The Canadian real estate market has seen significant changes recently, and they could be the game-changers the industry has been waiting for. With insured mortgages now available for homes priced up to $1.5 million—allowing buyers to qualify with less than a 20% down payment—and 30-year mortgages for First-Time Home Buyers (FTHB), the stage is set for a much more active 2025 market.
Here are our Top 5 Predictions for 2025 and what they mean for buyers, sellers, and investors.
1. Lower Interest Rates
No surprises here! The Bank of Canada’s current rate sits at 3.25%, but it’s expected to drop to 2.25%–2.75% in 2025, depending on the strength of the Canadian economy. Key factors influencing rate cuts include:
- Unemployment rates: A declining unemployment rate would signal economic growth.
- U.S. tariffs and trade policies: A stable international trade environment could further bolster Canada’s economy.
What It Means: Lower rates will increase affordability, allowing more buyers to enter the market and potentially boosting demand across all property types.
2. The Return of Multiple Offers
YES—multiple offers are already back, particularly for Toronto freehold properties under $1,400,000. However, the dynamics are changing:
- Buyers are less likely to overpay.
- Expect more conditions (like financing or home inspection) to be included in offers.
What It Means: Sellers should still anticipate competitive bids but be mindful of pricing realistically to attract offers without overextending buyer budgets.
3. A Boost in Sales
Sideline demand is stepping off the bleachers and into the game!
- The new insured mortgage cap and FTHB incentives are already making waves, driving renewed interest among buyers.
- Expect more government programs in 2025 to further jumpstart the market and boost sales across all segments.
What It Means: The market is poised for higher transaction volumes, especially in affordable and entry-level segments. Buyers should act early to secure favourable deals, and sellers should prepare for increased interest in their properties.
4. Pre-Construction Market Struggles
While pre-construction projects may slow in terms of new starts, builders are likely to introduce:
- Strong buyer incentives: Think discounts, upgrades, or free perks.
- Favorable deposit structures: To attract hesitant buyers.
What It Means: Buyers in the pre-construction market will have plenty of options and negotiating power, but the limited new supply could create opportunities for long-term value growth.
5. A Polarized Condo Market
The condo market will see varied performance depending on size and location:
- Micro condos (<500 sq. ft.): Expected to remain flat with limited demand.
- One-bedroom + dens and larger units: Modest price improvements are anticipated.
- Two-bedroom and larger condos: These will see the strongest growth, particularly in Toronto, where family-friendly layouts are in demand.
What It Means: Larger condos will dominate demand, making them an excellent investment option. Buyers and investors should focus on properties with versatile layouts and prime locations.
PSA for Sellers: Price and Strategy Are Key
If you plan to sell in 2025, your agent’s most crucial task is determining the right marketing price and implementing the best strategy for your home. Overpricing your property is the fastest way to watch your neighbours sell while your listing sits stagnant.
What It Means: Connect with an experienced agent to strategically position your home for maximum visibility and top-dollar offers.
Final Thoughts
The 2025 Canadian real estate market is shaping up to be one of renewed activity, greater affordability, and exciting opportunities for both buyers and sellers. With major shifts like reduced down payments, longer amortizations, and falling interest rates, now is the time to prepare your strategy—whether you’re buying, selling, or investing.
Let’s connect! At Mikeyat.com, we’ll help you navigate these changes and make the most of the opportunities ahead.
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