Canada Gets a Rate Cut, and Average Rent Costs Come Down

This week’s top real estate stories.

By  Jared Lindzon | 2 minute read

Every Friday, Wahi brings you the most important real estate stories from the past week. 

Another 25 Bps Bites the Dust

There’s a lot of doom and gloom in Canada’s economic forecast, but you know what isn’t hypothetical, unknowable, or uncertain? Another rate cut. This week the Bank of Canada brought the overnight rate down 25 bps to 3%. It’s the kind of news Canadians need heading into high-stakes elections, a tsunami of mortgage renewals, and that little threat to crush the Canadian economy made by the one man with the power to do it. At the same time, the Bank warned that it was going to wait and see how all that pans out before dropping rates further. 

Rent Relief Is on Its Way 

Canada might have hit peak rent in 2023 — at least for now — with a downward trend expected to continue through 2025. According to a new report, average asking rents coast-to-coast hit a new record high in 2022, then shattered that record in 2023, but have been trickling downwards over the last 17 months, led by major declines in Toronto and Vancouver. Experts expect that pattern will likely hold through 2025, thanks to lower interest rates, higher inventory and a slowdown in immigration. Lower interest rates and falling prices will also help renters transition into ownership, further reducing demand.

Renters Wanted in the GTHA  

The city where people are typically packed in like sardines has got a little extra breathing room these days. According to a new report, the vacancy rate for purpose-built rentals 25 years old or younger in the GTHA just hit its highest level since the pandemic. It also found that asking rents for new purpose-built rentals in the city hit their highest level on record in the last quarter of 2024. At the same time, inventory has been on the rise, and condo rents have been trending down, leading to a surge of vacancies among new purpose-built rentals.   

Nobody Wants a New Home in Toronto

There were basically no new home sales in Toronto last month. Okay, maybe that’s a bit of an exaggeration, but for a city of 3 million — where thousands of homes change hands every month — the 310 new home sales recorded in December of 2024 seem impossibly low. In fact, that’s the fewest number of new home sales on record since 1990. Last month’s sales represented a 46% drop from the prior December and an 80% decline from the 10-year average. While 2024 was a rough year for new home sales in Toronto, December took it to a brand-new low. 

Canada on Track to Miss its Housing Targets by Slightly Less

Canada was never close to hitting its 2030 housing targets, but thanks to a reduction in immigration, the country is on track to miss the mark by a little less. According to a new report the drop in immigration will result in the first population decline since Confederation in 1867, from 41.3 million last year to 41.1 million in 2026. That means the country will need about half a million fewer homes than previously estimated, dropping the target to 400,000 annually, down from 445,000. The record for housing starts in Canada was set in 1976, with 273,200 new units.    

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