Outlook for 2025: A rebound year for real estate?

Canada Mortgage and Housing Corporation (CMHC) recently released its latest Housing Market Outlook for 2025. While the possibility of a trade war with the United States remains the big question mark looming on the horizon for Canada’s real estate market (as it is for nearly every sector of the economy), Canada’s national housing agency is still predicting a significant rebound this year in both real estate sales and average home prices.

What they said

In an overview to its Outlook report, CMHC writes that it expects “housing sales and prices to rebound as lower mortgage rates and changes to mortgage rules unlock pent-up demand in the short term. In the longer term, stronger economic fundamentals will support this rebound.”

According to CMHC, the main factor driving this potential rebound is the six straight drops in interest rates we’ve seen in Canada over the past few months. In addition to reducing monthly mortgage payments for existing homeowners with variable-rate mortgages, lower interest rates are also making it easier for both new homebuyers and investors to get into the market.

Another element at play are the changes to Canada’s mortgage rules that were introduced by the federal government last year. Among other updates and changes, this included an expansion of 30-year mortgage amortizations to include first-time homebuyers and anyone purchasing a newly-constructed house or condo, as well as an increase in the price cap for insured mortgages from $1-million to $1.5-million, so more people with down payments of less than 20 per cent would be able to qualify for a mortgage.

As part of their forecast, CMHC is also predicting that these favourable borrower conditions could be felt over both the short and long terms, with the benefits for homebuyers and homeowners lasting for months or even years to come.

What could get in the way

The main stumbling block that could cast a shadow over all the good news, of course, is the uncertainty regarding our neighbour to the south.

The threat of tariffs of 25% or more on many Canadian goods has already shaken Canada’s markets, including real estate. Not knowing what the U.S. President plans to do next, or when he might implement it, makes it harder than usual to make any predictions this year with anything even remotely resembling a high degree of assurance.

In addition, while CMHC notes that lower interest rates are encouraging everyone from millennial first-time buyers to repeat homebuyers to return to the market, the recovery in sales and prices could nonetheless still be somewhat “uneven, with the condominium apartment market lagging, especially in regions that depend on investor activity.”

Why it’s still good news

That said, even if things continue to grow testier between Canada and the U.S., CMHC notes that lower interest rates should still help most homeowners and buyers weather the storm. And if new tariffs lead to higher inflation, there’s a good chance that the Bank of Canada could lower its key rate to help prop up the economy – which would, ironically, potentially be more good news for anyone who either has a mortgage or plans to get one.