Something shifted in Canada's housing market at the end of 2025. For the first time since mid-2023, every single property type saw prices decline on an annual basis. Detached homes, condos, semi-detached, townhouses. All of them.

The RPS-Wahi House Price Index dropped 1% in December compared to a year earlier, matching November's decline. That might not sound like much, but here's what makes it significant: detached homes had been holding steady for months. They were the last property type standing, basically flat at the national level. Then December hit, and they slipped into negative territory too.

"The Canadian housing market ended the year with prices trending in the opposite direction from the beginning of the year," says Ryan McLaughlin, RPS-Wahi economist. But, he adds, those headline numbers hide what's really going on regionally. Some markets are still hot. Others are ice cold.

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The Condo Crisis Continues

Condos have been struggling the longest. Prices dropped 5% year-over-year in December, continuing a slide that's lasted more than a year. Toronto and Vancouver condo markets, in particular, have been under serious pressure throughout 2025.

The Greater Toronto Area tells the story clearly. The average condo price fell 7.9% year-over-year to $628,000 in December. In Vancouver, condos dropped 5.3% to $710,000 during the same period. These aren't small adjustments. They're meaningful corrections.

Why condos? A few reasons. First, there's been a flood of new supply. Developers completed buildings that broke ground during the pandemic boom, when everyone thought prices would climb forever. Those units are now hitting the market just as investor demand has evaporated. Second, the entire investor calculation changed. When interest rates were near zero, buying a condo to rent out made financial sense even with modest returns. Now? Not so much.

According to Bullpen Research, new condo prices in Toronto fell 10% in Q4 2024 compared to three years earlier, with further declines expected through 2025. The firm predicts another 7.3% drop in the City of Toronto and a 6.1% decline in GTA suburbs. For buyers, that's translated into real savings. For developers and investors? It's painful.

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Detached Homes Join the Decline

Detached home prices had been remarkably resilient. They account for more than half of Canada's housing stock, and throughout most of 2025, they stayed positive or flat on a year-over-year basis. That changed in December, when they dropped 1% nationally.

Semi-detached and row/townhouse properties have been down for months. Both remained 3% lower than they were at the same time in 2024. The pattern is clear: the entire market is softening, not just the condo segment.

What's driving this? Affordability, mostly. Even with Bank of Canada rate cuts throughout 2025, bringing the policy rate down to 2.25%, homes remain expensive relative to incomes in major cities. The unemployment rate sits at 6.5%, and job insecurity makes people hesitant to take on massive mortgages. Lower rates help, but they haven't solved the fundamental problem: prices climbed too high, too fast.

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The Great Regional Divide

Here's where things get interesting. While Toronto, Hamilton, Vancouver, and Victoria all saw prices drop year-over-year, nine cities posted increases. The Canadian market isn't one market. It's a patchwork of wildly different local conditions.

Quebec City led the pack with prices up roughly 11% in December, matching Winnipeg's gains. These aren't anomalies. Both markets have been on fire throughout 2025.

In Quebec City, the average home price surged 16.4% year-over-year to $487,863 in November, driven by relative affordability and insufficient supply. Properties are selling for 10% or more over asking price. One in four homes, according to Quebec REALTORS®. That's a seller's dream and a buyer's nightmare.

Winnipeg's story is similar. Home prices increased 5.3% year-over-year to $378,300 in November, with strong demand fueled by people leaving expensive markets like Toronto and Vancouver. Where else can you buy a decent home for under $400,000 in Canada? Not many places.

Regina also saw significant gains, though recent data suggests Saskatchewan's market might be cooling. Still, home prices sat around $367,000 in December, which is outrageously affordable compared to Toronto or Vancouver.

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What's Driving the Winners?

The markets that are thriving share some common traits. They're more affordable than Canada's major metros. They have sticky employment rates, often in sectors less exposed to economic volatility. And they're experiencing demographic shifts as people relocate from pricier cities.

Supply constraints also play a role. In Quebec City, for example, much of the new construction has been purpose-built rentals rather than ownership housing. That's shifted the balance, creating more competition for the homes that are available to buy.

Economics matter too. According to the Canadian Chamber of Commerce's U.S. Tariff Exposure Index, markets like Quebec City, Winnipeg, and Regina have economies that are relatively insulated from potential trade disruptions with the United States. That stability attracts buyers who want predictability.

