A market recovery is underway, but experts aren't expecting a boom anytime soon
Canada’s housing market is beginning to stir over the summer – but there’s still no sign of the surge in activity long hoped for by mortgage brokers and lenders.
National sales have jumped in each of the last four months, according to the Canadian Real Estate Association (CREA), but the nature of that recovery remains highly regional with specific markets still seeing muted activity compared with historical levels.
Take Toronto, one of Canada’s notoriously priciest markets and among its most frenzied during the COVID-19 pandemic. After Bank of Canada interest rate hikes in 2022 and 2023 poured cold water over that red-hot purchase activity, the market has been stuck in a deep freeze – and even a “slight uptick,” in the words of Right at Home Realty president John Lusink (pictured top) has failed to dramatically shift the overall outlook.
“We’re still off from a couple of years ago. Listings remain high, and that’s no secret,” Lusink told Canadian Mortgage Professional.
“On the Right at Home side, two years ago we were running at about 2,500 active listings around this time of year. Last year, 3,500 and at the moment, 3,400. So the number of listings has remained relatively the same. It’s certainly still a buyer’s market.”
That said, while purchase activity is failing to hit the heights of more normal markets, there’s no sign yet that things are getting worse. The number of incoming transactions has gradually increased in recent months, Lusink said.
“We’ve seen a little bit of a spike. I’m not going to call it a recovery or an improvement because we’re well off from three or four years ago,” he said. “We’re seeing a slight increase in incoming transactions, so that’s the good news.”
Affordability improving – slightly – for many buyers
The alarming runup in home prices witnessed during the pandemic froze scores of buyers out of the market, and even a mild dip over the past year has failed to make a huge difference to the affordability outlook.
But the good news is that while plenty still find a downpayment out of reach, affordability is improving – very slowly – across most markets, according to Ratehub.ca.
Between June and July, the income required to purchase a home fell in Toronto, Hamilton, Vancouver, Halifax, Edmonton, Calgary, Winnipeg, Ottawa, Fredericton, Victoria, Montreal, and Regina, the company’s latest affordability study showed – with St. John’s alone among major Canadian markets in seeing its outlook worsen.
Still, in many markets those declines are too small to be a gamechanger for most buyers. In Toronto, the income required to purchase an average home fell by $4,040 – but remains above $200,000, well beyond the salary of many hopeful buyers.
Lusink said Right at Home’s data shows the average year-to-date sales price is down about 4% from last year, but also highlighted ongoing economic tensions from the continuing US-Canada trade war as a major factor behind some buyers’ reluctance to enter the market.
“I would say there’s been a slight improvement. But I think people are just still too worried about all that’s going on, especially with our friends to the south and all the uncertainty,” he said.
Housing affordability improved in 12 of 13 Canadian cities in July. Falling mortgage rates and stable prices brought buyers relief, with Toronto leading gains, according to Ratehub's Penelope Graham.
— Canadian Mortgage Professional Magazine (@CMPmagazine) August 21, 2025
Learn more in the latest report.https://t.co/q7bQeN5L91
Don’t expect to see a market boom in 2026
As for when Canada’s housing market might fully bounce back? Bank of Canada rate cuts in 2020 to a rock-bottom 0.25% were a key reason for the last housing boom, but there’s no prospect of a similarly dramatic drop anytime soon.
The ongoing trade war is also keeping a lid on a full recovery – and while RBC expects demand to heat up in 2026, it’s still stopping short of expecting an imminent return to normal levels of homebuying.
“A fragile labour market, reduced immigration targets, and affordability challenges will limit the pace of growth,” the banking giant said in a recent report. “For pricing, supply-demand conditions have shifted in buyers’ favour, particularly in Ontario and BC where affordability issues are acute.”
What’s more, the outlook still varies from one region to the next. Price gains are likely in the Prairies, Quebec, and some of Atlantic Canada this year and into 2026, RBC said – but “in contrast, Ontario and BC will continue to face challenges with imbalances in condo markets in Toronto and Vancouver likely spilling into other segments.”
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
