Shrinking Toronto Supply Begins To Move Needle in Favour of Sellers

Inventory has tightened across detached homes, condos and townhouses, even as benchmark prices sit below year-ago levels.

The Market at a Glance

Toronto's housing market is moving in sellers' favour across every property type this quarter, even though prices remain below where they stood a year ago. Tightening inventory is the common thread: supply has pulled back faster than demand has cooled, handing sellers more leverage at the negotiating table than they held twelve months earlier.

Detached Houses: A Seller's Market Returns

The detached segment has firmly tipped back to sellers. Months of inventory fell to 3.8 from 4.6 a year earlier, a 17 per cent drop that pushes the market below the four-month threshold that typically separates balanced conditions from a seller's advantage. Purchase demand climbed 8 per cent while active listings fell 11 per cent, a squeeze that leaves buyers with fewer options and less room to bargain.

Prices tell a more nuanced story. The benchmark detached home now sits at $1,239,300, up 1 per cent over the past three months, and the median sale reached $1,185,000, up 3 per cent over the same stretch. Both figures, however, remain below their year-ago levels. The benchmark has slipped 6 per cent from $1,322,400, a reminder that the recent firming follows a sharper annual decline.

Condo Apartments: Balanced, but Tilting

The condo market remains balanced, with buyers and sellers on roughly equal footing, though momentum is shifting toward sellers. Months of inventory dropped to 5.7 from 7.1, a 20 per cent decline and the steepest pullback of any segment. Demand rose 4 per cent while active listings fell 17 per cent.

Prices have been softest here. The benchmark condo stands at $539,400, down 1 per cent over the past three months, while the median held flat at $548,900. Year over year, the benchmark is off 9 per cent from $593,200. For buyers priced out of the detached market, condos remain the most accessible entry point, at 5.6 times the local median household income.

Townhouses: Holding Steady

Townhouses also sit in balanced territory while leaning toward sellers. Months of inventory eased to 5.0 from 5.6, an 11 per cent decline. Demand advanced 7 per cent against a 6 per cent drop in active listings.

Prices have flatlined in the near term. The benchmark townhouse is unchanged at $687,300 over the past three months, while the median ticked up 1 per cent to $677,000. The annual picture mirrors the condo segment, with the benchmark down 9 per cent from $755,500.

The Risk Picture

Toronto's sheer size works in sellers' favour. A deep buyer pool means even a slow market tends to find takers, cushioning the downside for anyone listing a home.

Interest rates remain low and the central bank has paused, a backdrop that lifts buyer budgets and supports demand. Rates are unlikely to rise until policymakers are confident the conditions that prompted the cuts have passed, and the full effect of any future tightening can take up to 18 months to filter through.

The clearest warning sign is in the detached segment. At 12.8 times the local median household income, benchmark detached prices are deeply disconnected from what residents earn, well beyond the four-to-six-times range generally considered sustainable. That gap points to bubble risk, even as near-term prices firm. Condos, by contrast, look far more grounded at 5.6 times income. New construction across all segments sits at typical levels, which means the market should absorb completed units without weighing on prices.

The Bottom Line

The story this quarter is supply, not demand. Listings have retreated faster than buyers have, pushing every Toronto segment toward sellers even as benchmark prices remain below year-ago levels. Detached owners hold the strongest hand, though the stretched relationship between prices and incomes is a caution that long-run affordability remains the market's underlying problem. Buyers may find better value in condos, where prices are softest and affordability is closest to sustainable ground.