CREA Cuts 2025 Home Sales Forecast Again as Ontario's Gains Fail to Offset National Decline
The Canadian Real Estate Association now expects 504,300 homes to change hands in 2025, down from the 512,000 transactions it predicted just three months ago. For an organization that revises its outlook quarterly, the March adjustment marks the second consecutive downgrade since the start of the year.
Ontario accounts for roughly 40 per cent of national transaction volume, and CREA's models show the province adding about 8,000 sales compared to 2024. That would be good news in isolation. The problem is what's happening everywhere else. British Columbia, Alberta, and the Atlantic provinces are all tracking below their year-ago levels, and the modest Ontario uptick isn't large enough to pull the aggregate figure into positive territory.
The revision reflects a reality that became clearer through the winter: borrowing costs are staying higher than buyers expected. The Bank of Canada has lowered its policy rate from the 5 per cent peak reached in mid-2023, but current qualifying rates still sit in the mid-4 per cent range after the stress test buffer is applied. That's restrictive enough to keep first-time buyers, who represent the largest segment of the market by volume, waiting for a signal that rates have further to fall.
The lock-in effect is fading, but slowly
One structural force that kept sales volumes depressed through 2023 and much of 2024 was the "lock-in effect." Homeowners who secured sub-2 per cent fixed rates in 2020 and 2021 had every incentive to stay put rather than sell and finance a new purchase at triple the cost. CREA's data suggests that dynamic is beginning to ease. Mortgage renewals are hitting a wall in 2025 and 2026, forcing tens of thousands of households to adjust to payments that are, in many cases, 60 to 80 per cent higher than what they've been paying. Some of that inventory is starting to appear on the market.
But the thaw is not producing a surge. Listings are up modestly in Toronto, Vancouver, and Calgary, yet the corresponding sales activity remains flat. Buyers have choice, but choice without financing capacity doesn't move transactions. The Bank of Canada's stress test requires qualification at a rate roughly two percentage points above the contract rate, which means a buyer looking at a 4.5 per cent mortgage must prove they can service the debt at 6.5 per cent. For a household earning $120,000 annually, that constraint caps borrowing power at roughly $475,000 before the down payment. In markets where the benchmark detached home sits above $900,000, the math simply doesn't work without either a much larger down payment or a much higher household income.
Regional divergence is widening
The Ontario gains CREA is banking on are concentrated in the Greater Toronto Area and the surrounding commuter zones, where interprovincial migration has propped up demand even as affordability worsens. British Columbia, by contrast, is seeing outflows as households relocate to Alberta and other Prairie markets where entry costs remain 30 to 40 per cent lower. Alberta's own market, which held up well through 2023, is now softening as speculative activity that drove Calgary and Edmonton prices higher begins to reverse.
The Atlantic provinces, which saw a brief post-pandemic boom driven by remote work migration, are giving back those gains as workers return to urban centres and hybrid models replace fully remote arrangements.
CREA's average home price forecast remains largely unchanged at $694,500 for 2025, a figure that suggests stagnation rather than correction. Prices aren't collapsing because supply remains tight relative to population growth, but they aren't rising either because transaction volume is too low to generate upward momentum. What results is a market in stasis: neither buyers nor sellers are winning, and the wait-and-see posture that has defined Canadian real estate since early 2023 shows no sign of breaking.
The Canadian Real Estate Association now expects 504,300 homes to change hands in 2025, down from the 512,000 transactions it predicted just three months ago. For an organization that revises its outlook quarterly, the March adjustment marks the second consecutive downgrade since the start of the year.
Ontario accounts for roughly 40 per cent of national transaction volume, and CREA's models show the province adding about 8,000 sales compared to 2024. That would be good news in isolation. The problem is what's happening everywhere else. British Columbia, Alberta, and the Atlantic provinces are all tracking below their year-ago levels, and the modest Ontario uptick isn't large enough to pull the aggregate figure into positive territory.
The revision reflects a reality that became clearer through the winter: borrowing costs are staying higher than buyers expected. The Bank of Canada has lowered its policy rate from the 5 per cent peak reached in mid-2023, but current qualifying rates still sit in the mid-4 per cent range after the stress test buffer is applied. That's restrictive enough to keep first-time buyers, who represent the largest segment of the market by volume, waiting for a signal that rates have further to fall.
The lock-in effect is fading, but slowly
One structural force that kept sales volumes depressed through 2023 and much of 2024 was the "lock-in effect." Homeowners who secured sub-2 per cent fixed rates in 2020 and 2021 had every incentive to stay put rather than sell and finance a new purchase at triple the cost. CREA's data suggests that dynamic is beginning to ease. Mortgage renewals are hitting a wall in 2025 and 2026, forcing tens of thousands of households to adjust to payments that are, in many cases, 60 to 80 per cent higher than what they've been paying. Some of that inventory is starting to appear on the market.
But the thaw is not producing a surge. Listings are up modestly in Toronto, Vancouver, and Calgary, yet the corresponding sales activity remains flat. Buyers have choice, but choice without financing capacity doesn't move transactions. The Bank of Canada's stress test requires qualification at a rate roughly two percentage points above the contract rate, which means a buyer looking at a 4.5 per cent mortgage must prove they can service the debt at 6.5 per cent. For a household earning $120,000 annually, that constraint caps borrowing power at roughly $475,000 before the down payment. In markets where the benchmark detached home sits above $900,000, the math simply doesn't work without either a much larger down payment or a much higher household income.
Regional divergence is widening
The Ontario gains CREA is banking on are concentrated in the Greater Toronto Area and the surrounding commuter zones, where interprovincial migration has propped up demand even as affordability worsens. British Columbia, by contrast, is seeing outflows as households relocate to Alberta and other Prairie markets where entry costs remain 30 to 40 per cent lower. Alberta's own market, which held up well through 2023, is now softening as speculative activity that drove Calgary and Edmonton prices higher begins to reverse.
The Atlantic provinces, which saw a brief post-pandemic boom driven by remote work migration, are giving back those gains as workers return to urban centres and hybrid models replace fully remote arrangements.
CREA's average home price forecast remains largely unchanged at $694,500 for 2025, a figure that suggests stagnation rather than correction. Prices aren't collapsing because supply remains tight relative to population growth, but they aren't rising either because transaction volume is too low to generate upward momentum. What results is a market in stasis: neither buyers nor sellers are winning, and the wait-and-see posture that has defined Canadian real estate since early 2023 shows no sign of breaking.
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