Canada’s Housing Market 2025: Why Buyers Should Prepare for a Rebound | Max Cash Back Realtor

Why Canada’s Housing Market is Poised to Stabilize — And What It Means for Home Buyers

The Canadian housing market has gone through one of its most dramatic cycles in decades. After the pandemic-driven boom came rapid interest rate hikes, surging inflation, and a slowdown in sales activity. Many home buyers have been waiting on the sidelines, unsure of when to step back in.

Now, conditions are changing again. Inflation is easing, interest rate cuts are being discussed, and housing activity is showing signs of balance. For home buyers, this moment represents both opportunity and preparation.

Inflation — From Highs to Lows

Inflation has been the key driver behind the housing market’s recent swings.

• In early 2022, inflation surged above 8%, leading to aggressive interest rate hikes.

• During that period, I advised my clients that the housing market was in a state of Euphoria, and once rates moved higher, prices would face downward pressure.

• By July 2025, Canada’s inflation had dropped to 1.7%, well within the Bank of Canada’s 1–3% target range.

• Lower inflation creates room for the central bank to shift from a restrictive stance to a more supportive one.

 Interest Rates and the Path Forward

Interest rates climbed quickly from 2022 to 2023, cooling the housing market and pushing affordability to its limits. But a turning point may be near:

• At the Jackson Hole Symposium, U.S. Federal Reserve Chair Jerome Powell indicated that the Fed may consider a September 2025 rate cut.

• The Bank of Canada often mirrors the Fed’s policy direction, to maintain currency stability and keep financial conditions aligned.

If cuts materialize, home buyers in Canada could soon benefit from lower mortgage rates, easier qualifying conditions, and improved affordability.

The Labour Market — A Soft Spot for the Economy

Canada’s unemployment rate is now at 6.9%, compared to pre-pandemic levels of around 5–5.5%. Youth unemployment has risen to 14.6%, the highest since 2010 outside of pandemic years.

While a weaker job market poses challenges for households, it also reduces upward pressure on wages and inflation, increasing the likelihood of earlier rate cuts. For buyers, this means more supportive monetary conditions ahead.

Housing Market Internals Show Balance

The housing data itself signals stabilization:

• Sales activity is increasing. National home sales have risen for four consecutive months.

• Prices are steady. The MLS benchmark price has stopped declining and is holding stable.

• Balanced conditions. The sales-to-new-listings ratio sits at 52%, which is considered balanced (neither a seller’s nor buyer’s market).

This combination suggests the market is no longer in decline, but instead finding its footing.

Immigration and Population Growth Drive Long-Term Demand

Population growth remains one of the strongest drivers of housing demand in Canada:

• In Q1 2025, Canada welcomed over 104,000 new permanent residents, while natural population growth (births minus deaths) was negative.

• The 2025–2027 Immigration Levels Plan targets 395,000 permanent residents in 2025, plus over 673,000 temporary residents.

• Most newcomers settle in major urban centres such as Toronto, Vancouver, and Calgary, where housing supply is already tight.

Research shows that immigration accounts for a measurable share of housing price growth, especially when supply is limited. Long-term, this ensures demand will remain strong, even in periods of slower economic growth.

Rent Pressure Keeps Buying Attractive

Rental prices have remained elevated, even with modest declines in some regions in 2025. On average, asking rents are still more than 12% higher than three years ago.

For many Canadians, rent is now close to — or higher than — what they’d pay in mortgage payments, especially when considering long-term equity gains. As rates ease, this will encourage more renters to transition into ownership, boosting housing demand further.

What This Means for Canadian Home Buyers

Act During Stabilization

Entering the market while it is balanced allows buyers to avoid bidding wars while positioning themselves for gains when prices start to rise again.

Secure Pre-Approval Early

Mortgage pre-approval locks in a rate and ensures you’re ready to act quickly once the right property becomes available.

Take Advantage of Cash Back Programs

Affordability is key. Through our Max Cash Back Realtor program, buyers receive 1.75% of the purchase price back after closing — that’s $17,500 on a $1 million home. This rebate puts meaningful savings directly back into your pocket.

A Market Ready for Rebound

The Canadian housing market has moved from euphoria to correction — and is now preparing for its next stage of stability and recovery. With inflation easing, interest rate cuts on the horizon, balanced sales activity, and immigration driving long-term demand, the case for a rebound is building.

For buyers, the message is clear: the time to prepare is now. Those who position themselves during stabilization will be best placed to benefit when the next upswing begins.

Disclaimer: The views expressed here are my personal opinions and should not be considered financial advice. Market conditions are subject to change, and buyers are encouraged to consult with their own financial and mortgage professionals before making any real estate decisions.