Canada Housing Market 2024-2025: Recovery Amid Affordability Strains

On this page

Text Link

National Housing Overview and Demand Factors

Canada’s housing market is in a tentative recovery phase. After a spring rally, activity cooled late in 2024, but economists now expect demand to pick up as borrowing costs fall. RBC Economics notes that “lower interest rates will reduce ownership costs and help unlock pent-up demand”^[1]. However, affordability remains strained: high prices and recent government cuts to immigration (to ease housing pressure) “will restrain upward price pressure”^[2][3]. Indeed, the federal government has explicitly linked immigration and housing, announcing in March 2025 new immigration pathways to bring in construction workers “as our country faces a housing shortage”^[4][5]. In 2025, RBC projects a return to more normal market activity (about 551,000 resales nationwide, roughly 12% above 2024 levels)^[1], with modest price gains overall. Still, Canada’s chronic supply shortfall looms large: the CMHC estimates roughly 6 million new homes are needed by 2030 to restore affordability^[6]. Analysts warn that today’s slowdown could turn into a shortage later – for example, Urbanation predicts that paused development will mean “fewer homes on the market later, potentially driving prices back up”^[7].

Macroeconomic headwinds are also a factor. A Deloitte outlook (May 2025) projects a near-term economic slowdown, with Canadians “extremely nervous” and on guard against uncertainty^[8]. As CP24 notes, U.S. trade tensions and tariffs have also dented confidence, further slowing housing activity. In this context, newly-installed Prime Minister Mark Carney has made housing a priority: vowing a $129 billion stimulus (including a major housing build) to counter slowing growth^[9][5].

Canada faces a chronic supply shortfall: CMHC estimates roughly 6 million new homes are needed by 2030 to restore affordability.

Mark Carney’s Housing Strategy

Former Bank of Canada governor Mark Carney (now Liberal Party leader) has unveiled an aggressive supply-focused plan. His platform promises to “double the pace of construction to almost 500,000 new homes a year”^[10], roughly twice current levels. Key elements include a new federal agency (“Build Canada Homes”) to spearhead mass construction of affordable housing, massive financing for modern methods-of-construction (e.g. $25 billion for prefab manufacturers and $10 billion in low-cost financing)^[11], and broad red-tape cuts. Carney would eliminate GST on homes under $1 million for first-time buyers and halve municipal development charges for multi-unit housing^[12]. Global News characterizes these proposals as aiming to spend and build “faster than expected,” but also notes that many measures (like doubling construction) will take years to implement^[6][13]. Economists are cautiously optimistic: RBC’s Tu Nguyen calls doubling output “extremely ambitious… it will not be easy”^[14]. In sum, Carney’s strategy is to supercharge supply and homebuilding (echoing post-WWII efforts) as the cure for Canada’s affordability crisis^[15][6].

Regional Market Trends

Toronto Market: Cooling and Oversupply

Toronto’s housing market showed strong recovery through mid-2024 but “stumbled” in late 2024 as affordability strains deterred buyers^[3]. Resale transactions plunged 19% between November and December 2024 (seasonally adjusted)^[3]. Although the average benchmark resale price recently edged above year-ago levels, gains are concentrated in single-family homes; condo prices are sliding. RBC notes Toronto condos continue to “erode amid ample inventory” and expects further price declines in that segment^[3]. Large new condo completions have flooded the market: the Toronto condo sales rate is down over 75% since 2022^[16], leaving steady inventory growth (over 20,000 unsold GTA condos, per CMHC).

This oversupply has led many developers to halt or cancel projects. Urbanation reports that at least 28 condo projects (~6,000 units) have been put on hold, cancelled or converted to rentals since 2024^[17]. The Real Deal confirms Toronto’s pipeline is “cracking under pressure”; condo project cancellations jumped fivefold from 2022 to 2025^[18]. High costs, lending hurdles and crashing presales mean some towers sit idle or enter receivership^[19]. RBC and experts warn these pauses will eventually shrink future supply – potentially tipping Toronto toward under-supply in the mid-term. Short-term, expect a buyer’s market in condos: prices and activity have softened. Over the long run, industry voices (e.g. Urbanation’s Shaun Hildebrand) note today’s supply glut is temporary and that fewer new starts now could lead to a shortage and upward price pressure later^[7][20].

Montreal Market: Resilient Growth

In contrast, Greater Montréal remains unusually strong. RBC finds Montreal “almost complete” its recovery; home resales in December 2024 were up over 3% from November and only 5% below pre-pandemic peaks^[3]. All price categories are rising: December 2024 saw an 8% year-over-year jump in single-family median price and +7% for condos^[21]. Desjardins Economist Maëlle Boulais-Préseault notes Quebec as a whole “continues to stand out” as markets cool elsewhere^[22]. Montreal is “gradually narrowing the gap” with Toronto/Vancouver as conditions shift toward balanced^[23]. Its relatively low prices (~$580k median in May 2025^[24]) sustain strong demand: Sotheby’s reports luxury home sales (>$1M) in Montreal jumped 26% year-over-year in H1 2025^[25].

Supply is rising but not yet excessive: housing starts in Quebec surged in late 2024 and Desjardins observes that growing supply may briefly outpace demand as population growth eases^[26]. The government’s Tariff fight could hike construction costs in Quebec (many materials come from the U.S.)^[27]. Overall, analysts expect Montreal prices to continue modestly higher. RBC projects Québec (including Montréal) resales up ~17% in 2025 (to ~106,000 units) and prices +3.9%^[28], among the strongest gains nationally. In short, Montreal’s market remains balanced-to-tight with steady growth, unlike the oversupplied condo markets of Toronto and Vancouver^[29][23].

