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In 2023, Canada saw a significant boost in luxury real estate demand, driven by the arrival of nearly 472,000 new permanent residents, with another 485,000 expected in 2024. This growth was further supported by the Bank of Canada’s interest rate cuts starting in June, which also helped shift some buyers from traditional markets into entry-level luxury properties.

By October 2024, home sales across Canada’s MLS systems had increased 7.7% month-over-month—the highest since April 2022—and continued to rise into November. A 50-basis point rate cut in December is expected to keep momentum going into 2025.

According to a recent report, both conventional and luxury markets showed strong resilience in 2024, with sales activity picking up in the final quarter, suggesting continued growth in the months ahead.

Greater Toronto Area

Toronto led the luxury market recovery, with sales over $4 million rising 21% year-over-year in 2024. Single-family homes made up 91% of these sales, and ultra-luxury sales over $10 million grew by 20%.

Calgary

Calgary saw the fastest growth, with sales over $1 million up 42%, and those over $4 million doubling from the previous year. The growth was driven by a population surge and strong demand for both single-family and attached homes.

Montreal

Montreal's luxury market showed resilience, with $4 million+ sales up 16% and $1 million+ sales up 38%. Condominiums were particularly strong, seeing a 53% increase in sales.

Vancouver

Vancouver’s luxury market struggled in 2024, with sales over $4 million down 11% and ultra-luxury sales over $10 million dropping 29%. However, $4 million+ condominiums saw a 26% rise, suggesting potential growth in this segment.

Summary

The report highlighted Toronto and Montreal’s recovery as a model for other markets, driven by realistic pricing and lower interest rates. Calgary continues to lead in luxury sales, creating high demand and price pressure. In contrast, Vancouver’s market remains slow due to a disconnect between seller expectations and buyer demands. However, luxury condominiums in Toronto and Vancouver present strong investment opportunities, with lower prices and less competition setting the stage for future growth.

In a surprising shift, more Canadian seniors now have mortgages than young adults under 35. According to the Bank of Canada's 2024 mortgage data, nearly half (49%) of mortgage debt is held by those aged 45 to 64, while another 26% is owed by people between 35 and 44. Together, these two age groups account for 75% of the country's mortgage debt.

Interestingly, seniors aged 65 and older hold 14% of mortgages, slightly outpacing the 12% held by those under 35. This is a big change from previous generations, who were more likely to own homes before 35.

Looking at mortgage originations (when the loan was first taken), 52% of current mortgages were taken out by borrowers under 45, but only 23% were taken out by those under 35. Today’s young adults are much less likely to own a home at the same age compared to previous generations.

Seniors aren’t just downsizing in retirement—they’re carrying mortgages longer. Despite representing 14% of mortgage holders, only 7% of loans were originated at age 65 or older. More seniors are simply holding onto their mortgages as they age, with reverse mortgages becoming an increasingly popular option

In 2023, Toronto continued to lead the way in housing searches, with one-bedroom rents averaging $2,374 and home prices at $1,061,700. Vancouver followed closely behind, boasting the highest rents in Canada at $2,534 and even higher home prices, averaging $1,172,100. For those seeking more affordable options but still close to Toronto’s vibrant urban core, Mississauga offered a more budget-friendly choice with one-bedroom rents at $2,279.

Ontario’s Housing Landscape

Ontario dominates the real estate market, driven by its population density and abundant economic opportunities. Cities like Mississauga, Hamilton, Ottawa, and Oshawa have followed Toronto's lead, offering a mix of affordability and convenience:

• Hamilton, located just an hour west of Toronto, is particularly attractive to first-time buyers, thanks to its relatively affordable home prices and rents.

• Oshawa, known for budget-friendly condo townhouses, is perfect for those seeking affordable options with easy access to Toronto.

• Ottawa, Canada’s capital, offers a stable job market, high quality of life, and more affordable housing compared to Toronto. Plus, its proximity to Quebec’s scenic lakes makes it an ideal spot for those looking for budget-friendly cottage properties.

