Toronto’s real estate market is starting to feel unfamiliar. After a long stretch of rapid price growth and relentless competition, the landscape is shifting. Buyers, once forced into rushed decisions, are now taking their time.
Sellers, who could once count on quick sales and soaring offers, are facing a market where patience and pricing strategy matter more than ever.
With sales down, inventory rising and interest rates keeping affordability in check, economic uncertainty is adding another layer of complexity. The recent U.S. tariffs on Canadian imports are fueling concerns about job security and consumer confidence, potentially dampening demand further.
As trade tensions and their broader economic impact unfold, the question isn’t just whether the market is cooling—it’s whether this shift is here to stay.
With the recent implementation of U.S. tariffs on Canadian imports, the economic outlook has become increasingly uncertain. This uncertainty is having a significant impact on the Toronto real estate market, as buyers and sellers alike are adopting a wait-and-see approach.
One potential outcome of the tariffs is that they could drive interest rates down. Canadian Banks are speculating that the Bank of Canada will be forced to drop interest rates harder and faster than previously anticipated in order to stimulate the economy and offset the negative impact of the tariffs. This could make borrowing more affordable for potential homebuyers, which should in turn lead to increased demand for housing. The problem is that people aren’t in a hurry to buy when the economy and their unemployment are uncertain—and this is why the Bank of Canada ends up cutting rates.
The ultimate impact of the tariffs on interest rates and the Toronto real estate market is difficult to predict. However, it is clear that the tariffs are adding an additional layer of uncertainty to the market, and this uncertainty is likely to weigh on both buyers and sellers in the coming months.
Sales plummet, but price declines remain gradual—for now
After strong year-over-year sales growth in late 2024, the GTA housing market has seen a sharp downturn in early 2025, with February marking the steepest decline yet. The chart below illustrates this.
We’ve experienced the slowest start to the year for sales in recent memory. Traditionally, the first few months of the year are a busy time for the real estate market, but this year’s market has been uncharacteristically sluggish.
Source: thehabistat.com
TRREB data for February also reveals a widespread drop in sales across all major housing types, with every segment experiencing double-digit declines compared to last year. However, while prices have softened across most categories, declines have remained moderate, and some segments have held steadier than others despite slowing transactions:
- Detached homes: Sales fell 31.1 per cent, with 1,706 transactions. Prices, however, held steady, rising 0.2 per cent to $1,445,879.
- Semi-detached homes: Sales declined 22.3 per cent, with 356 sales recorded. Prices decreased 4.0 per cent, settling at $1,079,996.
- Townhouses: Sales dropped 30.6 per cent to 700 transactions, while prices softened by 2.3 per cent to $911,483.
- Condo apartments: Experienced a 22.0 per cent decline in sales (1,225 transactions), while the average price dipped 1.3 per cent to $688,055.
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Source: TRREB
One key reason prices have seen only modest declines despite declining sales may be seller resistance. Many homeowners remain reluctant to lower their asking prices, particularly after years of sustained price growth.
At the same time, market conditions are increasingly favouring buyers, with homes taking longer to sell. This shift is reflected in the rise in average listing days on market (LDOM) to 28 days (up 12 per cent year-over-year) and average property days on market (PDOM) to 43 days (up 16.2% year-over-year).
The rise in available inventory also remains a recurring trend in February, continuing the pattern observed in January. Active listings have surged by 76 per cent year-over-year, while new listings have increased by 5.4 per cent, expanding buyer options significantly.
Source: TRREB
A market favouring buyers—but many are still holding back
For those looking to buy, conditions haven’t been this favourable in years. With inventory rising and demand slowing, buyers now have more choices, more negotiating power, and less urgency to act quickly. The once cutthroat market has shifted, giving buyers more control:
- Fewer bidding wars: Competition has eased, allowing buyers to make more calculated decisions.
- More negotiating power: Sellers, facing longer listing times, may be more open to price adjustments and conditions.
- Better timing for decision-making: With homes sitting on the market longer, buyers have more time to evaluate options.
Despite these advantages, many buyers remain hesitant, held back by high mortgage rates and…
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