The past few years have been a bit volatile for real estate. With prices surging, interest rates fluctuating, and new tariffs coming from the United States, people might be a little hesitant to jump into property ownership. However, buying a home is still a great investment, especially this upcoming spring.
Factors at play
There are a few factors to watch for in real estate, as they all affect the market and whether it’s a good time to invest. Interest rates, for example, affect affordability for many people and fluctuate, making it challenging to know when to sign on the dotted line and when to wait.
Factors such as interest rates, home prices, affordability, inflation, unemployment rates, and immigration all play a role in whether someone can afford to invest in property.
Market changes to take advantage of
Several positive changes in the real estate market will make buying this year easier for many people.
Interest rates
The Bank of Canada’s interest rates this year are lower than last year’s, by less than 1%, giving people more leeway in terms of purchasing power. With inflation up and tariffs still looming, these lower interest rates could not have come at a better time to help people get ahead of the home affordability train.
Home prices and affordability
Housing prices are beginning to cool, with the average single-family home price dropping from a high of $800,000 in 2022 back down to just under $700,000 this year. Townhouses and apartments are also dropping at similar rates, too. Townhouse prices are decreasing from their high of almost $700,000 in 2022 to the mid-$600s. Apartments, which sat in the mid-$500s in 2022, are expected to drop back to just under $400,000 this year.
It’s important to note, though, that lower interest rates can increase demand and drive up housing prices, so there is a bit of a time limit on when you can take advantage of these to deal with rising costs everywhere else before the market starts shooting up again.
Inflation
Inflation typically drives up home prices, reducing affordability. Inflation rates have risen from 1.8% in December 2024 to 2.4% in December 2025, and since 2000, home prices have outpaced inflation significantly.
However, property prices have corrected since 2022, with an average year-over-year decline of 0.5% since then. Because home prices have decreased, affordability has improved.
Unemployment rates
Canada’s unemployment rate is rising steadily, with rates at 6.7% in December 2024 and 6.8% in December 2025, which could significantly reshape the housing market. It can slow the market and reduce demand, leading to lower housing prices, giving people the opportunity to combine lower prices with lower interest rates for better affordability.
Immigration
Immigration also plays a role in the real estate market, as it can drive up demand in major cities, leading to fewer properties being available and more competition. However, with this year's changes to lower immigration targets, it’s expected to make it easier to afford to buy, as reduced competition and lower rental demand are expected to ease pressure, especially in urban markets.
Tariffs
The tariffs affect real estate, too, but that doesn’t mean that buying this spring would be a bad investment. In fact, while new builds stall due to increased costs, older, existing homes may see lower or stable prices, giving people the chance to get in at a lower price if they’re not looking for a new build.
Tariffs also reduce demand and activity across the market, making it ideal for people looking to invest without dealing with bidding wars or significant competition from other buyers.
The bottom line
All investments carry some level of uncertainty, but with lower interest rates, declining prices, and reduced immigration, this spring might create the perfect storm for people ready to invest in real estate. And real estate is a long-term game.