Canadian Housing Outlook 2025: What It Means for Toronto Homeowners and Buyers

Hey everyone,

I recently delved into Benjamin Tal’s latest release on the Canadian housing market outlook for 2025, and as always, he delivers insightful analysis that hits home—quite literally for us in Toronto. I wanted to break down some key points from his report and discuss what they could mean for current and future homeowners in our vibrant city, whether they’re in a condo or a house.

A Tale of Two Markets

Tal describes the 2025 housing landscape as a “tale of two markets,” distinguishing between the low-rise and high-rise (condo) segments.

Here’s the gist:

• Houses: Expect this market to pick up first. With mortgage rates projected to decrease, demand for houses will rise. However, the inventory is still historically low, which could lead to increased home price inflation. If you’re a homeowner in this segment, your property value might see a significant uptick. For buyers, it might become more competitive, so staying ahead of the curve is crucial.
• Condos: This segment has been in a slump and is likely to remain under pressure throughout 2025. Record-high completions are chasing a reduced appetite from investors, leading to an oversupply. This situation is expected to put downward pressure on resale condo prices in the coming year.

Population Growth and Immigration Policies

One of the most significant factors affecting the housing market is population growth, which is heavily influenced by immigration.

The Canadian government has announced unprecedented targets to reduce the net number of temporary residents by about 446,000 in 2025 and again in 2026.

While this move aims to ease pressure on the rental market, Tal is skeptical about the feasibility of these targets due to factors like asylum seekers and humanitarian visa holders.

What Does This Mean for Renters and Landlords?

• Rent Inflation: Good news if you’re renting—asking rates are already in negative territory year-over-year. This trend suggests that we may have reached peak rent inflation, and rental rates could stabilize or even decrease in the coming year.
• Investment Opportunities: For potential investors, the condo market’s current state might present buying opportunities. With prices under pressure, entering the market at a lower price point could be advantageous, especially considering Tal’s projection that by mid-2026, a lack of supply will clash with increased demand, pushing prices up.

Mortgage Rates and Housing Activity

Mortgage rates are on a downward trajectory, which is expected to boost housing market activity in 2025, particularly in the low-rise segment. However, the high-rise segment might not see the same immediate benefits due to the current oversupply and investor sentiment.

For Homeowners with Mortgages: About 40% of mortgages up for renewal in 2025 will actually see lower monthly payments. An additional 10% will see an increase of less than 10%. While 50% will face an average 20% payment increase, this is mitigated by wage growth and increased home equity over the past five years.

Preparing for the Future

• Buyers: If you’re looking to buy, especially a low-rise home, it might be wise to start your search sooner rather than later. With inventories tight and demand set to increase, the market could become more competitive.
• Sellers: For those considering selling a condo, 2025 might be challenging due to the buyer’s market conditions. However, if you can hold out until mid-2026 or beyond, the market dynamics could shift in your favour.
• Investors: The current state of the condo market could present a unique opportunity. With prices under pressure now but expected to rise in the coming years, strategic investments could pay off down the line.

Final Thoughts

Benjamin Tal’s analysis offers a comprehensive look at the factors shaping our housing market in the next couple of years. For us in Toronto, understanding these dynamics is key to making informed decisions, whether you’re buying, selling, or holding onto your property.

As always, staying informed and proactive is the best strategy. If you have any questions or need advice tailored to your specific situation, feel free to reach out. Let’s navigate this evolving market together!

Cheers,

Ara Mamourian – Broker and Founder of The Spring Team

Oh, btw, you can access the internal CIBC release here.

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