sustained demand, and limited inventory.

These trends are not temporary and are influenced by factors like household debt, migration patterns, policy decisions, affordability challenges, and economic resilience. To truly understand Canada’s housing market, one must look beyond the national average and consider the regional differences.

Softening Markets in B.C. and Ontario

Ontario and B.C. are the most expensive regions for homeownership in Canada. Rising home prices lead to higher mortgage debt, resulting in elevated debt-to-income ratios, especially as interest rates rise and employment levels decline.

Canadian Household Credit Debt to Disposable Income

Declining Home Prices

The traditional real estate powerhouses of Ontario and B.C. are now dragging down the national market instead of driving it. According to CREA’s April 2025 report:

• Ontario saw a 4.8% decrease in prices year-over-year
  
• B.C. experienced a 5.8% decline in prices year-over-year
  
• The national average price dropped by 3.9% year-over-year
  
  

These price drops are not sudden but persistent, indicating a cautious retreat in the market.

Weakened Buyer Confidence

While interest rates have been stable, buyer confidence has not recovered. Economic uncertainty related to tariffs is dampening demand. In Ontario and B.C., buyers are holding back not just due to cost but also caution, leading to a wait-and-see approach. When confidence wanes, prices tend to decline.

Strength in Atlantic Canada and the Prairies

Rising Prices in Secondary Markets

In April 2025, year-over-year price growth in regions like Prince Edward Island, Quebec, Newfoundland & Labrador, Alberta, Saskatchewan, and Manitoba was significant, reflecting affordability, demand, and low inventory levels.

• Prince Edward Island: +10.9%
• Quebec: +8.5%
• Newfoundland & Labrador: +7.2%
• Alberta: +5.6%
• Saskatchewan: +6.0%
• Manitoba: +5.5%

Tight Inventory in Smaller Markets

CREA reports a national sales-to-new listings ratio of 46.8%, with 5.1 months of inventory, indicating a balanced market. However, regional differences are stark, with inventory surges in Ontario and B.C. contrasting with tight inventory in Alberta, Quebec, and Atlantic Canada, leading to varied market conditions.

In these tighter markets, homes are selling quickly, highlighting the disparity between buyers’ and sellers’ markets across the country.

Factors Driving Canada’s Two-Speed Housing Market

Challenges in Ontario and British Columbia

Ontario and B.C. are facing demand declines and economic challenges, with significant population outflows and trade tensions impacting housing markets. Confidence is low, wages are stagnant, and debt levels are high, contributing to buyer hesitation.

Growth in Alberta, Quebec, and Other Provinces

In contrast, provinces like Alberta, Quebec, and Atlantic Canada are experiencing growth due to migration and affordability, highlighting the diverse nature of Canada’s housing market.