MARKET RATES
Here’s a snapshot of current market rates for both Canada and the US:
US 10Y Treasury Yield: 4.43% (July 14, 2025)
10YT Minus 2YT Spread: 0.53% (July 14, 2025)
US 30-Year Fixed-Rate Mortgage: 6.750% (as of July 15, 2025)
US Prime Rate: 7.50% (July 11, 2025)
Canada Prime Rate: 4.95% (July 14, 2025)
US Fed Funds Rate (Effective Federal Funds Rate): 4.33% (July 2025)
Policy Interest Rate - Bank of Canada: 2.75% (as of June 3, 2025)
SOFR: 4.33% (July 14, 2025)
Inflation & Exchange Rates
US Inflation (CPI): 2.7% (June 2025)
CA Inflation (CPI): 1.9% (June 2025) - Canada’s inflation rate is currently lower than that of the US, suggesting comparatively more subdued price pressures.
USD/CAD Exchange Rate: $1 USD = $1.36872 CAD (July 15, 2025)
Commodities & Indices
S&P 500: 6,296.92 (July 15, 2025)
Gold: $3,329.40 USD/t.oz (Canadian equivalent: $4,557.17 CAD/t.oz) (July 15, 2025)
Lumber: $422 USD per 1,000 board feet (Composite, July 4, 2025)
Crude (WTI): $65.76 USD/Bbl (July 15, 2025)
Gasoline USD/Gal: $3.150 USD/Gal (Current Avg., July 15, 2025)
Global Container Freight Index: 1,733.29 points (July 15, 2025)
Bitcoin: $116,480.40 USD (Canadian equivalent: $159,420.21 CAD) (July 15, 2025)
Ethereum: $3,042.52 USD (Canadian equivalent: $4,164.71 CAD) (July 15, 2025)
Luxury Watch Index: Market overview +37.66%; for specific brands: Rolex +46.95%, Patek Philippe +81.64% (since January 2019)
CANADIAN ECONOMIC & REAL ESTATE INDICES
The Canadian economy is experiencing a mixed bag of indicators, with some areas showing signs of slowing while others are attempting to stabilize.
Canada GDP Growth Rate (Quarterly): 2.2% (Q1 2025, annualized). However, forecasts from BMO suggest a potential reduction to around 0.5% in 2025, partly due to anticipated tariffs with the US, highlighting trade uncertainty as a significant headwind.
Canada Unemployment Rate: 6.9% (June 2025)
Canada Household Debt-to-Income Ratio: 173.9% (Q1 2025) - This high ratio remains a persistent vulnerability for Canadian households.
Canada Consumer Confidence Index (Conference Board of Canada): 48.80 points (June 2025) - A low reading indicates continued consumer apprehension.
Canada Housing Affordability Index (RBC Aggregate): 55.1% (Q1 2025) - This represents the share of median household income needed to cover homeownership costs, showing that affordability remains a significant challenge.
Canada Rental Vacancy Rate: Expected to rise in most major markets in 2025 (CMHC data), with the GTHA seeing a vacancy rate of 3.5% for purpose-built rentals in Q1 2025.
Teranet-National Bank Composite House Price Index (Canada): 311.75 (May 2025, -0.14% m/m, -1.63% y/y). The national index fell for the fifth consecutive month from April to May.
Canadian Home Builders' Association (CHBA) Housing Market Index (HMI) - Single-Family: 26.4 (Q1 2025) - Builder confidence remains low, below 50, indicating challenging conditions for new construction.
Canadian Home Builders' Association (CHBA) Housing Market Index (HMI) - Multi-Family: 22.3 (Q1 2025) - Builder confidence for multi-family projects is essentially at its record low from Q4 2024.
US ECONOMIC FACTORS
The US economy presents a contrasting picture, with a contraction in growth in the first quarter of 2025.
US GDP Growth Rate (Quarterly): -0.5% (Q1 2025, annualized). This reflects a contraction primarily due to increased imports and decreased government spending, despite increases in investment and consumer spending.
US Unemployment Rate: 4.2% (latest available data). This is significantly lower than Canada's unemployment rate, indicating a tighter labor market in the US.
US Household Debt-to-Income: Debt payments were 11.3% of disposable income in Q4 2024. Total household debt reached $18.203 trillion in Q1 2025.
US Consumer Confidence Index (Conference Board): 93.0 (June 2025). This is considerably higher than Canada's consumer confidence index, suggesting greater optimism among US consumers.
How the Economies Compare
Monetary Policy and Inflation: The Bank of Canada has a lower policy interest rate (2.75%) compared to the US Fed Funds Rate (4.33%), influencing the respective prime rates. Canada’s current CPI inflation (1.9%) is lower than the US (2.7%), which may grant the Bank of Canada more flexibility in its monetary policy decisions going forward.
Economic Growth and Employment: The US experienced a GDP contraction in Q1 2025, while Canada saw positive (though slowing) growth. A key divergence is the labor market, with the US maintaining a much tighter unemployment rate (4.2%) compared to Canada (6.9%). This suggests different levels of slack in each economy.
Consumer Sentiment and Debt: US consumer confidence is markedly higher, indicating more optimism. Canada, however, grapples with a high household debt-to-income ratio, a structural vulnerability that could limit consumer spending and economic resilience.
