Toronto Real Estate: Rising Prices, Tight Competition, and Market Hesitations

Sales Are Expected to Climb in 2025

The Toronto Regional Real Estate Board predicts home sales will jump 12.4% in 2025, hitting 76,000 transactions. The board ties this increase to lower borrowing costs, which should improve affordability.
Average prices are also projected to rise, with the board estimating a 2.6% gain to $1,147,000. Single-family homes will see stronger appreciation, while other segments maylag behind.

Buyer Confidence and Market Uncertainty

A survey from Ipsos found that 28% of respondents plan to buy a home in 2025, while 37% expect to sell. These figures align with last year’s responses, suggesting market attitudes haven’t shifted much despite lower interest rates.
First-time buyers make up 42% of those intending to purchase. Competitive bidding is already heating up, especially in lower-priced homes around $1 million. Higher-tier properties are seeing softer market activity, though interest remains steady.

The Reality of Budget Buying in Toronto

Finding a home under $500,000 in Toronto is nearly impossible. The average selling price is over $1 million, and even condos struggle to stay within that budget. Buyers hoping to enter the market at a lower price point will need to consider smaller units, older buildings, or properties in less central areas.
While competition is fierce across the board, lower borrowing rates may help some buyers. Still, inventories remain tight. Those searching for houses for sale in Toronto under $500,000 will be up against heavy demand, and options will likely be limited to extreme fixer-uppers or distant suburbs.

Market Hesitation Amid Economic Concerns

Economic uncertainty is keeping some potential buyers on the sidelines. The risk of tariffs from the U.S. could strain Canada’s economy, affecting confidence in real estate investments.
Some buyers are taking advantage of hesitation, pushing ahead while others wait. Broker Davelle Morrison argues that buying now could mean securing a better price. She warns that once uncertainty clears, competition will intensify, further driving up costs.

January Sales Drop as Listings Surge

TRREB reported in January that home sales dropped 7.9% year-over-year, with 3,847 transactions across the Greater Toronto Area. Despite lower sales, listing activity soared, increasing by 48.6% to 12,392 new properties.
The city saw 1,386 sales in January, marking a 4.7% decline. The rest of the region saw an even sharper drop at 9.6%, with 2,461 transactions recorded.
While detached houses, condos, and townhouses all experienced year-over-year declines, semi-detached homes were the exception, posting a 2.9% increase in sales. Condos suffered the most, with a 12.1% decline, while detached homes and townhouses followed with drops of 8.4% and 4.2%, respectively.

Interest Rates May Not Be Enough

Lower rates should encourage homebuying, but multiple variables complicate market predictions. Economic uncertainty, rising inventory, and wavering consumer confidence could counteract interest-rate-driven demand. Toronto’s real estate market remains unpredictable, with lower-end competition accelerating while higher price points linger in a state of wait-and-see hesitation.

Posted by Christopher Audette on April 3rd, 2025