'Tempered enthusiasm': No spring real estate bloom, but buyers are slowly coming back

Townhomes are seen in Delta, B.C., with Mount Baker in Washington in the distance, on Thursday, July 11, 2024. THE CANADIAN PRESS/Darryl Dyck

Rosy outlooks for Canada’s real estate sector at the start of this year rested on hopes of a fruitful spring market that experts say has yet to fully bloom.

While data from local real estate boards suggests some regions have seen a modest rebound from last year’s sluggish spring — when newly issued tariffs chilled economic sentiment — many buyers remain on the sidelines.

“People just aren’t as excited right now about real estate,” said Tim Hill, a Vancouver-based agent with Re/Max All Points Realty.

“The unfortunate reality is that people get excited when prices are going up, and they start getting fear of missing out and capitalizing on that sale price.”

In Greater Vancouver, considered Canada’s priciest market, sales were down 2.5 per cent year-over-year in April, which is the traditional start of the spring real estate market.

Nationally, prices were up 2.2 per cent last month as resale transactions fell four per cent from April 2025, the Canadian Real Estate Association said Thursday.

CREA recently downgraded its 2026 forecast, citing continued trade uncertainty and factors related to the war in the Middle East, such as higher inflation tied to a spike in oil prices that could prompt the Bank of Canada to hike its key policy rate. The association expects one per cent more home sales this year compared with 2025, down from its January estimate of 5.1 per cent growth.

“I think we’re going to have much of the same for the remainder of this year,” said Hill.

“I’d be surprised if anything significantly changed in the market.”

‘Stuck’ in an environment

BMO senior economist Robert Kavcic said the spring market likely hasn’t peaked yet when it comes to sales volume. As demand picks up, he said sellers might be inclined to re-list properties they’d taken down during the valleys of last year’s downturn. That would prevent supply from shrinking in the near-term, meaning prices could still struggle to gain traction.

Kavcic said the conditions needed for a “big rebound” simply aren’t in place at this point.

“Affordability has improved, but hasn’t ... to a level that’s going to pull a whole bunch of buyers off the sideline,” he said, adding mortgage rates haven’t come down enough to move the needle either.

“We’re kind of stuck in an environment where mortgage rates are going to basically be as you see them right now.”

In addition to borrowing costs not coming down further for the time being, the slow pace of the housing market turnaround is a culmination of other factors as well, said Zach Pendley, who leads the real estate transactions and valuations practice for EY Canada.

That includes the lack of population growth last year after the federal government slashed its immigration targets. Pendley said it’s no coincidence the real estate sector was red hot coming out of the pandemic, when immigration intake was high. But now, the reverse is playing out.

Buyers not going to ‘flood back to the market overnight’

Meanwhile, investor demand in condominiums has cratered, especially in Toronto and Vancouver, he added.

“That investor market was so healthy because you could buy a condo, turn around, rent it to a newcomer to Canada, rent it to a foreign student who needs a place to live,” said Pendley.

“With a slowdown in that population segment, it has had an impact on underlying demand for assets.”

Pendley said both buyers and sellers are having to adjust expectations to a “new reality,” however there are signs the worst of it may be over.

“We’re certainly on the second half of this correction,” he said.

“There’s a belief now that it might be a good time to buy. I do not think buyers are going to flood back to the market overnight, but I do think that over the balance of this year, I would expect to see continued upward momentum.”

Prices remain a top-of-mind concern for buyers in the Toronto area, said Jessica Hammell of Real Broker Ontario, who described a “tempered enthusiasm” among those finally willing to consider a home purchase.

In April, the GTA saw a seven per cent gain in sales over the previous year, but activity was still well-below the same month in 2024. Average prices fell almost five per cent from April 2025 to $1,051,969.

“I’m still seeing enthusiasm from first-time buyers who are excited to get out there in the market, but they’re maybe a bit more selective and methodical than they were in the past,” said Hammell, noting spring is considered a “bellwether” for the year’s real estate market trends.

Inventory in the region has fallen, and she said buyers are in no rush to make their move.

“Buyers are active again, they’re coming off the sidelines, they’re interested, but they’re definitely more price-sensitive and they’re more choice-driven,” she said.

“They’re taking their time, they’re comparing to see what their options are and they are not just offering on the first home they see.”

‘Not out of the woods yet’

A key underlying factor that will determine how much, and when, the resale market may come roaring back is the extent to which incomes are able to catch up with prices, said Mathieu Laberge, Canada Mortgage and Housing Corp.’s chief economist.

He said pent-up demand has been building, but the economy remains “very uncertain with all that’s happening globally.”

“I think we’ve gotten a bit more accustomed to it. There’s a bit more confidence building in Canada, but we’re not ... out of the woods yet,” said Laberge.

“In uncertain times, people look at the economic indicators and wonder, ‘Will I have a job? Will my income increase sufficiently so I can actually take on that mortgage debt and service it without risk to my standard of living?’”

Kavcic said there could be reason for optimism, given the resilience of the Canadian economy in the face of trade disruptions and global conflict. He said the housing market is getting closer to a point where valuations return to “levels that make sense” after prices shot up around five years ago.

“There are going to be pockets that will firm up, just because of the supply and demand dynamics. But the big picture is this is a huge housing bull market that now needs to be corrected for,” he said.

“We’re not there, but we’re a lot closer than we were back at the start of 2022.”

Sammy Hudes, The Canadian Press