Alberta: A More Affordable Alternative

With living costs soaring, Alberta’s cities offer a practical alternative for buyers and renters looking for affordability without sacrificing urban amenities:

• Calgary offers a blend of city life and outdoor adventures, with one-bedroom rents averaging $1,634 and homes priced at $575,600. Its proximity to the Rocky Mountains and vibrant cultural scene make it a popular choice for families and young professionals.

• Edmonton stands out for its affordability, with one-bedroom rents averaging $1,355 and home prices around $395,400, making it one of the most cost-effective cities in Canada. With a strong economy and lower living costs, Edmonton continues to attract both investors and first-time buyers.

Who’s Driving the Market?

Two key demographics are fueling today’s housing market. Young professionals and first-time buyers aged 25-34 are actively seeking affordability and urban convenience. At the same time, buyers aged 45-64 are looking to downsize or assist their children with housing costs, creating an evolving demand across various cities.

The luxury housing market in Toronto experienced a significant boost in the last quarter of 2024, with sales of homes priced over $3 million increasing by more than 40% compared to the same period in 2023.

More than 360 freehold homes and condos were sold in Q4, a notable rise from 259 sales in the same timeframe the previous year. Recent interest rate cuts by the Bank of Canada helped stimulate demand, sparking interest in high-end properties both within the city and its surrounding suburbs.

Experts had anticipated a surge in luxury home sales, as a combination of economic factors—such as lower rates, pent-up demand, and shifting buyer sentiment—came together in the final quarter.

Record-Setting Sales in Toronto’s Luxury Market

Toronto accounted for more than half (53%) of these luxury home sales, with the city’s softened property values creating new opportunities in the $5 million to $7.5 million range. Homes priced above $5 million saw the most significant increase, with sales jumping nearly 59% year-over-year. The $7.5 million-plus segment also posted gains, with sales rising 41%, while properties priced over $10 million remained stable compared to the previous year.

Notably, nearly half of the sales in the $5 million-plus category occurred in the suburbs, highlighting a growing preference for high-end homes outside the city core.

What’s Driving the Growth?

Several key factors have contributed to this surge in the luxury market:

• Lower interest rates: The Bank of Canada’s 100-basis-point rate cut in 2024 helped fuel buyer enthusiasm.

• Stock market gains: Strong performances in major indexes like the NASDAQ, S&P 500, and TSX have bolstered confidence among high-net-worth buyers.

• Easing inflation: As inflation pressures eased, many affluent buyers felt more secure in converting their financial gains into real estate investments.

Looking Ahead to 2025

Although inventory remains tight, there’s growing optimism for continued growth in Toronto’s luxury market. Increased buyer confidence, coupled with a strong equity market, suggests that demand will remain high, particularly for single-family homes. Additionally, the ongoing transfer of wealth across generations and rising interest from international buyers—especially affluent Chinese immigrants—are expected to continue supporting the high-end real estate sector.

The evolving political landscape in both Canada and the U.S. could also have an impact on the market. Despite this, many remain optimistic, believing that with the strong fundamentals in place, Toronto’s luxury market is positioned not only to maintain but to surpass the impressive levels seen in 2024.

Calgary's real estate market closed 2024 with strong sales, totaling 1,322 in December—a slight dip of 3% from last year but nearly 20% above the long-term average. While overall sales were close to last year's levels, growth in higher-priced homes offset slower sales in lower price ranges due to limited supply.

“Population growth has kept sales above long-term trends, but if there had been more options—especially in the affordable range—sales could have been even higher,” said Ann-Marie Lurie, Chief Economist at CREB®. “However, we saw supply improve in the second half of the year, especially for higher-priced homes.”

By December, inventory had risen to 2,989 units, a notable improvement over last year level. More housing options helped ease price pressures, with benchmark prices rising by 7% overall in 2024. As we head into 2025, supply will continue to be a key factor in shaping the market.

