Canadian real estate is showing signs of a strong rebound in 2025, despite ongoing affordability challenges. Interest rate cuts by the Bank of Canada are motivating buyers, particularly first-time homebuyers, to enter the market.
As the calendar flipped one year ago, Canadian real estate watchers were optimistic a sluggish 2023 would give way to a rebound, with hopes of renewed demand as soon as the spring. But the lag in 2024 lasted longer than some expected, with the Bank of Canada waiting until June to deliver the first of the year's five interest rate cuts.
While buyers stormed back to the market this fall, experts noted the first few rate cuts hadn't been enough to motivate everyone to leave the sidelines quite yet. Now heading into 2025, economists and real estate agents believe activity is poised to remain strong amid much lower borrowing costs and more favourable rules for buyers, despite an overall challenging affordability picture. The Canadian Real Estate Association reported earlier this month the number of homes sold in November jumped 26 per cent year-over-year, marking the second straight month of gains at that level. For the first 11 months of the year, cumulative home sales were up 6.9 per cent compared with 2023. 'The big thing is first-time homebuyers are back and are going to continue to get into the market,' said Re/Max Canada president Christopher Alexander in an interview. 'We expect, overall, a much more robust year as far as activity goes and consumer confidence, especially with further anticipated rate decreases.' The Bank of Canada lowered its policy rate by a half-percentage point earlier this month, bringing it to 3.25 per cent, while signalling a more gradual approach to future cuts in the new year. Alexander said high interest rates — the central bank's policy rate stood at five per cent before its cutting cycle — have been a major barrier of entry for would-be buyer
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