According to experts in the Canadian real estate market, the year 2025 might witness a significant shift in home prices, depending largely on location. As we approach the spring of that year, many analysts predict a surge in housing activity driven by lower borrowing costs coinciding with an influx of new property listings.

The Canadian Real Estate Association (CREA) recently released its housing outlook, revealing some intriguing insights. December 2024 saw a 5.8 percent decline in home sales from November, but when compared to May's numbers, there was a 13 percent increase. This resurgence was attributed to the Bank of Canada’s aggressive interest rate cuts that have reduced the policy rate by 1.75 percentage points since the easing cycle began.

CREA senior economist Shaun Cathcart emphasized that if the Bank of Canada continues to lower rates, 2025 could see a busy spring real estate market unlike anything witnessed in recent years. "It’s a perfect storm,” he noted, as Canadians are eager to enter ownership markets despite challenges tied to affordability and limited supply.

Interestingly, Canada has witnessed record population growth, yet the ownership market remains strained. Despite the rising affordability resulting from lower rates, Cathcart warns that we may never return to the pre-pandemic housing frenzy where buyers rushed in due to ultra-low borrowing costs. The typical sale price is projected to reach around $722,221 by year-end 2025, a notable increase of 4.7 percent year-over-year.

While the market presents signs of recovery, it's important to note that not all regions will experience equal growth. British Columbia and Ontario, Canada’s most expensive provinces, might see increased buyer activity, but inventory surpluses—particularly in Toronto’s condo market—could limit price growth.

In contrast, markets in Alberta and Saskatchewan are expected to experience heightened demand due to their affordability and very low inventory levels, creating a scenario where demand might far outstrip supply. Cathcart remarked that, "For every 10 buyers, there might only be five houses available," highlighting the competitive nature of these markets.

CREA forecasts about 532,704 homes will be sold in Canada in 2025, translating to an 8.6 percent increase in transactions from the previous year. However, economic uncertainties cast a shadow over these projections. Factors such as potential trade disputes—with implications from the newly-elected U.S. president—could dramatically alter the landscape.

TD Bank economist Rishi Sondhi echoed the sentiment surrounding rising home prices but cautioned about looming macroeconomic uncertainties. Any developments in trade relations or economic policy could disrupt the current trajectory of the housing market.

Royal LePage CEO Phil Soper struck a hopeful note amidst the uncertainty, suggesting that while potential economic disruptions could appear, the immediate impact on the housing market might be limited. He urged optimism, stating, "The signs indicate that the housing market is heading towards a positive trajectory, even as we face uncertainty."

As we look ahead, savvy buyers and investors should prepare for both challenges and opportunities in the Canadian real estate market. The stage is set for a thrilling year in 2025, but it will be crucial to stay informed and agile as conditions evolve. Will you be ready to seize the opportunity?