Tom YU

By TD Economics The one-two punch of winter storms and tariff-related economic uncertainty sent a chill through Canadian housing markets in the first quarter. Were now tracking a double-digit quarterly decline in Canadian home sales and a mid-single digit drop in Canadian average home prices. These outcomes are much weaker than our pre-Trump inauguration forecast made in December, where we assumed that a loosening in federal mortgage rules, lower interest rates and continued economic growth would fuel a modest Q1 gain in sales and prices. This much softer starting point has us led to materially mark down our 2025 annual average growth forecasts for Canadian home sales and prices. Moving forward, its unlikely that activity will be as weak as it was in the first quarter. However, we still think that elevated uncertainty and a deteriorating jobs market will yield subdued sales and price growth for much of 2025. 2025 home price forecasts have been cut the most in B.C. and Ontario, where we now think that prices will decline in annual average terms this year. This reflects muted demand conditions in both markets and supply/demand balances that are heavily skewed in the favour of buyers. Of note, the GTA condo market is particularly soft, which will weigh on prices in Ontario this year. Elsewhere, 2025 quarterly price growth forecasts have been marked down to sub-trend levels in other parts of the country. Were retaining our view that quarterly price gains will outperform in the Prairies moving forward given relatively tight supply/demand balances and comparatively better affordability. An improving backdrop should set the stage for a notable rebound in home sales and average home prices in 2026. Specially, hiring should improve as were assuming a dialing back in tariff-related uncertainty . At the same time, interest rates should be at multi-year lows. These factors will facilitate the release of significant pent-up demand. However, the scale of bounce-back in Canadian average home prices will likely be restrained by poor affordability in key markets like B.C. and Ontario. https://economics.td.com/ca-provincial-housing-outlook

Owning a home remains a critical source of wealth accumulation for many Canadian families, with real estate equity representing 42% of overall household wealth in 2023. The link between homeownership and wealth creation is even more pronounced for younger families, with housing assets accounting for nearly half of total wealth. As housing affordability deteriorated, the barriers to homeownership have become increasingly prohibitive, particularly for those without familial support. In 2019, 3 in 10 homeowners reported receiving an inheritance at a median value of $67,000, while 2 in 10 renters received a median value of $33,000. As home values appreciated strongly throughout the COVID-19 pandemic period, so too did inheritances for homeowners. By 2023, the median inheritance Canadian homeowners received had risen to $85,100. A looming wave of interfamilial wealth transfers is set to occur as baby boomers age, putting those with familial means in a more secure financial situation than those without. A wealth transfer in the form of an inheritance, whether from a living or deceased relative, is just one way many homeowners have benefited from familial support when entering the housing market. Other forms of assistance, such as receiving partial or full downpayment gifts, borrowing from family members rather than a bank, or receiving intergenerational property transfers, are also potentially important forms of familial support and are reported in Statistics Canadas Survey of Financial Security. Across all age cohorts, 5% of families were living in a home that was acquired in full or in part from a gift or an inheritance, and 9% reported that at least some of the downpayment for their home had been from a gift or an inheritance. When combined with those who borrowed from family and friends rather than a financial institution to purchase their home, the overall share of homeowners who benefited from an inheritance or other types of familial support to enter the housing market rose to 4 in 10. https://www150.statcan.gc.ca/n1/pub/36-28-0001/2025003/article/00001-eng.htm