Spring is typically the busiest season for Canadian real estate, but in 2025, the market took a notable turn, one that, in hindsight, was far from surprising. As inventory levels climbed and buyers hesitated amid elevated borrowing costs and global economic uncertainty, the usual frenzy of bidding wars and rapid price gains was replaced by a more measured, buyer-friendly environment in many Canadian cities.
According to data released in May 2025 by the Canadian Real Estate Association (CREA), Zoocasa found that several of Canada’s most expensive housing markets experienced price declines. Greater Vancouver and Greater Toronto, two of the country’s most populous regions, posted year-over-year price drops of 6.6% and 4.2%, respectively.
Buyers Pause as Vancouver’s Listings Surge
The shift is being driven by a surge in new listings rather than a spike in demand. According to the Greater Vancouver Realtors, active listings in Metro Vancouver hit 17,094 in May, a 25.7% increase from the previous month and nearly 46% above the region’s 10-year seasonal average. May alone saw 6,620 new properties come online, pushing inventory to its highest level in over a decade.
However, buyers are holding back. Residential sales in May totaled just 2,228, a sharp 18.5% drop year-over-year and more than 30% below the 10-year average. Detached home sales fell 22.7%, while apartment and townhouse transactions also declined. This widening gap between supply and demand suggests a softer, more balanced market as we head into the summer.
Local Strategy Is Key in Today’s Market Conditions
Vancouver eXp real estate agent Aaron Van Pykstra offers insights from the front lines. “In the last 45 days, we’ve seen some 6% to 8% drops, and that’s again because of high inventory. If interest rates hadn’t been lowered, we would’ve seen even more significant price declines.”
While the new short-term rental rules introduced in 2024 aimed to preserve long-term housing, they’ve also contributed to the shifting dynamics. Under these rules, platforms like Airbnb and VRBO are limited to principal residences or authorized secondary suites, which reduces the potential income for many investors.
Van Pykstra also attributes part of the inventory spike to recent short-term rental restrictions. “The real concern emerged with owners of Airbnb properties,” he explains. “These units once earned three to four times more than conventional rentals. But with the new regulations essentially banning them, many owners can’t afford to hold on and are now selling.”
Apartment sales declined by 18.8% in May, dropping to 1,087 units from 1,338 in May 2024. The benchmark price for an apartment now sits at $757,300, evidence that even Vancouver’s most affordable segment isn’t immune to the slowdown.
Despite the shake-up, Van Pykstra says most homeowners remain financially stable. “We’re only seeing single-digit price drops. A five per cent decline on a $600,000 home is about $30,000. Not catastrophic. Many clients who’ve held their homes for at least five years are still ahead.”
Meanwhile, new initiatives like the 30-year mortgage amortizations are giving first-time buyers a foothold, helping Vancouver buyers qualify by lowering monthly payments and meeting debt service ratios.
Vancouver’s Lower Mainland Prices Dropping Fastest
Even in a buyer’s market, understanding the nuances of different cities, communities, and neighborhood price trends remains essential for making informed decisions.
The most significant year-over-year price drops occurred within Metro Vancouver, part of British Columbia’s Lower Mainland. Burnaby East led with a sharp 7% decline, bringing its benchmark price to $1,095,100. West Vancouver, one of the most expensive markets, saw a 6 % drop, signaling a potential cooling in the luxury segment. Richmond followed with a 5.2% decline to $1,131,300. These declines suggest a broader softening in some of the region’s most sought-after markets.
Notably, Squamish was the only city in the Greater Vancouver area that experienced a 2.6% year-over-year price increase.
Canada’s National Market Shows Signs of Stabilization
Vancouver isn’t the only city experiencing a shift. Nationally, Canada’s average home price declined by 3.9%, falling from $707,380 in April 2024 to $679,866 in April 2025. This drop reflects a broader market correction as buyers grapple with interest rates and economic uncertainty.
Toronto saw a 4.2% year-over-year drop, with the average home price slipping to $1,107,463 from $1,156,167. High condo inventory is also a major headline in the city. At the end of May, condos made up about 60% of all homes for sale in Toronto, with 6,855 listings out of a total of 11,705, according to the Toronto Regional Real Estate Board. In the city of Toronto specifically, detached homes sold for an average of $1,719,937, accounting for 48% of total GTA sales in May.
Thunder Bay’s Price Drop Is Deceiving
Even smaller and more affordable markets are experiencing the impact. In Thunder Bay, the average home price lowered by 5%, dropping from $366,044 to $347,890. At first glance, this may suggest softening prices, but the whole picture is more nuanced.
“Prices have certainly increased this spring, and the market has been very active. Some properties are attracting up to 9 or 10 offers,” Thunder Bay eXp agent Karen Hill explains. “We haven’t had a single listing go without at least one bid by the offer deadline.”
Hill adds that CREA’s data for Thunder Bay also includes surrounding areas such as Dryden, Red Lake, and Kenora, where lower-priced rural and recreational properties can lower the overall average price.
Demand is strong for detached and semi-detached homes in the city of Thunder Bay, according to local eXp agent Katy Howarth. She has noticed a trend among her younger buyers, many of whom are between the ages of 24 and 30.
“Young buyers are entering the market with significant savings, typically between $100,000 and $200,000,” Howarth explains. “They’re looking to purchase their first homes and tend to prefer traditional houses with backyards, similar to what they grew up with. It’s a major change from previous years, when large down payments like these were much less common.”
A $100,000 or $200,000 down payment goes further in affordable markets like Thunder Bay, where 34% of single-detached homes were sold within the $350,000–$450,000 range, as reported by CREA.
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