Canadian Real Estate Insights

Recent insights from the Teranet Market Forum combined with the latest Teranet–National Bank House Price Index provide a comprehensive view of the evolving dynamics across the country. Let’s dive into the key takeaways that are shaping the market today.

1. Delayed Rebound Despite Lower Interest Rates:

While lower interest rates have traditionally spurred buyer activity, the anticipated market rebound has yet to occur. This delay suggests that broader economic uncertainties and evolving mortgage policies are tempering buyer enthusiasm.

Toronto vs. Ontario Condo Trends:
There is a notable divergence between Toronto and the rest of Ontario:

• Toronto’s Condo Market: Condos represent 60% of sales in Toronto compared to only 25% elsewhere in Ontario. A 20% year-over-year increase in condo transactions—driven by a 78% surge in new condo builds. It is important to remember that many of these purchases occurred years ago and with construction completed the transactions are being counted as current purchases or closings which skews the current demand for condos. 
• House Price Stability in Major Cities: According to the Teranet–National Bank House Price Index, Toronto’s prices remained stable in January, while other markets experienced varied changes. For instance, Quebec City saw a 3.2% increase month-over-month, and Montreal edged up by 0.4%.

2. Shifts Among Multi-Property Owners and Buyer Experiences

Multi-Property Owners (MPOs) Scaling Back:
Once dominant in the market, MPOs are now buying less aggressively. The share of investors with 11 or more properties has fallen from 13% to 7.2%, with 30% of their purchases made without mortgages—highlighting a shift toward cash transactions among wealthier investors.

Recent Buyers Facing Losses:
For those who entered the market between 2022 and 2023, the challenges are tangible. Approximately 25% of these buyers have sold at a loss, with median losses ranging from $45K in Ontario to $56K in the Greater Toronto Area, and an even steeper $240K in Muskoka. This trend serves as a cautionary tale about market timing and regional volatility.

3. First-Time Buyers and Homeowner Behavior

Rising Barriers for First-Time Buyers:
The dream of homeownership is becoming more elusive. The median age of first-time buyers has increased from 36 in 2014 to 40 in 2024, while average home prices have more than doubled—from $500K to $1.3M. These shifts reflect a market where affordability is increasingly out of reach for younger buyers.

Homeowners Staying Put:
In contrast, repeat buyers are not only investing more (averaging $1.75M in 2024) but also holding onto their properties longer. Data shows that the average holding period for condos has increased from 7 to over 8 years, and non-condo properties have seen a rise from 11 to 12.5 years—reaching nearly 18 years in Toronto. This stability among existing homeowners contributes to a market that is less dynamic but perhaps more resilient in turbulent times.

4. Teranet–National Bank House Price Index Update

The Teranet–National Bank House Price Index offers additional insights into current market conditions:

• Stable Composite Index:
  The composite national index remained stable from December to January after seasonal adjustment, marking a pause in the previously steady 2.8% six-month growth.

• Diverse City Performances:
  Among the 11 markets:

  • Price Gains: Quebec City (+3.2%), Halifax (+0.9%), Calgary (+0.8%), Ottawa-Gatineau (+0.6%), Victoria (+0.6%), Edmonton (+0.6%), and Montreal (+0.4%) experienced month-over-month increases.
  • Price Declines: In contrast, Winnipeg (–1.5%), Hamilton (–1.4%), and Vancouver (–0.6%) saw decreases, while Toronto remained stable.

• Year-over-Year Growth:
  From January 2024 to January 2025, the composite index rose by 3.4%, with notable gains in Quebec City (+13.6%) and Calgary (+8.6%). Toronto, however, recorded a modest 1.0% increase, with Hamilton as the only market to decline (–0.3%).

• Home Resale Market Dynamics:
  A decline in resale transactions in December and January—partly driven by uncertainty from potential US tariffs—has shifted market conditions from a seller’s market to a more balanced state. An influx of new listings in January may temper future price growth, although expectations are that any tariff-related apprehension will ease if the labour market remains resilient.

• Policy and Market Support:
  Recent measures, such as interest rate cuts by the Bank of Canada and the extension of the amortization period to 30 years for first-time buyers, are providing some market support. However, persistent affordability challenges, particularly in the most expensive markets, may continue to constrain recovery.

5. Looking Ahead

Uncertainty and Opportunity:
The landscape remains fluid. Factors such as potential US tariffs, evolving mortgage policies, and broader economic conditions mean that both buyers and sellers must navigate the market with caution. While policy initiatives offer some relief, the continuing affordability issues could limit recovery—especially in high-demand urban centres.

What This Means for You:
For investors, understanding these trends is critical. The data underscores the importance of timing and regional market conditions, while first-time buyers may need to adjust expectations or explore alternative financing strategies. For homeowners, the trend toward longer holding periods might signal a shift toward prioritizing stability over rapid transactions.

Conclusion

The latest insights from Teranet’s Market Forum and House Price Index paint a picture of a Canadian real estate market in transition. With regional disparities, evolving buyer profiles, and a balanced yet cautious market environment, stakeholders must remain vigilant and informed. Whether you’re an investor, a first-time buyer, or a long-term homeowner, staying abreast of these trends will be key to making sound decisions in the months ahead.