Canada's Real Estate Market: What to Expect Beyond 2025 & Why Timing Isn't Everything

The Canadian real estate market continues to spark interest among buyers. With fluctuating interest rates and evolving market trends, many are curious about what to expect as we move beyond 2025. Let's examine predicted trends, growth projections, and the drawbacks of trying to "time the market."

The Future of Canada’s Real Estate Market

Looking ahead to 2025 and beyond, many economists foresee ongoing growth in Canada's real estate market. This growth stems from a mix of rising demand driven by population increases and urbanization, alongside a limited supply of housing.

A report from Canada Mortgage and Housing Corporation (CMHC) has emphasized the need for a substantial increase in housing supply to meet future demand. In its reports, CMHC indicates that Canada will require an additional 3.5 million housing units by 2030 to restore affordability. Furthermore, a Reuters poll from September 2024 anticipates modest home price increases, with a 1% rise in 2024, followed by 2.8% in 2025, and 3.0% in 2026. These projections suggest an average annual growth rate for Canadian real estate could hover between 3% and 5% over the next five years.

Major Canadian cities such as Toronto, Vancouver, and Montreal are projected to experience moderate increases in housing prices over the next five years, driven by factors including economic growth, population influx, and limited housing supply.

Home prices in the Greater Toronto Area (GTA) are projected to increase by 5% year-over-year by the fourth quarter of 2025, reaching approximately $1,225,770, outpacing most Ontario cities. In contrast, Ottawa's prices are expected to rise by 5.4% to $667,098 by the end of 2024, while Hamilton anticipates a 4.2% increase to $787,348. Mississauga's prices are stable at $994,634, and Brampton sees a modest rise of 1.4% to $1,016,260. The GTA remains Ontario’s most dynamic real estate market, driven by strong demand and limited supply, though smaller cities like Ottawa are experiencing comparable growth rates due to their lower price points.

The Greater Vancouver, forecasts suggest a 4.0% increase in the aggregate home price, bringing it to around $1,271,712 by late 2025. Single-family detached homes are projected to see a 2.0% rise to $1,766,334, and condominiums a 4.5% increase to $795,141.

The Greater Montreal Area is expected to experience a 6.5% increase in aggregate home prices, reaching $655,082 by the fourth quarter of 2025. Single-family detached homes may see a 7.5% rise to $750,780, with condominiums increasing by 6.0% to $507,210.

These projections indicate a trend of moderate appreciation in housing prices across Canada's major urban centers, influenced by ongoing demand and supply dynamics.

The Risks of Timing the Market

Many prospective buyers cling to the strategy of "timing the market," operating under the belief that they can predict the best moment to buy. This approach is risky and often leads to missed chances.

Attempting to wait for prices to drop can backfire. Prices may not decrease as expected, and buyers could find themselves outpaced by rising rates. For example, a family waiting for a projected price drop may find the housing market has accelerated, pricing them out of the homes they were once considering.

Additionally, by waiting, buyers miss the opportunity to build equity. Every month spent on the sidelines is another month where homeowners are steadily growing their personal wealth through property ownership.

Why Timing the Market Doesn’t Work

The truth about real estate is that it is highly unpredictable and influenced by various factors—economic conditions, interest rates, and demographic shifts. Timing attempts often fail for several reasons:

1. Market Volatility: Prices fluctuate based on changes in interest rates or local policies. For example, a recent increase in interest rates from 2% to 4% can significantly affect home affordability overnight, temporarily tipping the balance in favour of buyers.

   
   

2. Opportunity Costs: Prospective buyers waiting for prices to drop may overlook properties that gain value over time. Real estate, historically a safe long-term investment, is often most rewarding when ownership is secured sooner rather than later.

   
   

3. Lack of Control: Homebuyers cannot dictate market conditions; obsessing over timing only adds unnecessary stress. Instead, focus on what you can control - financial readiness.

   
   

4. Inflation: As inflation rises, the value of money decrease. Real estate can protect you from this by typically increasing in value, helping you preserve and potentially grow your wealth.

   
   

Recognizing these challenges allows buyers to shift their focus from timing to readiness.

Preparing for the Future

To set yourself up for homeownership success, consider these vital steps:

1. Understand Your Finances: Assess your financial health; calculate what’s feasible—down payments, monthly expenses, and long-term financial goals.

   
   

2. Get Pre-Approved: Securing mortgage pre-approval can offer a competitive edge. Knowing your budget boosts confidence in negotiations.

   
   

3. Conduct Research: Learn about market trends in your desired area. Investigate schools, community developments, and future infrastructure that can enhance property values.

   
   

4. Stay Informed: Monitor changing interest rates and market conditions, as these can impact your buying strategy and readiness.

   
   

5. Consult Professionals: Real estate agents and financial advisors can offer essential insights tailored to your situation, helping navigate the complex landscape.

   
   

Moving Forward with Confidence

As we look beyond 2025, Canada’s real estate market is expected to grow. While many may feel tempted to time their purchases, waiting often leads to missed chances.

Ultimately, a successful strategy is to buy when you feel financially secure. Focus on building equity, achieving personal goals, and enjoying homeownership. By prioritizing preparation over timing, you can make informed decisions that contribute to your long-term success.

If you're considering your first home purchase, remember that the best time to buy is when you're financially positioned to do so, not necessarily when the market seems favourable.