The Bank of Canada today reduced its target for the overnight rate to 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70%.

The Canadian economy entered 2025 in a solid position, with inflation close to the 2% target and robust GDP growth. However, heightened trade tensions and tariffs imposed by the United States will likely slow the pace of economic activity and increase inflationary pressures in Canada. The economic outlook continues to be subject to more-than-usual uncertainty because of the rapidly evolving policy landscape.

After a period of solid growth, the US economy looks to have slowed in recent months. US inflation remains slightly above target. Economic growth in the euro zone was modest in late 2024. China’s economy has posted strong gains, supported by government policies. Equity prices have fallen and bond yields have eased on market expectations of weaker North American growth. Oil prices have been volatile and are trading below the assumptions in the Bank’s January Monetary Policy Report (MPR). The Canadian dollar is broadly unchanged against the US dollar but weaker against other currencies.

Canada’s economy grew by 2.6% in the fourth quarter of 2024 following upwardly revised growth of 2.2% in the third quarter. This growth path is stronger than was expected at the time of the January MPR. Past cuts to interest rates have boosted economic activity, particularly consumption and housing. However, economic growth in the first quarter of 2025 will likely slow as the intensifying trade conflict weighs on sentiment and activity. Recent surveys suggest a sharp drop in consumer confidence and a slowdown in business spending as companies postpone or cancel investments. The negative impact of slowing domestic demand has been partially offset by a surge in exports in advance of tariffs being imposed.

Employment growth strengthened in November through January and the unemployment rate declined to 6.6%. In February, job growth stalled. While past interest rate cuts have boosted demand for labour in recent months, there are warning signs that heightened trade tensions could disrupt the recovery in the jobs market. Meanwhile, wage growth has shown signs of moderation.

Inflation remains close to the 2% target. The temporary suspension of the GST/HST lowered some consumer prices, but January’s CPI was slightly firmer than expected at 1.9%. Inflation is expected to increase to about 2½% in March with the end of the tax break. The Bank’s preferred measures of core inflation remain above 2%, mainly because of the persistence of shelter price inflation. Short-term inflation expectations have risen in light of fears about the impact of tariffs on prices.

While economic growth has come in stronger than expected, the pervasive uncertainty created by continuously changing US tariff threats is restraining consumers’ spending intentions and businesses’ plans to hire and invest. Against this background, and with inflation close to the 2% target, Governing Council decided to reduce the policy rate by a further 25 basis points.

Monetary policy cannot offset the impacts of a trade war. What it can and must do is ensure that higher prices do not lead to ongoing inflation. Governing Council will be carefully assessing the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs. The Council will also be closely monitoring inflation expectations. The Bank is committed to maintaining price stability for Canadians.

Source: www.bankofcanada.ca

A total of 809 homes were sold in February 2025 through the MLS® System of the Ottawa Real Estate Board (OREB), marking a 10.2% decrease compared to February 2024. Home sales were 19.1% below the five-year average and 15.4% lower than the 10-year average for February.

"Ottawa’s sales activity moderated while prices held steady," says OREB President Paul Czan. "Despite increased inventory, market uncertainty continues to influence buyer and seller decisions. Some sellers who had previously delayed listing are now entering the market, contributing to more options for buyers. While demand remains strong in certain price segments, the pace of sales varies, making strategic pricing and preparation key for sellers."

Czan adds, "The Bank of Canada’s influence on borrowing power, ongoing economic factors like tariffs, and the potential impact of upcoming elections are also shaping buyer and seller sentiment. As we approach the spring market, we anticipate increased buyer activity, particularly if interest rates trend downward and confidence continues to build."

By the Numbers – Prices:

The MLS® Home Price Index (HPI) provides a more accurate representation of price trends compared to average or median price calculations.

• The overall MLS® HPI composite benchmark price in February 2025 was $658,300, reflecting a 4.4% increase from February 2024.

  • The benchmark price for a single-family home was $719,800, rising 1.3% year-over-year.

  • In contrast, the benchmark price for a townhouse/row unit dropped 11.6% to $438,000.

  • The benchmark price for an apartment reached $459,300, up 4.5% from the previous year.

• The average home price in February 2025 was $669,945, reflecting a 1.4% increase from February 2024.

• The total dollar volume of home sales in February 2025 was $541.9 million, down 8.9% from the same period last year.

OREB advises that while the average sale price can help identify trends over time, it should not be used to determine the value of specific properties. The average price is calculated based on the total dollar volume of all sales, and price trends will differ across neighbourhoods.

