Ontario and B.C. home prices fall—but it won’t last long

Canada’s housing market is stabilizing—but not for long.

Home prices in Ontario and B.C. are down 2.9 per cent and 2.4 per cent respectively, and sales are expected to slip further in 2025.

But the Canadian Real Estate Association (CREA) forecasts both provinces will rebound by 2026, with prices snapping back to 2024 levels. This could be the last chance for buyers in high-barrier markets like these to catch the market off-balance.

The pullback is mostly product-specific. In Toronto, pre-construction condo inventory ballooned to 58 months of supply—14 times more than in 2022. Many were built for investors, not residents. Developers are hitting pause as capital costs rise and sales stall, prompting a 40 per cent year-over-year drop in starts for June according to the Canada Mortgage and Housing Corporation (CMHC).

Demand isn’t the problem. Toronto added 268,000 people last year—more than any metropolitan area in Canada. But with 32,000 units already under construction, the market is digesting a glut of product that no longer fits today’s buyer.

Vancouver is taking the opposite approach. Starts surged 74 per cent year-over-year in June largely due to multi-unit rental builds, per CMHC. Vacancy is just 3.2 per cent, according to CoStar, and RBC says home ownership now eats up 92.7 per cent of residents’ household income.

Despite high earnings, affordability is still out of reach—fuelling urgency to build. CoStar reports prices and rents in Vancouver are 150 per cent and 60 per cent above the national average.

Other Canadian markets are pulling ahead as Montreal, Edmonton and Calgary outpace Toronto in home starts. In June, Montreal logged 2,729 units, Edmonton 2,689, Calgary 2,300, and Vancouver 3,079—well ahead of Toronto’s 1,701 according to CMHC. Developers are building where the economics work and where demand is resident-driven.

Alberta tells a different story. After two years of sharp gains, prices are forecast to rise 4.7 per cent in 2025 and flatten in 2026—meaning buyers there have more time.

But in Ontario and B.C., affordability improved only because prices and rates dropped at once—a rare combo. With two more interest rate cuts expected this year from the Bank of Canada, sidelined buyers may soon rush back into the market.

Nationally, CMHC reported a 3.6 per cent rise in the June trendline and a 14 per cent year-over-year jump in actual starts.

However, that growth is uneven. Year-to-date, starts are down 25 per cent in Ontario and 8 per cent in B.C., while the Prairies are up 32 per cent and Quebec is up 35 per cent.

The takeaway

Canada’s housing market isn’t in freefall—it’s in reset. The correction is localized and structural.

If you’re in Ontario or B.C., this year may be your best shot to buy before the rebound begins. Elsewhere in Canada, the game is still on—but the clock’s not ticking as fast.

With national average rents declining for now, interested residents should consider taking advantage of the soft rental market.

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