Trade and Insolvencies: The BMO report highlights Canada's significant exposure to US trade, making it particularly vulnerable to tariff changes. The recent Insolvency Insider report for Q2 2025 notes 77 insolvency filings, with real estate leading all industries (23 filings), followed by food & accommodation and retail. Ontario accounted for the majority of these filings (45), indicating localized economic stress, particularly in sectors sensitive to higher interest rates and slower consumer activity. This rise in insolvencies, especially in real estate, is a stark reminder of ongoing economic pressures.
Focus on GTA Real Estate: Summary and Actionable Items
The Greater Toronto Area (GTA) real estate market in mid-2025 presents a unique landscape, marked by increased choice for buyers and easing rental conditions, a stark contrast to the overheated market of recent years.
Summary of GTA Real Estate Conditions:
Shifting to a Buyer's Market (Condos): The summer of 2025 is described as offering opportunities for buyers, especially in the condo segment. New condo listings in the GTA rose 25.2% in Q1 2025 year-over-year, leading to more choice and negotiating power for buyers.
Improved Affordability: The average selling price of a GTA condo in Q1 2025 decreased by 2.2% year-over-year to $680,146. In the City of Toronto, condo prices dipped by 6.5% year-over-year to around $683,000 as of May 2025. This, combined with lower mortgage rates (some 3-year fixed rates as low as 3.89% in mid-June 2025 due to Bank of Canada rate cuts), significantly improves affordability.
Easing Rental Market: The rental market has seen a surge in supply, with purpose-built rental completions up 173% in Q1 2025 year-over-year. Condo rents also declined for the fourth consecutive quarter in Q1 2025, down 2.8% annually. Vacancy rates have risen, reaching 3.7% in the City of Toronto in Q1 2025. This easing is partly due to increased supply and some renters transitioning to homeownership.
Builder Confidence Low: Despite the need for more housing, CHBA's HMI for both single-family (26.4) and multi-family (22.3) homes remains at very low levels, indicating that builders perceive market conditions as "poor." This signals potential headwinds for future supply.
Insolvency Impact: The high number of real estate insolvencies in Ontario (part of the 45 provincial filings mentioned) is a significant concern. This indicates financial stress among some developers, investors, or related businesses, potentially leading to distressed sales or stalled projects.
Actionable Items for GTA Real Estate Stakeholders:
For Prospective Buyers (especially First-Timers and Condo Buyers):
Seize the Opportunity: Current market conditions offer a rare window of increased inventory, adjusted prices, and easing mortgage rates. This is a favorable time to enter the market or upgrade.
Get Pre-Approved: Understand your borrowing capacity with current, more attractive mortgage rates.
Negotiate: With more supply and less competition, there's greater room for negotiation on price and terms.
Explore Incentives: Some new developments or rental units might offer incentives (e.g., free rent periods for rentals, closing cost credits for purchases).
For Sellers:
Price Strategically: The market has shifted. Overpricing can lead to prolonged listing times and eventual price reductions. Work with an agent who understands current market values precisely.
Enhance Appeal: With more choice for buyers, ensure your property stands out through staging, minor renovations, and professional photography.
Be Flexible: Be open to negotiations on price and conditions to attract serious buyers.
For Real Estate Investors:
Evaluate Rental Yields: While rents have cooled, they are still high compared to pre-pandemic levels. Analyze potential rental income against carrying costs, especially with potentially lower acquisition prices.
Consider Purpose-Built Rentals: The increase in purpose-built rental supply is a notable trend. Evaluate opportunities in this segment, especially given the government's focus on boosting rental housing supply.
Due Diligence on Distressed Assets: The rise in real estate insolvencies suggests potential opportunities for acquiring distressed assets at favorable prices, but thorough due diligence is critical.
For Current Homeowners (Refinancing/Debt Management):
Review Mortgage Terms: With the Bank of Canada cutting rates, homeowners with variable-rate mortgages may see lower payments. Those with fixed-rate mortgages nearing renewal should explore current rates.
Manage Debt: The high household debt-to-income ratio remains a concern. Prioritize debt reduction, especially higher-interest consumer debt, to enhance financial resilience.
In conclusion, while Canada's broader economic outlook faces challenges, including trade uncertainties and a high debt load, the GTA real estate market appears to be recalibrating towards a more balanced and potentially advantageous environment for buyers, particularly in the condo segment. Understanding these dynamics is crucial for making informed decisions in this evolving market.
Sources:
Canadian Economic Factors and Outlook - BMO Economics: https://economics.bmo.com/en/publications/detail/d052c9b7-4aac-4563-899a-97bfc3172a9d/
Prime Rate in Canada - Ratehub.ca: https://www.ratehub.ca/prime-rate
Bank of Canada Interest Rate - WOWA.ca: https://wowa.ca/bank-of-canada-interest-rate
Consumer Price Index, June 2025 - Statistics Canada: https://www150.statcan.gc.ca/n1/daily-quotidien/250715/dq250715a-eng.htm
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Today's Oil Price: Brent Crude & WTI Oil Prices Today - Commodity.com: https://commodity.com/energy/oil/price/
AAA Fuel Prices: https://gasprices.aaa.com/
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Bitcoin Price USD: [suspicious link removed]
Ethereum Price USD: [suspicious link removed]
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Statistics Canada reports household debt-to-income ratio ticked higher in Q1: https://www.ctvnews.ca/business/inflation/article/statistics-canada-reports-household-debt-to-income-ratio-ticked-higher-in-q1/
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10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity (T10Y2Y) - FRED | St. Louis Fed: https://fred.stlouisfed.org/series/T10Y2Y
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United States Effective Federal Funds Rate - Trading Economics: https://tradingeconomics.com/united-states/effective-federal-funds-rate
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