Canada’s real estate market in 2025 remains heavily influenced by Vancouver and Toronto, the country’s largest and most dynamic markets. Both cities continue to experience strong demand for housing, driven by their robust economies, immigration, and growing industries like technology, finance, and healthcare.

According to the Canadian Real Estate Association (CREA), home sales in Toronto saw a 4.1% increase in early 2025, with demand strongest in suburban neighborhoods like Scarborough, Etobicoke, and Mississauga. Vancouver, despite higher home prices, remains a key market for real estate investors, particularly in the luxury sector and high-density condominiums.

Build-to-Rent Communities Continue to Expand

Build-to-rent (BTR) developments are gaining momentum across Canada, particularly in cities like Toronto, Ottawa, and Calgary. These communities, designed specifically for rental housing rather than ownership, appeal to a growing number of renters who seek modern living spaces with flexible lease options.

Cities like Ottawa, where public sector employment continues to grow, are seeing an uptick in BTR developments aimed at professionals seeking housing near work. Investors are drawn to these developments due to the long-term stability and strong rental yields they offer, particularly as housing affordability becomes a larger issue in major urban centers.

Secondary Markets and Smaller Cities Gaining Attention

While Vancouver and Toronto remain at the forefront, smaller cities such as Kelowna, Edmonton, and Quebec City are seeing increased investor interest in 2025. These cities provide a more affordable entry point for investors, along with a lower cost of living and a growing demand for both rental properties and single-family homes.

Kelowna, for example, continues to attract retirees and remote workers seeking a high quality of life and access to outdoor amenities, while Edmonton benefits from its diverse economy, including the oil and gas sector, tech, and manufacturing. Quebec City is also seeing an increase in demand for rental housing, driven by both student and workforce housing needs.

Mortgage Rates and Affordability in 2025

Mortgage rates in Canada are expected to stabilize around 6% in 2025, and with inflation cooling to 2.8%, buyers and investors are finding opportunities for stable financing. However, affordability remains a challenge in major markets like Toronto and Vancouver, where home prices continue to increase.

The lack of affordable housing in these cities is encouraging demand for rental properties, while secondary markets such as Edmonton and Halifax provide opportunities for investors to secure properties at lower entry points with better potential for long-term growth.

Commercial Real Estate: Mixed Trends Across Canada

Canada’s commercial real estate market is seeing mixed trends in 2025. While office vacancies remain elevated in cities like Toronto and Montreal due to the rise of remote work, industrial real estate continues to perform well. Calgary and Edmonton are seeing growth in the industrial sector, driven by logistics and e-commerce demand.

Retail real estate is evolving with an increasing shift toward mixed-use developments, combining retail, residential, and office spaces to cater to changing consumer habits. In cities like Vancouver and Toronto, developers are focusing on revitalizing urban centers with projects that combine housing with amenities and public spaces.

REITs and Investment Funds for Passive Exposure

For investors seeking passive exposure to Canada’s real estate market, REITs (Real Estate Investment Trusts) offer diversified investment options. Funds like Vanguard Real Estate ETF (VNQ) and local Canadian REITs focused on multifamily and industrial assets provide opportunities to invest in Canadian real estate without directly managing properties.

These REITs and funds provide liquid, diversified portfolios, offering exposure to urban, suburban, and industrial markets across the country, with solid long-term growth potential.

Key Factors to Watch in Canada Through 2025

Several important factors will influence the Canadian real estate market this year:

• Immigration trends contributing to housing demand in urban centers like Toronto and Vancouver
  
• Affordable housing initiatives, particularly in major cities, to address rising home prices
  
• Infrastructure improvements in secondary markets, especially for transportation and digital connectivity
  
• Climate risk considerations, particularly in flood-prone areas and urban heat islands, which will affect building codes and insurance policies
  

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