Welcome to the January issue of my monthly newsletter!
Happy New Year!
This month, I wanted to take a look at what is in store for us for the housing market as we head into 2025. Plus, I have some tips to help kick your financial health into gear for the next twelve months! Scroll down for all the details.

Market Outlook for 2025

It’s a new year and as we gear up for the upcoming Spring season, it is a good idea to take a look at the market outlook and what we are expecting to see around housing sales, prices, interest rates, and how these current conditions affect buyers versus sellers!

Let’s dive into the Canadian Real Estate Association Forecast and more:

National Trends

• Housing Sales: National home sales are expected to increase by 6.6% in 2025, reaching approximately 499,800 units as interest rates continue to decline, drawing buyers back into the market. This follows a modest 5.2% increase in 2024.
• Housing Prices:On a national level, Canada’s housing market is expected to see a 4.4% increase in home prices in 2025, reaching an average of $713,375. This follows a more modest 0.9% increase in 2024. The national growth is tempered by regional differences, with areas like Toronto and Vancouver seeing higher price levels due to ongoing demand, while more affordable regions like Quebec may see more moderate growth.
• Rising Demand: Canada’s housing market remains competitive, with demand continuing to rise in urban centers and suburban areas due to factors like population growth, economic recovery, and strong immigration.
• Interest Rates: The Bank of Canada’s policy on interest rates continues to play a central role in shaping the housing market. While rates were higher through 2023 and part of 2024, they are expected to continue declining in 2025, which should ease affordability constraints and encourage more buyer activity.

Regional Highlights

Greater Toronto Area (GTA)

• Housing Prices:The average home price in the GTA reached $1,135,215 in October 2024, reflecting a 0.8% increase year-over-year and 2.5% monthly growth. The City of Toronto itself saw a 3.4% increase, signaling continued demand despite higher prices. Areas like Mississauga and Brampton show mixed price trends, with Mississauga seeing a slight decline of 2.2% year-over-year, while Brampton experienced a 2.0% increase. These fluctuations reflect demand in more affordable areas within the GTA.
• Rising Demand: Toronto remains one of Canada’s most sought-after markets, driven by its status as a global financial hub and growing tech sector. Suburbs like Mississauga, Brampton, and York Region are seeing rising interest as buyers seek more affordable options. Ontario’s strong job market and immigration influx contribute to population growth, further boosting demand. While some cooling has been seen due to high home prices, the overall demand remains robust, especially for entry-level homes.
• Interest Rate Impact: Rates are expected to decrease into 2025 increasing buyer demand. Despite higher rates over the last two years, Toronto remains a seller’s market in many areas, though buyers will benefit from more favorable conditions as rates decline.

Greater Vancouver

• Housing Prices: Vancouver has experienced a slight decline in average home prices, down 0.2% year-over-year in 2024, with prices hovering around $1,250,329. However, Vancouver remains one of Canada’s priciest markets, and some recovery is expected as the market adjusts. While the downtown core sees slower price growth, suburban areas in the Lower Mainland, such as Richmond and Surrey, continue to see moderate price increases, as these areas offer better affordability and space.
• Rising Demand: Vancouver’s appeal remains strong for both domestic buyers and international investors, particularly in tech, entertainment, and natural resources sectors. Despite price stagnation, demand continues for detached homes and more spacious properties as residents seek to balance living costs with quality of life. Vancouver also benefits from significant immigration, and the city continues to diversify economically, drawing both residents and investors who are fueling demand in the housing market.
• Interest Rate Impact: Like Toronto, Vancouver has been affected by the Bank of Canada’s interest rate hikes, which have increased borrowing costs and cooled market activity. The rate hikes have caused some slowdown, but the region is expected to see a modest recovery in 2025 with interest rate cuts. As rates decline, Vancouver may experience more balanced market conditions, with higher demand for detached homes in suburban areas and some recovery in the more expensive core areas.

Quebec:

• Housing Prices:The province has seen steady growth in home prices, with Montreal, in particular, experiencing an 8.9% year-over-year price increase as of October 2024, reaching an average home price of $630,063. While Quebec’s growth is generally more moderate compared to Ontario and British Columbia, the relative affordability of homes in many areas still offers opportunities for buyers compared to more expensive regions like Toronto or Vancouver.
• Rising Demand: Montreal’s job market, particularly in technology and aerospace, continues to attract young professionals, which fuels housing demand. The province also benefits from ongoing immigration, contributing to population growth, which supports housing demand.
• Interest Rate Impact: Like the rest of Canada, Quebec will see easing interest rates in 2025, which should help to bolster market activity. However, since prices have risen significantly over the past decade, some buyers in Quebec, particularly first-time buyers, may still face affordability challenges, albeit less severe than in major cities like Toronto.

Expectations for Buyers

1. Affordability Challenges: While interest rates are expected to decline gradually, the impact of high housing prices in major cities like Toronto and Vancouver will still be a challenge for many buyers. However, some relief is anticipated as lower rates could ease monthly mortgage payments.
2. Opportunity in the Suburbs: Suburban areas are projected to see more price stability and may be more attractive to first-time buyers and those looking for better value for money. Areas like Mississauga, Brampton, and Ottawa are seeing mixed price changes, making them viable alternatives to the high-cost core regions.
3. More Inventory: A growing number of homes available for sale could give buyers more choice, but competition may still exist in certain markets due to demand returning as rates ease.

