After a five-year roller coaster ride that included historically low interest rates, soaring home sales and prices, severely depleted supply and the scare of US tariffs, Canadian housing markets appear to be slowly returning to a semblance of normal. “More prospective homebuyers are making their way back to Canada’s housing markets as some trade war fog dissipates, but it’s far from a stampede,” according to Robert Hogue, assistant chief economist at RBC Economics in a new report. “Local real estate board statistics indicate transactions increased modestly between May and June in several major markets, including Vancouver, Edmonton, Regina, Saskatoon, Toronto and Halifax, reversing only a fraction of pullbacks earlier this year,” writes Hogue. “The bottom line is activity is still soft in Southern Ontario and British Columbia even though it’s stabilized. The picture is generally more robust in other parts of the country with exceptions.” An increase in inventory to historically high levels in Southern Ontario and the lower mainland of BC, the most expensive markets in Canada, has put downward pressure on prices, but buyers still face stretched affordability conditions. Most local real estate boards in the Ontario and BC regions report July showed prices continued to decline in the Toronto and Vancouver areas along with other Southern Ontario and Lower Mainland markets. ."On the Prairies, Quebec and Atlantic region, property values continue to be higher in most markets, mostly due to tight supply-demand conditions," said Hogue, adding tariffs are still a cloud. “While any positive development in the trade war would boost confidence and keep the housing market on a recovery course, we think the impact would most likely be gradual, especially in regions struggling with affordability,” he said. “We expect diverging price trends to persist in the near term across the country.” An increase in resales, particularly in Toronto is helping supply and demand rebalance, which in time will ease downward pressure on prices. Prices remain comparatively stronger in most markets in the Prairies, Quebec and the Atlantic region, still supported by tight and, in some cases, very tight supply-demand conditions. "We expect a broad market recovery to get back on track across Canada as confidence builds further,” said Hogue. “Diverging price trends are likely to persist, but they could narrow later this year or next. .The Calgary market. “Calgary continues to cool from its earlier heated state,” said Hogue. “The inventory of homes for sale is rising, prices are softening, and we estimate resales slipped month-over-month in June for the fourth time this year.” “It’s a market where supply and demand are largely aligned, and affordability is only mildly strained. Calgary is also supported by a relatively robust economy and solid, if moderating population inflows.” Supply has been the bigger story in Calgary this year, with strong construction delivering a marked 20% increase in newly completed homes. “This new supply contributed to a material build-up in inventory from low levels and came at a time when demand cooled in the face of economic uncertainty. Price pressure swung downward in the process,” said Hogue. “By July, Calgary’s composite home price index fell 3.9% from a year ago, a sharp contrast to the 4.5% annual gain at the end of 2024.” “Still, we expect this price adjustment to be short lived. Supply and demand are largely in balance, and active listings are far from excessive, even if it builds up further. We estimate home resales picked up by 2% in July from June and we see it continuing to rise gradually as economic uncertainty eases.” “We see limited downside for property values.”
