1st Quarter 2025
The Canadian real estate landscape stands at a fascinating crossroads, shaped not only by internal market dynamics but also by broader global forces. Recent tariffs have cast a shadow of uncertainty across the national economy, particularly in provinces like Ontario where the manufacturing sector remains a vital economic pillar. As these tariffs threaten to curtail production costs and international trade flows, consumer confidence has been noticeably impacted. The resulting caution among buyers and sellers is particularly evident within the Toronto Real Estate Board (TREB) market, which finds itself
under tremendous pressure. Media narratives have understandably concentrated on Toronto, magnifying its struggles and, at times, overlooking the resilience that persists just beneath the surface.
Despite the immediate uncertainty, it would be an error to mistake volatility for weakness. There are genuine signs of strength, both structural and psychological, that signal a promising foundation for 2025. Consumer fundamentals are markedly better positioned than they have been in recent years. Household savings are up, borrowing costs have receded, and the market is gradually digesting over three years of pent-up buyer demand. Evidence of this underlying vitality emerged in the closing months of 2024 and into early 2025, as a robust sales volume surged from November through February. Even as the headlines fixate on short-term pressure points, the broader narrative is one of cautious optimism.
The question of monetary policy looms large as well. As of now, the odds of another Bank of Canada rate cut at the April 16 decision stand at an even 50-50. However, the evolving trade war complicates the central bank’s calculations. Higher tariffs are likely to push inflation upwards, thereby limiting the extent to which policymakers can cut borrowing costs to stimulate growth. Nevertheless, political signals suggest a calibrated approach; Liberal leader Mark Carney has emphasized that Canada’s retaliatory measures are designed not merely to respond but to contain the conflict. If successful, such a strategy could pre-
vent runaway inflation and provide the Bank of Canada with crucial flexibility in the months ahead.
As the April 28th election approaches, housing policy has emerged as a central issue, with the three main political parties presenting sharply contrasting visions. The Liberals are campaigning on a platform that builds on their existing housing strategies, proposing expanded initiatives aimed at helping first-time buyers, increasing rental supply, and encouraging the construction of more affordable homes. Supporters argue these policies offer a pragmatic path forward, while critics contend they may not move quickly enough to address the urgency of the current crisis. The Conservatives are emphasizing a market-driven solution, pledging to streamline development approvals, reduce regulatory barriers, and accelerate private-sector construction—an approach praised for its focus on supply but questioned for its potential to overlook affordability safeguards. The NDP is calling for a bold expansion of public sector involvement, promising to create hundreds of thousands of new non-market rental units and strengthen measures against speculative investment, though concerns remain about the scale and speed of their proposals. Media coverage has largely highlighted the ideological divides among the parties, while suggesting that no single platform fully resolves the deep structural challenges facing Canada’s housing market. For voters, the choice is not just about ambition, but about which approach feels most credible in delivering meaningful change. Yet it is worth recognizing that no matter which federal
party forms government, their ability to fundamentally reshape the housing landscape remains limited. The most critical reforms—particularly those related to zoning laws, development approvals, and land use planning—lie in the hands of provincial and municipal governments. It is at these levels that the levers for real, lasting change must ultimately be pulled.
At the household level, the strength entering this year’s spring market cannot be overstated. Canadians are better prepared to navigate this environment than they have been in recent memory. For those looking to shield themselves from future rate volatility, threeand five-year fixed mortgage terms, or hybrid options blending fixed and variable rates, remain the safest harbours. Presently, insured five-year fixed rates are available as low as 3.64 per cent from lenders such as Nesto and Butler Mortgage, while uninsured rates hover just below four per cent. For borrowers seeking a more flexible, shorter-term commitment, three-year fixed rates offer a compelling alternative, with insured rates ranging from 3.74 to 3.89 per cent, and uninsured rates around 3.94 per cent.
Still, the cooling of the market is reflected in the national sales data for March. Vancouver posted a year-over-year decline of 13.4 per cent, and Toronto, grappling with more acute pressures, saw a 23.1 per cent decrease. In contrast, Victoria defied the national trend, recording a modest but encouraging 4.43 per cent increase. Inventory levels in Victoria also tell an intriguing story: there were 3,023 active listings for
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sale on the Victoria Real Estate Board Multiple Listing Service® at the end of March 2025, representing a 14.9 per cent increase from February and a 14.2 per cent rise compared to the same period in 2024. This expanding inventory provides greater choice for buyers, which can help stabilize pricing trends and maintain healthier market conditions over the longer term.
Price performance further highlights Victoria’s underlying resilience. The Multiple Listing Service® Home Price Index benchmark value for a single-family home in the Victoria Core in March 2024 was $1,288,400. By March 2025, that value had risen by 3.6 per cent to $1,335,300, a continuation of the upward momentum seen since February’s benchmark of $1,309,500. The condominium market has been more modest but still positive; the MLS® HPI benchmark value for a condominium in the Victoria Core edged up 0.4 per cent year-over-year, reaching $560,400 in March 2025 from $558,200 the year prior, also rising from February’s figure of $551,900.
As we look ahead, it is clear that while challenges remain, they are accompanied by genuine opportunities. The market’s core fundamentals are sound, and with over three years of pent-up demand waiting to be realized, 2025 has the potential to be a year of considerable strength and renewal. In the face of geopolitical uncertainty and economic recalibration, Canadian real estate continues to show a resilience that is both measured and quietly profound.