By the Numbers – Inventory & New Listings:

• New listings increased 4.8% from February 2024, with 1,668 new residential properties added to the market. This was 10.8% above the five-year average and 6.7% above the 10-year average for February.

• Active residential listings at the end of February 2025 totaled 3,735 units, a 61.4% surge compared to February 2024. Active listings were 95.7% above the five-year average and 51.4% higher than the 10-year average for February.

• Months of inventory stood at 4.6 at the end of February 2025, up from 2.6 in February 2024. This metric represents how long it would take to sell all current listings at the current pace of sales.

Source:www.oreb.ca

A total of 617 homes were sold through the MLS® System of the Ottawa Real Estate Board (OREB) in January 2025, marking a 4.2% decline compared to January 2024.

Home sales fell 13% below the five-year average and 9.6% under the 10-year average for January.

“Ottawa’s market is seeing increased activity as more listings hit the market and buyers start to re-engage,” says OREB President Paul Czan. “Many buyers and sellers had been waiting for more conducive market conditions, but with the recent rate cut and potentially lower interest rates on the horizon, optimism is growing. While there’s more supply, the availability of suitable properties in various market segments remains tight. This is reflected in some homes selling quickly while others linger on the market. Sellers should be prepared to price competitively and present their homes in the best light to capture buyer interest in this evolving market."

“The recent Bank of Canada rate cut, introduction of U.S. tariffs, along with upcoming provincial and federal elections, introduce factors of variability,” adds Czan. “That said, confidence is growing, and more buyers are expected to return to the market in the coming months, leading to an increase in transactions.”

By the Numbers – Prices

The MLS® Home Price Index (HPI) provides a more precise measurement of price trends than average or median price calculations.

• The overall MLS® HPI composite benchmark price stood at $649,900 in January 2025, reflecting a 5.2% increase from January 2024.

• The benchmark price for single-family homes reached $713,000, up 2.3% year-over-year.

• In contrast, the benchmark price for townhouse/row units declined 3.9% from the previous year to $448,000.

• The benchmark price for apartments was $436,900, a 4.5% increase from January 2024.

• The average sale price of homes in January 2025 was $670,258, a 5.8% rise from the previous year.

• The total dollar volume of all home sales in January 2025 amounted to $413.5 million, reflecting a 1.3% increase compared to January 2024.

OREB advises that while the average sale price can highlight broader market trends over time, it should not be interpreted as an indicator of value changes for specific properties. The average price is derived from the total dollar volume of all sales, with prices varying across different neighbourhoods.

By the Numbers – Inventory and New Listings

• New residential listings rose by 3.0% compared to January 2024, with 1,359 new properties hitting the market in January 2025. New listings were 14.1% above the five-year average and 9.3% higher than the 10-year average for January.

• Active residential listings reached 3,312 units at the end of January 2025, marking a 57.3% increase from January 2024. Active listings were 90.6% higher than the five-year average and 48.9% above the 10-year average for January.

• Months of inventory stood at 5.4 at the end of January 2025, compared to 3.3 in January 2024. This figure represents the number of months required to sell the current inventory at the existing rate of sales activity.

Thinking about buying or selling in Ottawa’s evolving market? Whether you're a buyer looking for the right opportunity or a seller wanting to position your home competitively, we're here to help you navigate the market with confidence.

Contact us today for expert advice and personalized guidance! Let's make your real estate goals a reality.

The Bank of Canada has announced a reduction in its target for the overnight rate to 3%, with the Bank Rate set at 3.25% and the deposit rate at 2.95%. Additionally, the Bank has outlined its plan to finalize the normalization of its balance sheet by ending quantitative tightening. Asset purchases will resume in early March, with a gradual approach to ensure the balance sheet stabilizes before experiencing modest growth in line with economic expansion.

The January Monetary Policy Report (MPR) highlights an increased level of uncertainty in its projections due to the rapidly shifting policy landscape, particularly regarding potential trade tariffs from the new U.S. administration. Because the extent and duration of a possible trade conflict remain uncertain, the report presents a baseline forecast that assumes no new tariffs.

According to the MPR, the global economy is projected to maintain growth at approximately 3% over the next two years. U.S. economic growth has been revised upward, primarily due to stronger consumer spending. In contrast, growth in the eurozone is expected to remain sluggish due to competitiveness challenges. In China, recent policy measures are supporting short-term demand and economic expansion, though structural challenges persist.

