Canada’s real estate market is poised for a strong comeback in 2025, with activity expected to pick up as early as March, according to online brokerage Zoocasa.
Lauren Haw, broker of record and industry relations officer at Zoocasa, highlights several key factors in a recent report, including stabilizing interest rates, the return of sidelined buyers and a potential boost in inventory.
“Next year, Canadians can anticipate a lively spring market kicking off as early as March,” Haw explains. “With interest rates stabilizing and strong pent-up demand among buyers, we’re likely to see a return to a more traditional spring surge in real estate activity.”
This resurgence comes after an uneventful 2024 spring market, where sales remained subdued despite an increase in listings. Zoocasa predicts that heightened buyer activity will also encourage more sellers to list their properties
Mortgage renewals May prompt downsizing
Zoocasa projects a wave of mortgage renewals in 2025 will contribute to the influx in listings. Haw suggests a “wave” of renewals is likely to push some homeowners to downsize.
According to CMHC, approximately 1.2 million mortgages will come up for renewal next year, with many homeowners transitioning from historically low rates secured in 2020-2021 to rates above 3 per cent.
This influx of listings would help feed buyer demand, particularly in major markets like Toronto and Vancouver, where conditions have recently shifted in favour of buyers.
Buyer competition expected to increase
As interest rates stabilize, Zoocasa anticipates a renewed sense of urgency among buyers, particularly in the first half of 2025 With rates now hovering around 3.75 per cent and potentially dropping further, buyers may act quickly to secure properties before prices increase.
“First-time buyers and end-users will drive next year’s sales,” says Haw, who predicts the potential return of “FOMO” to the housing market.
Investor challenges persist
The condo market will likely remain challenging for investors in 2025, according to Zoocasa’s analysis. High borrowing costs and lagging profitability have already prompted a rise in listings, and this trend is expected to continue.
“Investors will continue to have a lot of supply as multi-residential mortgage renewal rates push many condos and multiplexes underwater,” says Haw. “At the same time, the challenges of making land investments financially viable continue to discourage new development.”
Recent data reflects these struggles. In Q3 2024, new condo sales in the GTA and Hamilton Area dropped 81% year-over-year, marking the lowest quarterly total since Q1 1995, according to Urbanation. Meanwhile, ownership costs for condos have risen by nearly 60% since 2020, while rental income growth has lagged significantly behind.
