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In January 2025, Canadian MLS® Systems experienced a notable increase in new home listings, up by double digits compared to December 2024. However, sales activity slowed towards the end of the month, likely due to concerns about a potential trade war with the U.S.

Although sales dropped by 3.3% month-over-month in January, most of the decline was due to a slowdown in the final week of the month. On the other hand, new listings surged by 11% compared to December, representing the largest seasonally adjusted monthly increase in new supply since the late 1980s, excluding the pandemic period.

With sales slowing and new listings rising, the national sales-to-new listings ratio dropped to 49.3%, down from the mid-50s in the last quarter of 2024. A balanced market typically has a ratio between 45% and 65%, with the long-term average around 55%.

By January’s end, about 136,000 properties were listed across Canadian MLS® Systems, a 12.7% increase from the previous year, though still below the usual 160,000 listings for this time.

At the close of January, there were 4.2 months of inventory nationwide, an increase from the high 3s in late 2024. The long-term average is five months, with a seller’s market below 3.6 months and a buyer’s market above 6.5 months.

The National Composite MLS®  has remained relatively stable over the past year, with price softness in B.C. and Ontario offset by rising prices in the Prairies, Quebec, and the East Coast.

The national average home price stood at $670,064 in January 2025, a 1.1% increase from January 2024, marking the first year-over-year rise since March 2024, though modest.

In January 2025, Canadian MLS® Systems saw a significant 11% increase in new listings compared to December 2024, marking the largest jump since the late 1980s (aside from the pandemic). However, sales slowed toward the end of the month, likely due to concerns over a potential trade war with the U.S.

Sales dropped 3.3% from December, mainly in the last week of January. Despite the dip in sales, the number of homes listed increased. This combined with fewer sales has softened the market, particularly in British Columbia and Ontario, according to CREA’s Senior Economist.

The national sales-to-new listings ratio fell to 49.3%, down from the mid-to-high 50s in late 2024. Historically, this ratio hovers around 55%, which suggests the market is shifting toward a more balanced situation.

By the end of January, there were nearly 136,000 homes listed, up 12.7% from last year but still below the long-term average of 160,000 listings for the time of year.

Looking ahead, while uncertainty over tariffs may hold some buyers back, others might benefit from a softer pricing environment and lower interest rates. Those considering buying or selling in 2025 should consult a local REALTOR® for guidance.

Nationally, inventory rose to 4.2 months, slightly above the long-term average of five months. In terms of home prices, the National Composite MLS® Home Price Index remained nearly unchanged, down just 0.08% from December 2024. Year-over-year, the national average home price reached $670,064, a 1.1% increase from January 2024.

Montreal’s real estate market has started 2025 strong, completing a two-year recovery. January saw both sales and prices rise, reinforcing the city’s status as one of Canada’s top housing markets.

Sales Return to Pre-Pandemic Levels

Resale transactions have surpassed 54,000, bringing activity back to pre-pandemic levels. The Quebec Professional Association of Real Estate Brokers (QPAREB) reported 2,812 residential sales in January 2025, a 36% increase from the previous year. Single-family homes on the Island of Montreal saw a notable 55% rise in sales.

Tight Inventory Gives Sellers the Advantage

As more buyers return, the number of listings remains low. Despite a seasonal 11% rise in new listings, inventory is down by 4%, keeping sellers in control of price negotiations. Areas surrounding the Island of Montreal are particularly tight, with less than four months of inventory available.

Prices and Demand Keep Rising

Home prices continue to climb. In January, the median price of single-family homes rose more than 10% year-over-year, while condos increased by nearly 8%. This upward trend is expected to continue through 2025, possibly accelerating.

Interest Rates and Market Sentiment

The market rebound is supported by recent interest rate cuts and new homeownership initiatives. Many buyers who had been waiting are now re-entering the market. While some economic uncertainty has affected consumer confidence, trade developments with the U.S. could lead to further rate cuts, boosting buyer support.

Some developers warn that impending U.S. tariffs on Canadian steel and aluminum could significantly harm the housing sector by raising the costs of essential construction materials. A trade association representing over 4,000 companies involved in development and renovation expressed concerns that the tariffs might trigger an economic slowdown and reduce investment in residential real estate.

The group’s leadership cautioned that this could deal a "brutal blow" to the housing market and worsen housing affordability. They pointed out that in an environment already affected by low profit margins, high interest rates, and rising input costs, additional cost increases could make builders anxious. The situation was described as creating "chaos" in the development market.

On Monday, U.S. President Donald Trump signed an executive order imposing a 25% tariff on steel and aluminum imports, set to take effect on March 12. Trump has also threatened to impose a 25% tariff on a wide range of Canadian imports, including a 10% tariff on Canadian energy, though he has delayed these actions until at least March 4 in connection with border security commitments.

The concern is that rising construction material costs would push up home prices in Canada, which are already under pressure due to inflation. Costs for materials like lumber increased during the pandemic and have not returned to pre-COVID levels. Reducing U.S. demand for Canadian products could lead to less production, which would, in turn, raise prices domestically.

Additionally, retaliatory tariffs could further drive up costs, as Canada exports about $20 billion worth of steel and aluminum to the U.S. annually. There are fears that if tariffs extended to other construction materials like cement, gypsum, and lumber, costs could skyrocket, making construction projects unfeasible.

While Canadian builders may still be able to construct homes, the rising costs could make them less affordable for many consumers.

In 2024, Calgary homebuyers needed a lower annual income to qualify for a mortgage on an average-priced home compared to the previous year. The report showed that buyers in Calgary saw a reduction in income needed to qualify for a mortgage with a 20% down payment and a five-year fixed mortgage.