Key Property Trends:

·       Detached Homes: Sales rose for homes priced over $600,000, aided by easing lending rates. Detached home prices increased by nearly 11%, with the strongest growth in the North East and East districts.

·       Semi-Detached Homes: Tight supply in detached homes drove buyers toward semi-detached properties, leading to a 5% sales increase. Prices rose by almost 11%, particularly in the North East and East.

·       Row Homes: Row homes saw a 2% increase in sales, making it the second-highest total on record. Prices rose by 14%, with the North East and East districts seeing over 20% growth.

·       Apartment Condominiums: After a strong first half, apartment sales slowed by 4%, but still reached the second-highest total ever. Prices rose by 15%, with the North East, East, and South districts seeing the biggest gains.

Regional Highlights:

·       Airdrie: Sales rose by 4%, thanks to more listings, and prices increased by 8%, especially for higher-density homes.

·       Cochrane: The market favored sellers for most of the year, but by the last quarter, more listings helped balance conditions. Prices rose by 9%, averaging $565,808.

·       Okotoks: With sales up 8% and new listings increasing by 16%, Okotoks continued to favor sellers. Prices rose by nearly 8%, with row and semi-detached homes seeing larger increases.

Looking Ahead to 2025

As we move into 2025, supply will remain critical in shaping Calgary’s housing market. CREB®’s upcoming forecast report will provide further insights into what to expect in the year ahead.

As 2024 comes to a close, the Canadian real estate industry has seen notable changes. Here’s a quick look at the top five stories that have had the most impact this year, setting the stage for 2025 and beyond.

1. Competition Bureau Investigates CREA

The Canadian Competition Bureau is investigating CREA’s commission rules and cooperation policy, examining if they hinder competition or give larger brokerages an unfair advantage. CREA is cooperating and believes its policies support competition and benefit consumers.

2. CREA Votes to Make Realtor.ca For-Profit

CREA members approved a plan to transition Realtor.ca into a for-profit subsidiary starting in January 2025. This move aims to modernize the platform, reduce reliance on member dues, and explore new revenue streams through features like advertising.

3. New Mortgage Rules Offer Short-Term Relief

New mortgage rules introduced in December extend 30-year amortizations for first-time buyers and new builds and raise the insured mortgage limit from $1 million to $1.5 million. While these changes could help with affordability, experts emphasize that increasing housing supply is crucial for long-term recovery.

4. Bank of Canada Cuts Interest Rates Again

The Bank of Canada cut its benchmark rate to 3.25% in December, marking a fifth consecutive reduction. This is expected to lower borrowing costs and stimulate buyer activity, leading to a busier market heading into 2025.

5. OREA CEO Tim Hudak Resigns

Tim Hudak resigned as CEO of the Ontario Real Estate Association in August after seven years. He was instrumental in key initiatives like the Trust in Real Estate Services Act. OREA is now searching for a new CEO, with Sonia Richards serving as interim leader.

These stories have had a major influence on Canadian real estate this year and will continue to shape the industry in the months and years ahead.

This fall has been an unusually busy time for much of Canada’s housing market, with some areas continuing to see strong activity into December, fueling optimism for 2025. The positive outlook is largely driven by recent federal policy changes, including continued interest rate cuts by the Bank of Canada and new mortgage reforms designed to make it easier for people to buy homes.

In November, Canadian real estate sales surged 26% compared to last year, with some areas like Montreal, the Greater Toronto Area, and Greater Vancouver seeing even bigger increases. This marks a significant recovery after a slow period following the pandemic. With more people returning to the market, many are expecting prices to rise next year, which is motivating both buyers and sellers.

However, despite increased activity, the number of available homes is still low, driving up prices. Some markets are seeing their busiest Decembers in years, with more listings expected early in the new year as sellers try to get ahead of spring competition.