Since October, financial conditions have diverged internationally. U.S. bond yields have risen, driven by solid economic growth and persistent inflation. Meanwhile, Canadian bond yields have declined slightly. The Canadian dollar has weakened significantly against the U.S. dollar, largely due to trade uncertainty and overall strength in the U.S. currency. Oil prices have been volatile, rising by about $5 above the levels anticipated in the October MPR.

In Canada, previous interest rate cuts have already started stimulating the economy, and the momentum in consumption and housing activity is expected to continue. However, business investment remains weak, while exports are benefiting from expanded oil and gas export capacity.

The labour market remains soft, with the unemployment rate at 6.7% as of December. While job growth has improved in recent months, it had previously lagged behind labour force expansion for over a year. Wage pressures, which had been persistently high, are now showing early signs of easing.

The Bank anticipates that GDP growth will strengthen in 2025. However, given reduced immigration targets, both actual GDP growth and potential growth are expected to be more moderate than previous forecasts in October. Following an anticipated GDP growth rate of 1.3% in 2024, the Bank now projects GDP growth of 1.8% in both 2025 and 2026—a rate that slightly exceeds potential growth. Consequently, excess supply in the economy is projected to diminish gradually over time.

Inflation remains close to 2%, though fluctuations are occurring due to the temporary suspension of the GST/HST on certain consumer goods. While shelter price inflation remains high, it is gradually declining as anticipated. Various economic indicators, including inflation expectation surveys and price change trends within the CPI, suggest that underlying inflation is stabilizing around 2%. The Bank projects that CPI inflation will remain near its 2% target over the next two years.

Excluding potential U.S. trade tariffs, the economic outlook maintains a relatively balanced level of risks. However, the MPR warns that a prolonged trade dispute could result in lower GDP growth and higher consumer prices in Canada.

Given inflation stabilizing around 2% and an economy operating with excess supply, the Governing Council has decided to cut the policy rate by another 25 basis points to 3%. Since last June, the cumulative rate cuts have been significant. Lower interest rates are already stimulating household spending, and based on today's projections, the economy is expected to gradually strengthen while inflation remains stable. However, if significant trade tariffs were to be implemented, Canada's economic resilience would be put to the test.

The Bank will closely monitor economic developments and assess their impact on inflation and monetary policy. It remains dedicated to maintaining price stability for Canadians.

With the Bank of Canada lowering its policy rate to 3%, now is the time to assess your real estate plans. Whether you're buying, selling, or refinancing, lower rates could open new opportunities. Let’s discuss how this impacts your goals—contact us today!

A total of 613 homes were sold in December 2024 via the MLS® System of the Ottawa Real Estate Board (OREB), representing a 7.9% increase from December 2023.

Despite this rise, home sales were 6.8% below the five-year average and 2.7% lower than the 10-year average for December. Year-to-date sales reached 13,526 units by December 2024, an 11.8% increase from the same period in 2023.

“A year of wait-and-see came to a close with the expected slowdown over the holiday season,” said OREB President Paul Czan. “The latter half of the year brought signs of more favourable market conditions with consecutive interest rate drops, higher insured mortgage limits, and extended amortizations. It’s early to assess the impact of these measures. And it’s an uphill battle against affordability and supply issues that persist.”

“Listing activity indicates that sellers anticipate improved conditions could spur more activity from buyers who have been keeping a close eye on the market but hesitant to make moves. Buyers are still limited in their selection of affordable inventory that can meet current demands, which stalls movement. While the improving market conditions are encouraging, the supply needs to be there. Coming political shifts are adding a layer of uncertainty but there is a trending optimism for more increased market activity in the months ahead.”

By the Numbers – Prices

The MLS® Home Price Index (HPI), which tracks price trends more accurately than average or median prices, highlighted the following:

• The overall MLS® HPI composite benchmark price was $645,800 in December 2024, up 3.8% from December 2023.

  • Single-family homes: $729,300, an increase of 3.7% year-over-year.

  • Townhouse/row units: $533,200, up 11.3% from a year ago.

  • Apartments: $404,400, down 2.5% compared to December 2023.

• The average sale price in December 2024 was $663,781, a 4.4% increase from December 2023.

• Year-to-date, the average price was $679,067, rising 1.3% compared to 2023.

• The total dollar volume of home sales in December 2024 was $406.9 million, up 12.7% year-over-year. For the entire year, the total dollar volume reached $9.2 billion, an increase of 13.3% from 2023.