Expectations for Sellers

1. Tight Timing: Sellers in 2025 will likely benefit from a surge in demand in the spring and summer, driven by the stabilization or decline of interest rates. However, selling in a market with increased inventory may require competitive pricing.
2. Realistic Pricing: With the market expected to shift towards more buyer-friendly conditions, sellers will need to adjust expectations and price their homes carefully. Those listing too high might face longer waiting periods.
3. Stronger Negotiation Power in Suburbs: Sellers in high-demand, low-inventory areas (especially in suburban regions) may still enjoy more favorable conditions and could see prices rise or remain stable.

Key Takeaways for 2025

1. Recovery Driven by Rate Cuts: Declining interest rates are anticipated to accelerate both sales activity and price growth in the latter half of 2025.
2. Regional Disparities: While Vancouver and Toronto remain expensive, other regions like Montreal and Ottawa offer growth potential due to relative affordability and robust economic conditions.
3. Inventory and New Construction: Higher inventory levels may moderate price increases in some areas, but affordability concerns and economic factors will shape regional market dynamics.

Overall, 2025 will likely be a year of transition with benefits to both buyers and sellers as the market continues to stabilize.

Looking to purchase or renew your mortgage this year? Don’t hesitate to reach out to me

Kickstart Your Year:
5 Steps to Improve Your Financial Health

Improving your financial health is essential for long-term stability and peace of mind.

STEP 1: This starts with creating a budget and sticking to it. Begin by tracking your income and all expenses for at least a month to understand where your money is going.

• Categorize your spending into essentials (housing, utilities, groceries) and non-essentials (entertainment, subscriptions). Use this information to set realistic spending limits and prioritize needs over wants.
• Apps and tools can also make budgeting easier and more effective.

STEP 2: Next is to build an emergency fund. Life is unpredictable, and having a financial cushion can prevent setbacks from turning into crises.

• Aim to save 3–6 months’ worth of living expenses, but don’t be discouraged if that feels daunting.
• Start small, even $10–$20 from each paycheck, and automate your savings to ensure consistency. Over time, these small contributions will grow into a safety net.

STEP 3: Debt can be a significant barrier to financial health, so it’s crucial to pay down debt strategically. High-interest debt, like credit cards and payday loans, should be your top priority, as it compounds quickly and can drain your resources.

• Use strategies such as the snowball method (paying off the smallest debts first for psychological wins) or the avalanche method (focusing on the highest-interest debts to save money overall). Whichever method you choose, ensure you make at least the minimum payments on all debts to avoid penalties.

STEP 4: Another vital component of financial health is to invest in your future.

• Begin contributing to retirement accounts, such as an RRSP if your employer offers one, especially if there’s a company match—it’s essentially free money.
• If an RRSP is not an option, consider a high-interest savings account.
• Beyond retirement, explore low-risk investments, which can grow your wealth steadily over time. Even small, consistent contributions can lead to significant returns thanks to compound interest.

STEP 5: It’s essential to regularly review and adjust your financial plan. Financial needs and goals evolve, so take time annually—or after major life events like a new job, marriage, or a baby—to reassess.

• Review your budget, savings, investments, and debt repayment progress. Adjust your plan as needed to stay on track and adapt to changes.
• Regular check-ins help you stay proactive and maintain momentum toward your goals.

Financial health is a journey, not a destination. Consistency, patience, and smart planning will lead you to long-term stability and financial freedom. Remember, even small steps make a big difference over time!

Economic Insights from Dr. Sherry Cooper

There is an unprecedented disparity between the economic and financial situation in the US and Canada. The Canadian economy is far more interest-sensitive than the US and, therefore, slowed more dramatically in response to the Bank of Canada’s restrictive policy to bring inflation back to its 2% target level.

The jobless rate in Canada has reached 6.5%, well above the level in the US, and job vacancy rates have plummeted. Wage inflation has been sticky at 4.9% but will likely edge downward in response to excess supply in the labour market.

Inflation accelerated to 2% y/y in October, compared to the cycle-low 1.6% in September, mainly because gasoline price deflation slowed. The odds of another 50 bps rate cut by the central bank—on the heels of a jumbo cut in October—have diminished, but a 25 bps cut is in the bag.

Market-driven interest rates in Canada are well below those in the US, owing to weaker economic activity and lower inflation. US interest rates surged on the news of the Trump election victory. Ten-year US Treasury yields rose sharply to a post-election high of nearly 4.5% on the presumption that with a Republican majority in the House and the Senate, Trump will move ahead with tax cuts, tariffs and deregulation. Trump has also threatened to limit the independence of the Federal Reserve.

Canadian long-term yields have risen far less since the election. Short-term interest rates are also lower in Canada than in the US. The Bank of Canada has eased monetary policy four times for a total decline in the overnight policy rate of 175 bps, compared to only one rate cut of 50 bps by the Fed. This unprecedented divergence bodes well for a rebounding housing market in Canada.

Housing activity picked up in October and early November in response to the surge in new listings, giving potential buyers a broader range of choices and lower interest rates. The steepening yield curve portends more significant declines in variable mortgage rates—tied to the prime rate, which declines with every cut in the overnight rate, than fixed rates, which move with longer-term bond yields.

The Bank of Canada, concerned about a weakening Canadian economy, will continue to cut the overnight rate at every meeting between now and mid-2025. By then, the policy rate will be roughly 2.5%, half the level at the peak in BoC tightening. This will likely trigger a robust spring housing season.

There is plenty of pent-up activity in the Canadian housing market as buyers have waited for lower interest rates and home prices, and sellers have been reticent to list their properties, hoping for a housing recovery. This is beginning to turn around as every easing move by the Bank of Canada boosts economic activity, particularly in the interest-sensitive housing sector.

 

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Angela Calla is an 19-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

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