Over the past 10 days, RBC has published 2 special housing reports.
One report, “Canada’s housing market outlook: Sustaining recovery in uncertain times” breaks down the key factors that could either boost or stall the market’s recovery.
The second report, “Sellers set the tone in Canada’s housing markets as 2025 rolls in”, takes a closer look at trends in Vancouver, Calgary, Toronto and Montreal.
Here’s where it gets really interesting - each market is behaving differently, and these shifts could have major implications for buyers and sellers right now.
Stick around, because I’m going to break down all the key takeaways for you.
2025 is shaping up to be a tug-of-war between economic uncertainty and monetary policy shifts.
On one side, lower interest rates are expected to unlock pent-up demand, driving home sales and market recovery.
But on the other side, U.S. tariff threats could cause major economic disruptions.
Things like reduced exports, increased business costs, disrupted supply chains and weakened economic confidence could lead to massive layoffs and slow economic growth.
If that really happens, the Bank of Canada may be forced to respond with deeper interest rate cuts to stimulate spending and investment.
Here’s the thing.
Not all job sectors would be affected equally.
Sectors highly dependent on exports, particularly manufacturing, energy and natural resources, would see the hardest hit.
On the other hand, people in stable job sectors, such as technology, healthcare and government, could see low interest rates as an opportunity to enter the housing market.
So it all depends on which force is stronger, economic risk versus monetary stimulus.
This will be a key thing to watch in 2025.
Overall, RBC projects that the number of resale transactions will rise 12% nationally to 551,000 units in 2025, returning to a normal level of activity just prior to the pandemic.
In terms of prices, RBC expects supply and demand to stay balanced in the year ahead, yielding minimal price increases Canada-wide.
Let’s dig in and take a look at the supply and demand conditions in major cities as of January 2025.
Vancouver has a sales-to-new listings ratio of 0.36.
This means if 10 new listings come onto the market, only 3 to 4 of them would get sold.
So Vancouver is in a buyer’s market.
Calgary is in a pretty balanced market.
Edmonton is actually in a pretty strong seller’s market, 7 out of 10 new listings would get sold.
Toronto, as expected, is in a buyer’s market, just like Vancouver.
Montreal’s market has fully recovered and is now in a seller’s market.
Now let’s take a look at the MLS Home Price Index.
Both Vancouver and Toronto are in a buyer’s market, but we are still seeing support on prices, with an annual increase of 0.5%, so more or less flat.
Calgary’s activity has levelled off over the past year.
It shifted from a heated market to a balanced market, with a mild 2.8% price increase.
Edmonton saw a 12% annual price increase because it is in a strong seller’s market.
Montreal is in a seller’s market as well and it saw a 7.1% price increase.
Let’s compare the price of a typical detached home in the 5 cities.
In Vancouver, it costs $2 million dollars to buy a typical detached house.
In Edmonton, it is only a quarter of the price.
When you look at the price, you can see why Edmonton and Montreal are the hottest housing market right now.
Calgary has gotten significantly more expensive, 1.5 times more than Edmonton, which is why the Calgary market has cooled off.
It is good to see that the Edmonton and Montreal markets are thriving despite wider economic uncertainty.
It means there remains strong demand for housing within Canada.
As lower-cost markets become more expensive over time, higher-priced markets will regain their appeal.
But for now, maintaining stability would be good for 2025.
RBC is actually expecting resale activities to rebound 16.5% in British Columbia and 12.9% in Ontario.
Let’s see how the markets unfold.
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