OREB cautions that while average sale prices offer insight into market trends over time, they do not reflect changes in the value of individual properties. Average price calculations are derived from the total dollar volume of all properties sold, with prices varying significantly by neighbourhood.

By the Numbers – Inventory & New Listings

• New listings: 603 new residential properties were added in December 2024, marking a 13.6% increase from December 2023. This was 3.5% above the five-year average but 2.7% below the 10-year average for December.

• Active listings: Residential listings totalled 3,216 units at the end of December 2024, a surge of 58.7% compared to December 2023. Active listings were 90% above the five-year average and 51.4% above the 10-year average for the month.

• Months of inventory: There were 5.2 months of inventory at the end of December 2024, compared to 3.6 months in December 2023. This metric reflects the time it would take to sell all current inventory at the current sales pace.

In recent years, the Canadian housing market has experienced significant disruptions. A global pandemic, surging interest rates, and economic challenges caused the market to deviate from typical patterns. However, 2025 is anticipated to see a return to conditions more aligned with long-term historical trends.

The Royal LePage Market Survey Forecast projects that the aggregate price of a home in Canada will rise by 6.0% year-over-year, reaching $856,692 in the fourth quarter of 2025. The median price of a single-family detached home is expected to grow by 7.0% to $900,833, while condominiums are forecasted to see a 3.5% increase, reaching $605,993.

“After several years of unusual volatility in the real estate market, key indicators point to a return to stability in 2025. The backlog of willing and able buyers continues to grow, and upcoming changes to mortgage lending rules will further enhance Canadians’ borrowing power,” said Phil Soper, president and chief executive officer, Royal LePage. “Most notably, the Bank of Canada’s shift from ‘inflation fighter’ to ‘economy booster’ has taken time to influence buyer behaviour. We saw a marked increase in market activity at the start of the fourth quarter, following the Bank of Canada’s 50-basis-point rate cut. Buyers now believe home prices have hit bottom and are eager to act before competition intensifies.”

New Lending Rules to Enhance Borrowing Power

New lending regulations taking effect this month will provide improved accessibility for first-time buyers and existing homeowners. Starting December 15th, eligibility for 30-year amortizations on insured mortgages will expand to include all first-time buyers and purchasers of new construction homes, an increase from the current 25-year limit. Additionally, the mortgage insurance cap will rise from $1 million to $1.5 million, enabling buyers with less than a 20% down payment to consider higher-value properties. These changes will be especially impactful in Canada’s most expensive real estate markets, where average home prices often exceed $1 million.

“Improved lending conditions, combined with declining interest rates, will unlock new housing opportunities for many Canadians in the new year. First-time buyers will be the primary beneficiaries of these initiatives, as their ability to borrow more for less with a smaller down payment will help bring them closer to their first home purchase,” said Soper. “We believe the return of buyers to the market will encourage builders and trigger a wave of new supply, which is very much needed.

“Addressing Canada’s critical housing shortage must remain a top priority for policymakers at every level of government. With our population growing rapidly through both natural increases and immigration, it is essential to stay focused on supporting the development of new homes if we hope to address housing affordability, be it for purchase or rent.”

Shifting Political Landscapes and Potential Housing Impacts

The year 2025 is expected to bring political changes in both Canada and the United States, with potential implications for the housing market. In Canada, a federal election may introduce new housing policies that could temporarily influence market activity in the latter half of the year.

“With an election approaching in Ottawa and a new administration preparing to take office in Washington, the housing market faces potential disruptions. Here at home, a federal election will see new housing policies that may temporarily impact market activity in the second half of 2025,” said Soper. “Meanwhile, south of the border, the incoming Trump administration’s trade policies and broader economic agenda have the potential to create ripple effects for Canada’s economy and housing market. While these impacts may take time to unfold, they could eventually affect consumer confidence and market dynamics on both sides of the border.”

Highlights from the 2025 Forecast

• Greater Montreal Area is expected to lead with aggregate home price growth of 6.5%, outpacing Greater Toronto (5.0%) and Vancouver (4.0%).

• Quebec City is forecasted to see the largest increase among major regions, with an 11.0% rise in aggregate home prices, followed by Edmonton and Regina at 9.0%.

• Calgary, along with Ottawa, Halifax, and Winnipeg, is projected to experience a moderate 4.0% home price increase, following significant appreciation over the last two years.

• The median price of a condominium in the Greater Toronto Area is anticipated to decline by 1.0%, reflecting the addition of thousands of new units to an already surplus supply.