In the second quarter of 2025, Canadian households saw a modest increase in their overall net worth, even as the housing sector faced ongoing pressures. According to recent analysis from the Royal Bank of Canada, based on data from Statistics Canada, net worth climbed by 1.5 percent to reach $17.9 trillion. This growth came despite a dip in real estate values and rising debt burdens. For homeowners and potential buyers, these trends highlight the shifting dynamics in the property market, offering both challenges and opportunities.
Financial Assets Drive Modest Wealth Growth
The primary boost to household balance sheets stemmed from strong performance in financial markets. The S&P/TSX Composite Index rose by 7.8 percent during the quarter, lifting the value of investments like stocks and mutual funds. This rebound helped offset weaknesses elsewhere, resulting in the overall net worth gain.
Statistics Canada noted that most of these financial asset increases benefited the top 20 percent of households, who hold about 70 percent of such assets. This uneven distribution underscores how market recoveries can widen wealth gaps, with higher-income groups gaining more from equity surges.
Housing Market Pressures Limit Gains
Real estate, a key component of many Canadians' wealth, showed signs of cooling. The Canadian Real Estate Association's MLS Home Price Index fell by 1.2 percent in Q2, reversing some earlier advances. This decline contributed to the slower pace of net worth growth compared to previous quarters.
National inventory levels rose, with 206,435 properties listed on MLS systems by the end of June, up 11.4 percent from the previous year. Inventory stood at 4.7 months, close to the long-term average of five months. Markets below 3.6 months typically favor sellers, while those above 6.4 months lean toward buyers. These figures suggest a balanced but cautious environment for real estate transactions.
Rising Debt and Income Dynamics
Household debt continued to climb, increasing by 1 percent to $3.1 trillion. Mortgage borrowing slowed but persisted, pushing the debt-to-disposable-income ratio to 174.9 percent. Income growth lagged at just 0.3 percent, making debt burdens feel heavier for many families.
Debt-servicing costs stayed below their 2023 highs but are projected to rise as fixed-rate mortgages renew at elevated rates. The Royal Bank of Canada analysis indicates this could remain manageable if unemployment does not spike significantly. Many Canadians preferred fixed-rate mortgages for their stability, often finding them competitively priced against variable options depending on the lender.
The household savings rate dipped to 5 percent in Q2, reflecting stronger consumer spending amid a softening job market. This trend points to households prioritizing immediate needs over building reserves.
Outlook for Housing Recovery
Looking forward, experts anticipate a gradual uptick in housing activity. The Royal Bank of Canada forecasts modest improvements in the second half of 2025, building toward stronger momentum in 2026 as market confidence returns. However, external factors like tariff concerns could introduce volatility by increasing import costs and affecting stock markets.
Shaun Cathcart, senior economist at the Canadian Real Estate Association, suggested that the expected housing rebound might have been postponed by a few months due to early-year disruptions. He noted ongoing risks from tariff threats but emphasized that severe impacts have not materialized yet.
Implications for Canadian Homeowners
These developments paint a picture of resilience in Canadian household finances, tempered by real estate headwinds. For those navigating the property market, the current balance of inventory and prices could create buying opportunities, especially in regions with stable demand. Staying informed on economic shifts, such as interest rate changes and market inventories, is crucial for making sound decisions.
At Coldwell Banker Horizon Realty, we focus on providing clear guidance based on the latest data to help clients understand these trends. Whether you are buying, selling, or investing, our team is here to support your real estate goals in this evolving landscape.
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The content of this article is for informational purposes only and should not be considered as financial, legal, or professional advice. Coldwell Banker Horizon Realty makes no representations as to the accuracy, completeness, or suitability of the information provided. Readers are encouraged to consult with qualified professionals regarding their specific real estate, financial, and legal circumstances. The views expressed in this article may not necessarily reflect the views of Coldwell Banker Horizon Realty or its agents. Real estate market conditions and government policies may change, and readers should verify the latest updates with appropriate professionals.
