Toronto, ON – Canada's two most expensive housing markets have begun 2025 with notable sluggishness, but a recent report from TD Economics suggests that Vancouver's market is poised to outperform Toronto's throughout the year. Despite the Bank of Canada's ongoing efforts to stimulate the economy through consecutive interest rate cuts, both the Greater Vancouver Area (GVA) and the Greater Toronto Area (GTA) have seen significant declines in home sales.

In February, GVA home sales dropped by 11.7% compared to the previous year, falling nearly 29% below the 10-year seasonal average. The composite benchmark price also experienced a slight annual dip of 1.1%, settling at $1,169,100. Meanwhile, the GTA faced even steeper declines, with home sales plummeting by 27.4% year-over-year and 28.5% from January. The average selling price in Toronto also fell by 2.2% to $1,084,547. Compounding these challenges, both markets are witnessing a continued rise in housing listings.

"Both the GTA and GVA housing markets have registered tepid performances to begin 2025, weighed down by economic uncertainty," stated TD economist Rishi Sondhi in a recent research note. "While both markets could continue struggling, the GVA is on a firmer footing than the GTA heading into this bout of tariff-related turbulence. This suggests that the GVA’s housing market could again enjoy a leg up on the GTA this year."

Sondhi attributes Vancouver's relative strength to its greater price resiliency. Average home and benchmark prices in the GVA have decreased by approximately 6% and 4%, respectively, from their pandemic peaks, whereas Toronto's prices have fallen by about 15%. Additionally, Vancouver's affordability conditions did not deteriorate as severely during the pandemic, and its condo market is not grappling with the same oversupply issues as Toronto's.

Conversely, the GTA's condo market is facing significant challenges, with a surplus of supply and weak demand exerting downward pressure on prices. While sales of other housing types in the GTA have shown slightly stronger growth over the past two years, overall price trends remain subdued.

The overall soft start to 2025 is expected to make it challenging for both markets to achieve positive sales and price growth. Economic uncertainty, including the effects of tariffs, is weighing heavily on buyer and seller confidence, offsetting the positive impact of lower interest rates, pent-up demand, and a growing population of prime home-buying age Canadians.