As we move through 2025, the luxury real estate markets in both the U.S. and Canada are evolving amid shifting economic conditions and changing buyer preferences.
What Buyers and Sellers Need to Know
While declining interest rates did spark optimism, concerns over economic uncertainty have prompted some investors to proceed with caution once more. Still, an increase in available inventory suggests a dynamic and promising market for affluent buyers and sellers alike.
A Look at the Numbers
Recent sales data from February 2025 indicates there is positive momentum in the luxury housing sector. Single-family home sales rose by 4.5% year-over-year and 16.2% month-over-month. Condo and townhome sales also saw gains, increasing by 2.6% annually and 18.7% from January.
Inventory levels have expanded significantly, with single-family home listings up 27.3% year-over-year and new listings rising by 17.9%. Condo and townhome inventory followed a similar pattern, climbing 27.8% from February 2024. However, new listings entering the market declined month-over-month, signaling a cautious approach among sellers despite the broader increase in available properties.
While sales activity is growing, inventory is expanding at a slightly faster pace. This trend suggests that buyers have more options, but sellers must be strategic in pricing to attract interest in a competitive market.
This month we take a deeper dive into the similarities and differences between the Canadian and U.S. luxury real estate markets.
Similar Trends in Canada and the U.S.
The luxury real estate markets in both countries share several key trends:
- Interest Rates & Buyer Caution: Lower interest rates have encouraged activity, yet economic uncertainties, such as stock market fluctuations and global events, have tempered enthusiasm.
- Ultra-Luxury Resilience: High-net-worth buyers remain largely unaffected by interest rates and prioritize exclusive, high-end properties when they become available.
- Generational Shifts & Inventory Growth: More Baby Boomers are selling luxury properties, increasing inventory levels. Meanwhile, affluent Millennials and Gen Z buyers are entering the market, bringing preferences for smart home technology and sustainable features.
- Single-Family Homes in High Demand: Despite the rise of luxury condominiums, single-family homes continue to dominate demand across North America.
- Strategic Pricing is Key: With more inventory on the market, luxury homebuyers are selective, making it essential for sellers to price properties competitively.
Key Differences in Canada vs. U.S. Markets
While there are similarities, notable differences between the two markets shape investment decisions:
- Economic & Tax Policies: Canada’s luxury market faces stronger taxation rules, stricter foreign buyer regulations, but increased demand from wealthy immigrants. The U.S. benefits from greater investment flexibility, tax incentives, and no state income tax in certain regions.
- Housing Supply & Market Dynamics: Canada’s limited luxury housing supply, helps stabilize prices even in downturns. Meanwhile, the U.S. offers a more diverse luxury market which is open to a greater variability of inventory levels and price trends.
- Demographic Influence: Canada’s luxury market is shaped by wealthy domestic buyers and high-net-worth immigrants, often prioritizing family-oriented investments. The U.S. sees a blend of lifestyle and investment-driven purchases, with fewer foreign investment restrictions and a strong secondary-home market.
A Global Perspective on Luxury Real Estate
Beyond North America, the global real estate market continues to navigate economic challenges while offering substantial investment opportunities.
Knight Frank’s Wealth Report highlights ongoing shifts driven by AI advancements, geopolitical shifts, and financial market fluctuations. Despite global uncertainties, global GDP growth is expected to remain strong, interest rates anticipated to gradually decline, and private capital become deeply invested in luxury residential and commercial real estate once more, with cities like London, Tokyo, and Paris seeing strong demand.
In Conclusion
Whether you’re considering buying or selling luxury real estate in 2025, understanding market trends is crucial. While economic factors and policy differences influence regional markets, the demand for high-end properties remains strong. Strategic pricing, awareness of shifting buyer demographics, and collaboration with a knowledgeable luxury real estate professional can help you navigate this evolving landscape successfully.
Luxury real estate remains an attractive and resilient asset class—positioning yourself with the right insights and expertise will ensure your investment aligns with market realities and long-term goals.
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