‘Pent-up demand’ pressures 2025 predictions

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This article was published 20/02/2025 (236 days ago), so information in it may no longer be current.

Pent-up demand from a ballooning population could fuel Manitoba’s housing market this year — but all 2025 predictions come with a large asterisk, economists warn.

“We are in a liminal place right now with respect to these tariffs,” said Shaun Cathcart, Canadian Real Estate Association senior economist.

He presented a forecast of Manitoba’s housing market during the annual Winnipeg Regional Real Estate Board market insights event, held Thursday in the provincial capital.

Cathcart and fellow economists shared data outlining worldwide, national and local trends in economics and housing. All projections could change if the United States implements a sweeping 25 per cent tariff on Canadian imports (as U.S. President Donald Trump has repeatedly threatened).

Already, the Canadian Real Estate Association has tracked a year-over-year dip in national home sales. The decrease followed Trump’s January inauguration and pledges to implement damaging tariffs.

“Tariffs hanging over our heads as a threat … is going to cause people to step back,” Cathcart predicted, adding it could cause “less of a rebound in demand this spring.”

However, he and other economists expressed doubt the tariffs would materialize. Trump has paused broad tariffs on Canada and Mexico until at least March.

There’s a possibility Trump’s threat against Canada will loom for the longer term, Cathcart stated.

“We always have to take that into consideration, but also, we have to live our lives,” he said. “Some of that initial uncertainty, I think, is going to fade and there’s a lot of pent-up demand out there.”

Winnipeg and surrounding regions haven’t experienced a drop in sales recently, said Jeremy Davis, WRREB director of external relations and market intelligence.

Rather, last month marked the city’s third-best January on record sales-wise. It’s the sixth consecutive month to hit the milestone.

“Outside of the tariff threats, we see growth in our real estate market,” Davis said. “But with that tariff threat, there’s a level of uncertainty there that we just can’t predict.”

Manitoba has received an influx of immigrants over recent years. Winnipeg alone has grown by 65,000 people over the past three years, Mayor Scott Gillingham remarked in December.

Many newcomers are looking for homes, Davis noted. They join long-time residents in a housing pool with fewer listings than the 10-year average.

The number of listings from 2020 onward has not surpassed levels in 2015 through 2019, the WRREB shared. Meanwhile, house sales in 2024 exceeded the 10-year average trend line.

“We can safely conclude the demand has risen substantially over the last five years and supply hasn’t kept pace,” Davis said, adding it seems “the market has adjusted to become more efficient.”

Prices have adjusted, too. Last year, the average residential detached home in Winnipeg cost $423,878, per WRREB data. It’s the highest average price over the past 10 years and a 6.1 per cent annual increase.

The local real estate board expects detached house prices and overall sales to rise six per cent this year. (The calculations don’t account for U.S. tariffs.)

Million-dollar home sales have swollen in Winnipeg and surrounding communities. In 2024, 155 houses sold for at least $1 million. It’s a 67 per cent increase from the 93 sales counted in 2023.

It’s unclear whether more homes, new and resale, will hit the market than years past, said Davis. Winnipeg has been funnelling money to local housing projects through Ottawa’s accelerator fund, he noted.

The Canadian Real Estate Association forecasts a 5.9 per cent increase in Manitoba home sales, driven by demand but constrained by supply. The province could see 16,692 sales this year, per CREA estimations. The association expects Manitoba’s average home price to increase 3.7 per cent to $382,908.

Both Cathcart and Derek Holt, Scotiabank vice-president and head of capital markets economics, forecast a decrease in interest rates.

The Bank of Canada reduced its key policy rate five times last year and again in January. Currently, its rate is three per cent. Holt believes the rate could drop to 2.75 per cent; Cathcart shared a forecast rate below 2.5 per cent this year.

There was a 13 per cent year-over-year increase in Winnipeg and surrounding region home sales in 2024, the WRREB tracked. The 14,597 sales elicited a $5.54 billion sales volume (a 20 per cent increase from 2023).

Office vacancy nationally appears to have peaked last summer, said Sean Kliewer, Colliers International senior vice-president. The majority of Winnipeg’s office vacancy — 2.1 million of 2.5 million square feet — remains downtown; some buildings are “functionally obsolete,” Kliewer said.

Tenants seek quality, he underlined.

gabrielle.piche@winnipegfreepress.com