From softening resale activity to falling condo prices and declining construction starts, the real estate market appears set for another challenging year.
In its latest housing outlook, Oxford Senior Economist Michael Davenport noted that national home sales are roughly 15% below the five-year average, with the sales-to-new-listings ratio hovering around 50—a balanced market threshold, but a sharp drop from pandemic-era highs.
“We’ve seen some very low levels of unit sales across the country,” Davenport said, pointing to a peak-to-trough price correction of 8–10% in the most expensive markets like Toronto and Vancouver.
🏗️ Construction and Condos: More Pain Ahead
While new housing construction held up longer than the resale market, that trend is reversing. Oxford expects national housing starts to decline from 245,000 units in 2024 to just 225,000 in 2025, with quarterly starts dipping to 218,000 by year-end—the slowest pace since early in the pandemic.
Adding to the pressure: a wave of condo completions from projects launched during the boom. According to Tony Stillo, Director of Canada Economics at Oxford, the result has been a perfect storm of oversupply and price weakness.
“The condo market right now is a mess. Prices of units have to fall in order to move, and that means investors may have to take a loss.”
Affordability challenges also persist. Stillo noted that many first-time buyers are increasingly reliant on family help to fund down payments, a trend that further skews market dynamics.
🌍 Beyond Real Estate: Trade Tensions Weigh on Growth
Oxford Economics also pointed to rising macroeconomic risks—especially those stemming from escalating trade tensions between Canada and the U.S.
Goods exports to the U.S. fell roughly 10% month-over-month in April, with only a partial rebound in May. With additional U.S. tariffs—potentially up to 35%—still looming, Oxford projects a GDP contraction in the second half of 2025.
“Even if the Bank of Canada were to cut rates, a quarter to half point is likely the most we’d see,” said Stillo. “They’re running out of room to maneuver.”
🛡️ Canada’s Next Moves: Defence, Diversification, and Diplomacy
Oxford also highlighted upcoming federal defence spending plans as a potential fiscal wildcard heading into the fall budget. For now, that spending is assumed to be deficit-financed, adding pressure on government balance sheets.
As for Canada’s long-term trade outlook, Oxford sees both challenges and opportunity. While pivoting to markets like India, China, or the EU may help reduce dependence on the U.S., those transitions are complex, slow, and risk-laden.
“Energy exports could be a key growth driver,” said Stillo. “But broader diversification won’t happen overnight.”
🇨🇦 What This Means for Lendworth Clients
At Lendworth, we continue to monitor these market shifts closely. For investors and borrowers alike, these trends reinforce the importance of sound underwriting, disciplined lending, and deep local market insight.
Whether you're navigating new construction funding, refinancing an investment property, or assessing market risks—our team is here to help you move with confidence through an evolving real estate landscape.
📩 Reach out to our lending experts today at www.lendworth.ca