Calgary Market: Strong and Expanding

Calgary’s housing market has remained robust. A booming local economy and record population growth have underpinned strong demand^[3]. In late 2024, sales dipped briefly but stayed near all-time highs, and new listings have increased, giving buyers more choice than a year ago^[3]. Price honors: Calgary’s Composite MLS HPI was up 3.2% year-over-year by December 2024^[3]. Builders responded vigorously – 2024 is on pace for record housing starts and completions in Calgary. The City reports a 35% jump in Q2 2024 permit applications year-over-year^[30] and a 124% jump in apartment unit completions.

For 2025, RBC forecasts Calgary home resales +4.8% (to ~87,500 units) and prices +4.1%^[31]. The market faces fewer headwinds: high prices in Toronto/Vancouver make Calgary and Edmonton relatively affordable, sustaining migration inland. As Sotheby’s notes, Calgary’s top-tier ($4M+) market even saw strong year-over-year growth (up 43% in H1 2025)^[32]. In summary, Calgary’s market is healthy: rising supply is keeping growth moderate, but demand (supported by energy sector and population gains) remains firm, so analysts see continued positive momentum^[3][31].

Vancouver Market: Softness and Delays

Metro Vancouver has lagged the national rebound. After a strong mid-2024 rally, sales dipped as consumers “held off…to see if prices drop further”^[20]. Condo sales volumes are plunging (down ~37% since 2022^[33]) and listing inventory is at decade highs^[34]. As a result, benchmark prices are flat or barely up (+0.4% year-over-year in Dec 2024^[3]). RBC notes Vancouver returned to recovery track but “[took] a small detour” late 2024^[3].

New condo construction has cratered: Urbanation reports it’s the lowest level since 1996, with weakened presales and financing hurdles. At least 28 condo projects (~6,000 units) in the Toronto market have stalled or been repurposed in 2024; Vancouver’s experience is similar. A PwC/ULI survey warns a “significant slowdown” has “brought the [condo] market to a grinding halt” in Vancouver and Toronto^[35]. In the city, four major approved condo towers (808 units in the West End) have been allowed to delay construction for up to 2 years due to the weak strata market^[36][37]. Financing is tight and many small/mid developers are pausing new launches^[38][39].

Looking ahead, analysts predict a gradual cleanup. Many market insiders feel a rebound will follow once the current glut is absorbed. NRML’s Jason Mercer cautions builders not to “take our foot off the gas”^[20]; CMHC warns that Canada needs millions of new homes – including in Vancouver – to avoid future shortages. RBC expects “a recovery is still on track in Vancouver” by mid-2025^[3], and forecasts modest price gains (+0.9% in Ontario overall, with Vancouver closer to that trend modestly up)^[31]. If interest rates fall and the economy steadies, demand could return; but in the short run, Vancouver is a buyer’s market, especially in condos.

Supply Dynamics – Government and Private

Supply-side action is underway on multiple fronts. Federal initiatives include the 2024 “Housing Plan” (billions for rental and affordable housing) and changes to mortgage rules to help first-time buyers. The recent federal–provincial housing summit signaled unprecedented co-operation. On March 7, 2025, Immigration Minister Marc Miller announced new measures (new skilled-worker pathways, faster foreign credentialing, etc.) explicitly “to meet the growing demand for housing”^[4][5]. Prime Minister Carney’s $129 billion plan also earmarks massive infrastructure (“build baby build” in his words^[9]) and creation of Build Canada Homes to boost supply^[10]. In short, Ottawa is shifting toward aggressively promoting home construction and removing impediments (zoning, fees, red tape)^[12][6].

On the private side, large builders pursue big projects selectively. Well-capitalized developers continue underway builds (especially in strong markets), but smaller firms are retrenching. Many developers have cut staff, exited deals, or pivoted to condos-to-rentals^[39]. Lenders are also stepping in: the condo downturn has even turned some lenders into developers, as banks buy troubled projects out of receivership to protect their loans^[19]. These trends slow immediate supply, as fewer new projects get started. At the same time, Calgary and other markets report surging development activity (as seen in building permits^[30]), indicating a patchwork pattern: Western oil centers expand, while pipelines stall in oversupplied cores.

Outlook

Overall, experts foresee modest gains ahead but unevenly. RBC projects national home sales rising ~12% in 2025, with prices largely flat to +2–3% on average^[40][2]. Growth will be strongest where supply is tight (e.g. Edmonton, Montreal) and weakest in bloated condo markets (Toronto, Vancouver)^[3][31]. U.S. trade tensions or deep economic shocks could derail this, though lower rates later in 2025–26 are expected to revive activity. Carney’s housing plan (if implemented) would be a game-changer on supply, but even ambitious measures take years to bear fruit. In the short term, buyers are cautious: many “have put [buying] on hold” amid economic uncertainty^[20]. But industry veterans believe the cycle will swing back. As one analyst put it, today’s lull will eventually give way to an undersupplied market – so “we can’t take our foot off the gas” on building homes^[20]. The net effect: a market muddling through higher interest with restrained activity in 2025, followed by gradual improvement and continued debate over policies to boost housing supply.

‍
Billy