Over the past decade, Canada’s housing market has largely been a tale of two cities: Vancouver and Toronto. These markets have seen prices climb steadily, putting a significant strain on affordability. As detached housing moved out of the reach for average buyers, focus has shifted toward condominiums or housing farther from the urban core. Today, however, the story is about the sharp slowdown in market activity.
Recent economic uncertainty, driven mostly by tariff tensions, is eroding consumer confidence. While this may prove temporary if trade disputes are resolved quickly, we expect market conditions to remain soft through the end of the year. In BC, regions with economies tied to resources and agriculture face the risk of significant job losses due to ongoing trade issues. As a result, many potential homebuyers remain hesitant, wary of taking on larger mortgages in higher priced markets amid these rising employment risks.
Home sales declined across nearly all of BC’s economic regions in March, according to the Canadian Real Estate Association (CREA). Sales fell by 7.3 per cent in the Greater Vancouver Area, 2.0 per cent on Vancouver Island, 8.9 per cent in the Okanagan Mainline, and 1.6 per cent in South Okanagan. The average home price in B.C. dipped by 0.9 per cent to $935,600, now 12.9 per cent below the February 2022 peak. Housing supply rose 1.6 per cent following a sharp 16.7 per cent drop in new listings in February. Although potential buyers are rightfully hesitant, market conditions still favour them, with a sales-to-new listings ratio of 36.8 per cent in March.
While the decline in resourced-based communities is not surprising, the issue for Vancouver is the condominium market. Metro Vancouver has seen record-setting levels of homebuilding in the past two years. Based on current absorption rates, the Vancouver-based real estate marketing firm Rennie projects a 60 per cent increase in the inventory of completed but unsold condos. For builders, this growing inventory will limit their ability to bring more development to the market.
Forecasted Unsold Condominium Inventory 2025 – Metro Vancouver
Source: Rennie Intelligence
The story for Ontario is similar. After an uptick in February, housing starts in the province dropped sharply in March. According to CREA, nine of Ontario’s 16 metro areas recorded declines in the seasonally adjusted annualized rate of housing starts. Notably, Toronto saw a 19.5 per cent drop, with housing starts falling to 14,838 units from 18,431 units in February.
Home sales also continued on a downward trajectory across the province, marking a fourth straight monthly decline. Sales fell by 21.8 per cent quarter-over-quarter, with consumer confidence hit hard by early-year tariff threats that shook trade and economic stability.
Prices fell in most of Ontario’s economic regions. While home values in the Toronto economic region rose by 1.3 per cent, the benchmark price index – which adjusts for compositional effects – decreased by 1.4 per cent.
Like Vancouver, Toronto is facing challenges in its condominium market. Record levels of condo construction, a lack of investors willing to buy pre-construction units, and a growing inventory of unsold condos is putting pressure on the market.
While home prices and sales activity have softened amid tariff uncertainty, these adjustments will not fundamentally impact affordability. With the price-to-income ratio sitting around 10 times in the Vancouver and Toronto markets, we can expect conditions to remain soft through 2025. However, unless there is a significant employment shock, prices should remain rangebound.
Independent Opinion
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