Canadian Housing Market Momentum: Decoding RBC's Forecasts for Real Estate Investment Opportunities

The Canadian housing market in 2025 is a mosaic of diverging trends, shaped by regional supply-demand imbalances, affordability constraints, and the lingering effects of monetary policy. Royal Bank of Canada (RBC)'s latest forecasts paint a nuanced picture: while national existing home sales show signs of stabilization, regional disparities are creating distinct investment opportunities in real estate and housing-related equities. For investors, understanding these dynamics is critical to navigating a market that is neither uniformly bullish nor bearish.

Regional Divergence: Where Momentum Lies

RBC's July 2025 report underscores a key theme: regional fragmentation. Markets like Toronto and Vancouver, long plagued by affordability challenges and high inventory, are showing early signs of recovery but remain vulnerable to further price corrections. In contrast, Quebec, the Prairies, and Atlantic Canada are experiencing tighter supply-demand conditions, driving modest price appreciation and stronger buyer confidence.

• Toronto and Vancouver: These metropolitan hubs are in a transitional phase. Toronto's home resales rose 13% in July compared to June, but the composite MLS Home Price Index (HPI) fell 5.4% year-over-year. Vancouver's resales increased 10% month-on-month, yet inventory levels remain historically high, keeping downward pressure on prices. Investors here might focus on construction and development firms that benefit from inventory-driven demand, such as homebuilders like Boralex Inc. (BCE) or Aurora Acquisition Corp. (ACQ), which are positioning for long-term stabilization.

• Montreal and Quebec: A seller's market with historically low inventory has allowed median prices to rise 6.8% for single-family homes and 3.4% for condos year-over-year. RBC anticipates continued modest gains if affordability improves. This environment favors real estate investment trusts (REITs) like Crescent Point Energy (CVE) or RioCan Real Estate Investment Trust (REI.UN), which benefit from stable rental demand and rising asset values.

• Calgary and Alberta: Supply-driven rebalancing is reshaping the market. Calgary's inventory surged due to a 64% year-over-year increase in new completions, leading to a 3.9% annual decline in HPI. However, RBC expects a short-lived price adjustment as economic uncertainty eases. Investors could target construction materials companies like Cementation Canada (CEM) or Boralex Inc. (BCE), which stand to gain from increased building activity.

National Trends and Macro Risks

Nationally, RBC notes a balanced market with a sales-to-new-listings ratio (SNLR) of 47% in May 2025. While this suggests equilibrium, regional extremes persist: Ontario remains a buyer's market (SNLR 34%), while Quebec and Saskatchewan are in seller's territory (SNLR 66% and 60.4%, respectively). The national average home price of $691,299 in May—a 3.5% decline year-over-year—highlights the fragility of the recovery.

Investors must also weigh macroeconomic risks. RBC cautions that trade uncertainties and affordability constraints could delay a full recovery. However, the Bank of Canada's gradual rate cuts (projected to remain at 2.75% in Q3 2025) offer a tailwind for buyer activity.

Strategic Investment Opportunities

1. Seller's Market Equities: In Quebec, the Prairies, and Atlantic Canada, focus on REITs and homebuilders. For example, Crescent Point Energy (CVE) has a strong presence in Alberta's energy-driven real estate sector, while Boreal Capital REIT (BCE.UN) targets multi-family housing in high-demand regions.
2. Buyer's Market Plays: In Toronto and Vancouver, consider mortgage brokers and real estate tech firms that benefit from high inventory and shifting buyer behavior. Companies like Mortgage Brokerage International (MBI) or Zoocasa (ZOOA) could thrive as transaction volumes stabilize.
3. Construction and Materials: As Calgary and other cities rebalance supply, construction materials firms like Cementation Canada (CEM) or Boralex Inc. (BCE) are well-positioned to capitalize on increased building activity.

Conclusion: A Market of Contrasts

RBC's forecasts reveal a Canadian housing market in flux, where regional conditions dictate investment potential. While affordability challenges and inventory imbalances persist, pockets of strength—particularly in Quebec, the Prairies, and Atlantic Canada—offer compelling opportunities for investors willing to navigate the fragmentation. By aligning portfolios with these diverging trends, investors can position themselves to benefit from both stabilization and growth in a market that is far from uniform.

As the year progresses, monitoring RBC's SNLR metrics and regional price trends will be essential. For now, the message is clear: in Canada's housing market, location—and the companies tied to it—matters more than ever.