Not all areas are experiencing the same level of activity. While some regions are slowing down, others, like Calgary, are seeing strong sales well into December, thanks to interest rate cuts and a positive outlook for 2025. There’s also optimism that new lending rules will make housing more accessible, especially in expensive markets like Vancouver.

Looking ahead, many experts believe the market will stay active through 2025, with more buyers entering the market and limited inventory potentially pushing prices higher.

Canadian real estate seems to be on the path to recovery, with interest rates falling, house prices down from their peaks, and affordability slowly returning. The government is actively addressing housing issues, but the big question is: when will the market truly recover?

It’s felt more like a long, drawn-out road trip than a clear comeback. Buyers have been waiting on the sidelines, hoping for the right moment to jump in—either waiting for prices to dip further or hoping for a sign that the market has bottomed out. Ironically, those waiting for the “bottom” may have missed it, as the market has seen steady price increases in recent months.

While September seemed subdued, recent data shows signs of a market turnaround. Home sales increased by 2.8% in November, marking the second consecutive month of growth. Lower rates, more buying power, and new mortgage policies have drawn sidelined buyers back into the market, with strong activity in major cities like Toronto, Vancouver, and Montreal.

However, this spike in activity raises some questions: is it a real recovery, or just a temporary boost driven by policy changes? The market still feels relatively flat compared to the highs of the pandemic, and there are signs that the recovery remains fragile. Though prices are rising, they’re still lower than a year ago, and the supply of homes remains tight, with fewer listings coming to market.

Looking ahead, much depends on the upcoming spring market. While optimism is building, potential challenges like a possible recession and rising unemployment could still slow the recovery. The key will be whether the momentum from the past few months can carry through.

In the meantime, the dream of homeownership is still tough for many, especially first-time buyers, who face rising prices and fewer available homes. For sellers, however, the market is leaning in their favor, with competition among buyers growing as inventory remains low.

In short, Canadian real estate is showing early signs of recovery, but it’s unclear whether this momentum will last or if it’s just a brief reaction to lower rates and policy changes. The spring market will be a critical test.

Home sales in Canada continued to rise in November, up 2.8% from October and 18.4% higher than in May, before the first interest rate cut. The boost was driven by gains in Greater Vancouver, Calgary, Greater Toronto, Montreal, and some smaller cities in Alberta and Ontario.

"Sales not only increased, but tighter market conditions also pushed prices up at the national level for the first time in over a year and a half," said Shaun Cathcart, CREA’s Senior Economist. "With the Bank of Canada’s recent rate cut and changes to mortgage rules, we might see a more active winter market than usual."

November Highlights:

• National sales rose 2.8% month-over-month.

• Sales were 26% higher than November 2023.

• New listings were down 0.5% month-over-month.

• The HPI increased by 0.6% from October but is down 1.2% year-over-year.

• The average sale price rose 7.4% from last year.

The sales-to-new listings ratio tightened to 59.2%, up from 57.3% in October, indicating a shift toward a more balanced market.

At the end of November, there were over 160,000 properties listed for sale—8.9% more than last year, but still below the typical level for the season. Inventory dropped to 3.7 months, the lowest in 14 months.

The national average home price in November was $694,411, up 7.4% from last year.

Home sales in Vancouver saw a nice boost in November, thanks to a jump in new listings that helped keep prices steady, according to the local real estate board.

The composite benchmark price for November was $1,172,100, which is slightly down by 0.9% compared to last year and basically the same as October.

Real estate agents in Greater Vancouver reported a 28.1% increase in the number of homes sold compared to November 2023. With a more balanced market, many buyers took advantage of the opportunity. In total, there were 2,181 sales in November, which, while still 12.8% below the 10-year average, is an improvement over the 1,702 sales from the same month last year.

There were also 3,725 new listings in November, a 10.6% increase from 2023 and 5.4% above the seasonal average for the past decade. Overall, the number of active listings in the region reached 13,245, up by 21.2% from last year.

