2025 Real Estate Trends: What to Expect in the Market This Year

The Canadian real estate market has seen some notable shifts recently, and whether you’re buying, selling, or just keeping an eye on the market, understanding these 2025 real estate trends is key. Here’s a clear breakdown of what’s happening:

Home Sales Are Up

In October, home sales increased by 7.7%, marking the highest jump since April 2022. September saw an uptick in available homes, but October brought a 3.5% drop in new listings, particularly in the Greater Toronto Area (GTA). Prices have remained steady, dipping only slightly, and are 2.7% lower compared to last year. These shifts indicate a steadying market, with opportunities for both buyers and sellers.

Inflation on the Rise

Inflation climbed to 2.0% in October, up from 1.6% in September, due to rising costs for essentials like gas and property taxes. This impacts everyday expenses and could influence borrowing rates in the future. Keeping an eye on inflation trends will be crucial as they affect the real estate market and household budgets alike.

Interest Rates in Focus

The Bank of Canada is closely monitoring the economy and will decide in December whether to adjust interest rates further. A potential decrease could make borrowing more affordable, benefiting those looking to finance their next home purchase or refinance an existing mortgage.

Stable Employment Landscape

Canada’s job market held steady in October, with an unchanged unemployment rate of 6.5%. While full-time jobs increased, part-time roles saw a slight decline. Industries such as manufacturing and construction added jobs, while real estate and transportation experienced minor losses. A stable job market provides a strong foundation for real estate activity.

Top 2025 Real Estate Trends to Watch

The coming year is shaping up to be an eventful one for homeowners and prospective buyers. Here are some trends and updates that could impact your next move:

1. A Surge in Mortgage Renewals
   Over 100,000 mortgages per month are set to renew in 2025. Many of these homeowners locked in at lower rates and may now be exploring better deals or strategies to save.
2. Simplified Mortgage Transfers
   Switching lenders during renewal will be easier for many, as the stress test won’t apply in many cases, streamlining the process.
3. Rising Incomes
   With wages growing faster than inflation, more buyers can qualify for larger mortgages, potentially boosting purchasing power.
4. Potential Home Price Increase
   Experts predict home prices could rise by over 4% in 2025. Buyers may face higher down payments, but sellers could see increased value in their homes.
5. Expanded Insurance Coverage
   The insured property value cap has risen from $1 million to $1.5 million, providing more options for buyers of higher-value homes.
6. Growing Buyer Confidence
   After a cautious period during high interest rates, stabilized rates and improving affordability are expected to bring more buyers back to the market.
7. Longer Mortgage Terms for New Buyers
   First-time and new-build buyers can now spread payments over 30 years instead of 25, enhancing affordability and flexibility.
8. Improving Mortgage Rates
   Variable rates may dip further, while fixed rates are projected to remain stable, creating more opportunities for cost-effective borrowing.
9. Refinancing for Home Improvements
   Starting January 15, homeowners can refinance up to 90% loan-to-value for adding secondary suites, ideal for growing families or generating rental income. Previously, the cap was 80%.
10. Market Watch
    While the outlook is positive, factors such as policy changes, economic fluctuations, and global events could influence the market. Staying informed is key to making sound decisions.

Ready to Plan Your Next Move? If you’re considering buying, selling, or refinancing in the near future, these 2025 real estate trends could work to your advantage. For more tips on navigating the real estate market, check out our guide on Winter Home Selling Tips in Ottawa. Feel free to reach out to The Reality Group to discuss how these changes might benefit you. We’re here to help turn your real estate dreams into reality!