🏡🔍 “From Booming Heights to Balanced Markets”
After years of record‑breaking price surges, both the Toronto and Vancouver housing markets have shown signs of moderation in early 2025. Affordability pressures, rising mortgage rates, and increasing supply are converging to temper runaway growth. 📉
Recent Price Movements
- Toronto CMA: Average home price peaked at CAD 1.14 million in October 2024; by March 2025 it stood at CAD 1.07 million (–6 %).
- Vancouver CMA: From a high of CAD 1.35 million in November 2024 to CAD 1.28 million in February 2025 (–5.2 %).
Drivers of the Cool‑Down
- Mortgage Rate Pressure: The Bank of Canada’s 5.00 % policy rate translates into 6 %–7 % on five‑year fixed mortgages, straining buyer budgets. 🏦
- New Supply: Approvals for multi‑unit developments rose by 18 % year‑over‑year in Greater Toronto Area (GTA) and 12 % in Metro Vancouver. 🏘️
- Regulatory Measures: Ontario’s Fair Housing Plan and B.C.’s Speculation Tax dampen speculative flipping and foreign demand.
Segment Analysis
- Detached Homes: Most pronounced price decline (Toronto –7 %; Vancouver –6 %).
- Condo Market: Relatively resilient, down just 2 %–3 %, supported by first‑time buyers and investors. 🏢
- Rental Market: Vacancy rates inch above historical norms (Toronto 2.8 %; Vancouver 2.5 %), slightly softening rents.
Impact on Buyers and Sellers
- Buyers: Gaining negotiating power; longer listing times (average days on market up from 18 to 36 in the GTA). ⏱️
- Sellers: Adjusting expectations; more price reductions, especially for properties priced above CAD 1.2 million. 💵
- Developers: Holding back some condo launches to avoid oversupply; focusing on mid‑market and rental projects.
Policy Considerations
- Affordability Programs: Expansion of first‑time home buyer incentives and co‑purchase schemes. 🎁
- Rental Construction: Calls for faster approvals of purpose‑built rentals to alleviate long‑term demand. 🏢
Outlook
Most analysts expect a shallow correction rather than a crash. With employment strong and population growth steady (300 000 new residents in 2024), prices could stabilize by late 2025. Affordability remains a key challenge; balanced markets hinge on continued supply growth and prudent macroprudential policy. 📆🏠