 At the beginning of 2024, a Calgary buyer needed to earn about $116,000 a year to qualify for a mortgage with a 5.71% interest rate, factoring in the federal stress test (which required the buyer to afford a 7.71% rate). By December 2024, that same buyer needed only $113,500 a year, even though the average price of homes in Calgary had increased. At the start of the year, the average home price was $572,400, and by the end of 2024, it had risen to over $605,000.

 Other cities saw similar trends. In Toronto, buyers needed $12,400 less in annual income, despite a slight drop in home prices. In Vancouver, buyers needed $12,100 less, with an income requirement of $216,700 to purchase a home priced at $1,171,500.

 On the other hand, Edmonton experienced an increase in income required by the end of 2024. Buyers there needed $83,330, up by $1,050 from earlier in the year, to qualify for a mortgage on a home priced around $435,000.

 A city in New Brunswick, experienced the biggest increase, with a $6,130 rise in income requirements to $73,640, partly due to a significant $54,000 jump in average home prices, which reached $325,000.

Emerging Trends in Real Estate, an annual report by PwC and the Urban Land Institute, surveys real estate professionals globally to identify trends in investment, development, and markets. The 2025 report highlights Calgary as a rising star in real estate investment, ranking No. 1 for overall prospects due to its growing tech sector and strong population growth. Calgary’s CMA added nearly 96,000 people in the past year, with a third coming from interprovincial migration.

The report notes the greatest investment opportunities are in Calgary’s single-family and multi-family markets, with housing starts reaching a record 24,369 in 2024. Despite rising construction costs, the city’s relatively affordable housing continues to attract people, though increasing demand is expected to push rents up by 3.4% in 2025. Still, average rents remain lower than Toronto or Vancouver.

While Calgary’s office space vacancy rate hit 30.3% in 2024, the city is addressing this with a program to convert office buildings into residential and mixed-use spaces, offering funding to developers. The industrial market remains strong, with a 3.3% vacancy rate, and Calgary’s role as a distribution hub for Western Canada is expected to drive continued demand.

With another record year of housing starts expected in 2025, Calgary’s development initiatives should help ease housing pressures, especially for first-time buyers and renters.

Big news from the Bank of Canada! This Wednesday, they announced a 25-basis point rate cut, bringing the interest rate down to 3%. It’s the lowest the rate has been since September 2022. This is the first of eight rate cuts planned for 2025, and it shows the Bank is taking a slower, more gradual approach to policy after the bigger cuts in October and December.

With inflation hovering around 2% and the economy still adjusting, the Bank decided to reduce the rate further. The hope is that these lower rates will encourage household spending and gradually strengthen the economy. The Bank has made it clear that while things are looking good now, they’ll be keeping a close eye on the situation—especially with the looming threat of tariffs from the U.S.

Economists were pretty much expecting this 25-basis point cut, though things have been a bit uncertain lately, especially with the possible tariffs set to hit as early as February 1st. If the tariffs go through, it could shake things up for the Canadian economy, which is why some experts say the Bank was playing it safe with this decision.

Of course, the full impact of any U.S. tariffs is still up in the air. Some think the Bank may need to raise rates in the future if inflation picks up, while others believe the cuts could continue if the economy stays on track.

The next rate decision will happen on March 12, 2025, and we’ll be keeping a close eye on what happens next.

By the end of November 2024, a total of 22,563 housing units were completed, including 9,340 purpose-built rental units. This increase in supply has helped ease the pressure on both resale prices and rental rates. New home construction is on track to hit record levels in 2024, with 22,652 starts so far—already surpassing the entire 2023 total of 19,579. There’s been an uptick across all property types, with nearly half of the new builds being apartment-style units, including almost 5,000 purpose-built rentals. As these new units are completed, buyers will have more options, which should continue to ease pressure on resale home prices throughout 2025.

Looking ahead, experts predict that new home starts will slow down in 2025 after the record-breaking pace of 2024, as the market moves toward a more balanced state. However, demand is expected to remain strong, supported by lower interest rates that are favorable for both move-up buyers and first-time buyers. The increase in new home supply could also impact certain areas of the resale market.

Looking ahead to 2025, employment in Calgary is expected to grow by about 2%, with gains in sectors like construction, retail, healthcare, and education. At the same time, a slowdown in migration is likely to ease the growth of the labor force, helping to reduce unemployment rates by the end of 2025.

In 2024, Calgary's unemployment rate rose due to high levels of migration, which led to a quicker expansion of the labor force than job growth could keep up with. However, this increase in unemployment mostly affected younger people and newcomers, so it hasn’t had much of an impact on demand for housing.

Calgary’s job market in 2024 outperformed expectations, with strong growth in manufacturing, followed by accommodation and food services, transportation and warehousing, and information, culture, and recreation sectors. As migration slows down in 2025, the city’s employment levels are expected to continue on an upward trend, which should help stabilize the job market and improve employment rates.

Alberta’s energy sector is flourishing, benefiting from rising energy prices, favorable exchange rates, and increased production following the completion of the TMX pipeline. Additionally, the province has experienced significant population growth, fueled by both international and interprovincial migration, which has supported the housing and construction sectors, despite the challenges posed by higher interest rates. As a result, many analysts are forecasting that Alberta will lead all provinces in economic growth in 2024.

Looking towards 2025, concerns about potential U.S. tariffs have slightly dampened growth expectations. However, most projections still indicate that Alberta’s economy will continue to expand. In addition to the energy sector, growth is expected to come from investments in alternative energy, carbon capture and storage, food manufacturing, and artificial intelligence data centers. These sectors, combined with anticipated rate cuts by the Bank of Canada, are expected to drive economic activity. ATB Economics suggests that if Alberta avoids U.S. tariffs, the province’s economic growth could be nearly double current predictions, likely resulting in stronger interprovincial migration and a boost in housing activity

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