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The Expensive Markets Keep Sliding

Toronto and Vancouver paint a different picture. These markets saw prices climb to unsustainable levels during the pandemic, and they're now experiencing a correction. But it's not a crash. It's a slow, grinding adjustment.

In the Greater Toronto Area, the average home price fell 5.7% year-over-year to $1,006,735 in December. Detached homes dropped 6.9% to $1.3 million. Condos fell 7.9%. Even with these declines, prices remain well above 2019 levels and still feel out of reach for many buyers.

Vancouver's benchmark home price decreased 4.5% year-over-year to $1,114,800 in December. Condos fell 11% annually. The market has eight months of inventory, which suggests a buyer's market, but sales activity remains subdued. People are waiting. For what? Better prices, lower rates, more job security. Something.

Inventory levels tell part of the story. Toronto had 12,087 sales in November, down 19.8% month-over-month, with a sales-to-new-listings ratio that suggests balanced conditions. Vancouver's ratio was 12.7% in December, firmly in buyer's market territory. When you have that much inventory and weak demand, prices don't climb.

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Interest Rates: The Floor That Isn't

Many people thought lower interest rates would reignite demand. The Bank of Canada cut rates aggressively in 2024 and 2025, bringing the overnight rate from 5% down to 2.25%. That's a full percentage point drop just in 2025.

But here's the thing: most economists expect rates to stay at 2.25% through much of 2026. No more cuts. No immediate hikes either. Just stability. The Bank of Canada has signaled it's "about right" with current policy.

For borrowers renewing in 2026, that's mixed news. People coming off ultra-low pandemic-era fixed rates of 2% or less are facing payment shock. Fixed-rate borrowers renewing this year will see payments increase by roughly 26% on average, adding close to $7,000 annually to housing costs. Variable-rate borrowers who rode the ups and downs are in better shape, with much more modest increases.

The point is, even at 2.25%, rates aren't low enough to make expensive homes affordable. A $1 million home still requires significant income to qualify under stress test rules. And with youth unemployment at 12.8% and job insecurity elevated, many potential buyers are simply priced out.

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What This Means for Buyers and Sellers

If you're buying in Toronto, Vancouver, or similar markets, this is probably the best environment you've seen in years. Inventory is high. Sellers are getting realistic about pricing. The days of bidding wars and offers 20% over asking are mostly gone. You have negotiating power.

But don't expect fire sales. Properties in Toronto are selling for 3% less than asking on average, which is a far cry from the steep discounts some buyers hoped for. And in hot markets like Quebec City or Winnipeg, you're still competing against multiple offers. Location matters more than ever.

For sellers, the strategy depends entirely on where you are. In expensive markets, you need to be aggressive on pricing. Homes are sitting longer. The average property in Toronto took 65 days to sell in December, up from 56 days a year earlier. Price it right from the start, or watch it languish.

In growing markets, sellers still have leverage. But even there, the pace is slowing. Winnipeg saw home sales decline 10.5% in November compared to the previous year, and prices dipped slightly after months of gains. Nothing stays hot forever.

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The Road Ahead

The Canadian Real Estate Association projects national home sales will increase 7.7% in 2026, with the average price rising a modest 3.2%. That suggests a gradual recovery rather than a dramatic rebound. Most forecasters expect balanced market conditions to emerge as excess inventory gets absorbed.

But uncertainty remains high. U.S. trade policy, tariff threats, and broader economic volatility kept buyers on the sidelines in 2025. Those concerns haven't disappeared. The federal election removed one source of uncertainty, but others persist.

What's clear is that Canada's housing market is no longer moving in one direction. Some cities are rising. Others are falling. Some property types are holding up better than others. The national averages mask enormous regional variation, and understanding your local market matters more than tracking national headlines.

For the first time in years, buyers in expensive markets have real choices. Sellers need realistic expectations. And everyone is watching to see if this correction becomes something more or if 2026 brings the stability that's been missing. The housing market that enters 2026 looks fundamentally different than the one that began 2025. Whether that's good or bad depends entirely on which side of the transaction you're on and where you're looking to buy or sell. If you're navigating these shifting conditions and need expert guidance on the market in your area, reach out to the team at Coldwell Banker Horizon Realty to discuss your options and find the strategy that works best for you.