Canadian Real Estate in 2025: The 7 Biggest Questions We Need Answered

2025 is here, and if the future of Canadian real estate feels uncertain, you're not alone. With economic shifts, political changes, and fluctuating markets, many are wondering what’s next. Let’s break down the seven biggest questions on everyone’s mind—and what we might expect in the months ahead.

1. How Will Trump’s Presidency Impact Canadian Real Estate?

With Donald Trump back in office, uncertainty is high. His proposed tariffs on Canadian imports could weaken the Canadian dollar, impact business growth, and make home sales more cautious. If tariffs go through, the cost of building materials could rise, making housing even more expensive. And as always, unpredictable U.S. policies create economic ripples that affect our market.

2. Where Are Interest Rates Headed?

After a series of rate cuts in 2024, interest rates currently sit at 3%. But what happens next? The Bank of Canada suggests any further cuts will be gradual, but forecasts vary. Some banks predict a drop to 2.5% by mid-year, while others believe we’ll hold steady at 3%. Lower rates could help homebuyers, but if economic uncertainty grows, all bets are off.

3. Will Home Prices Keep Rising?

Most experts say yes, but growth will vary by city. Quebec City is expected to lead with an 11% increase, while Toronto and Vancouver may see around 4-5% growth. Single-family homes will likely see the biggest price hikes, while condos may lag behind. However, political and economic shifts could change the outlook in unexpected ways.

4. Is the Condo Market Making a Comeback?

Right now, condos are struggling. In 2024, thousands of units were canceled in major cities like Toronto and Vancouver, and prices dropped. Investors have pulled back, and oversupply is a major issue. While lower interest rates may help, a full recovery before 2026 seems unlikely. Experts warn that condo construction could slow even further.

5. Will Purpose-Built Rentals Continue to Grow?

Rental apartments have become a hot topic as more Canadians struggle with affordability. Government incentives and strong long-term investment appeal have fueled rental construction. Despite some challenges—like immigration slowdowns and rent declines—purpose-built rentals will likely keep growing, as demand remains strong in urban centers.

6. Will Rents Keep Dropping?

For the first time in years, rents started to decline in late 2024. Toronto and Vancouver saw the biggest drops, and the national vacancy rate rose to 3.6%. With more rental units hitting the market, declining immigration, and lower interest rates making homeownership more attainable, experts predict that rents will continue trending downward in 2025.

7. Will Canada Build Enough Homes?

The answer isn’t promising. Canada needs 3.5 million new homes by 2030, but current housing starts aren’t keeping up. Ontario, for example, needs 100,000 new homes per year but is falling far short. High construction costs, low investor confidence, and market uncertainty mean housing starts are expected to slow further, making affordability challenges even worse.

Final Thoughts

The real estate market is changing fast, and staying informed is key. Have questions? Looking for expert guidance? Let’s connect! You can email me at [email protected] or send me a DM on LinkedIn. My team and I are always available to help you make the best real estate decisions!