While prices remained stable last month, if the supply of homes doesn’t keep up with rising demand, buyers could face higher prices in 2025. For now, though, the market seems to be holding steady.

As we head into winter, Calgary’s housing market is following typical seasonal trends, with slower activity compared to the fall, but year-over-year demand remains strong. November saw a mix of increased sales in detached, semi-detached, and row homes, though apartment condo sales slowed. Overall, 1,797 sales in November were on par with last year and 20% above long-term averages.

Detached Homes:
Sales for homes priced above $600,000 are rising, while lower-priced homes face limited supply. Although inventory improved, 85% of homes for sale were priced over $600,000, creating varied market conditions. The benchmark price for detached homes was $750,100, up over 7% from last year.

Semi-Detached Homes:
There were 173 semi-detached sales in November, up nearly 5% from last year, supported by more listings and higher supply. With two months of supply, conditions still favor sellers, particularly for homes below $700,000. The benchmark price was $675,100, nearly 8% higher than last year.

Row Homes:
Sales of row homes showed continued strength, rising nearly 3% year-to-date. Despite inventory improvements, supply remains tight with about two months of available homes. The benchmark price was $454,200, up nearly 7% from last year.

Apartment Condominiums:
Sales for apartment condos slowed from last year’s record, but still remained well above long-term trends. Increased listings pushed supply levels higher, easing price pressure. The benchmark price was $337,800, up 9% from last year.

Regional Highlights:

• Airdrie: Supply levels are returning to pre-2020 norms, with a 4% increase in the benchmark price, now at $543,300.

• Cochrane: A surge in new listings drove strong sales, with the benchmark price at $568,600, up 4% from last year.

• Okotoks: A dip in new listings kept inventory low, with prices rising 6%, bringing the benchmark price to $624,000.

Overall, the market remains active, though conditions vary by property type and price range.

The Canadian housing market is set to find its footing in 2025, as lower interest rates and new lending rules are expected to attract more buyers. The real estate company predicts that the average home price in Canada will rise by 6% year-over-year, reaching $856,692 by the fourth quarter of 2025, aligning with long-term trends.

Single-family detached homes are expected to see a 7% price increase, hitting a median value of $900,833, while condos are forecast to grow by 3.5%, reaching $605,993. "There’s a growing backlog of buyers ready to enter the market, and upcoming changes to mortgage lending rules will help boost Canadians' borrowing power," says Phil Soper, President and CEO of Royal LePage.

Regional Price Trends: A Strong Demand Across Canada

The forecast suggests price growth in major Canadian markets, with Quebec City leading the way with an 11% price increase. Edmonton and Regina are expected to see a 9% gain each. Greater Montreal is predicted to rise by 6%, while the Greater Toronto Area is projected to grow by a more moderate 5%. Metro Vancouver is expected to see a 4% increase.

Good News for First-Time Buyers: New Lending Rules

Starting December 15, 2024, new mortgage rules are expected to help first-time buyers and those purchasing new homes. These changes include eligibility for 30-year amortizations on insured mortgages and an increase in the mortgage insurance cap from $1 million to $1.5 million.

First-time buyers will be the main beneficiaries of these changes, as they’ll be able to borrow more with a smaller down payment, bringing them closer to owning their first home. This will likely encourage more builders to start new projects, which is exactly what the market needs.

What to Expect in 2025

The first quarter of 2025 is expected to bring the strongest gains, driven by an early spring market. National home prices are projected to rise 2% from Q4 2024 to Q1 2025. After that, growth is expected to slow slightly, with 1.5% gains in the second and third quarters, and 1% in the final quarter of the year.

2025 will bring a sense of normalcy to the market. After a few years of unusual ups and downs, the signs point to a return to stability next year. The recent shift in the Bank of Canada’s monetary policy—from focusing on fighting inflation to boosting the economy—has contributed to this optimism.