Metro Toronto
Real Estate Trends and Price Forecast

HIGHLIGHTS

• Metro Toronto home values have been volatile since 2021, and are now trending downward.

• While industry experts saw signs of improvement in late 2024, conditions have since deteriorated.

• Multi-factor analysis identifies Metro Toronto as a moderate-risk real estate market.

• Mortgage rates have eased from their peak, but remain high relative to the 2010–2020 average, limiting buyer budgets.

• Economic uncertainty is rising due to Canada's recent migration policy shift and the Trump administration's tariffs, which could further weigh on the market.

This report covers:

1. What is the state of the Toronto property market?

2. Where are prices headed?

3. Should investors sell?

4. Is this a good time to buy?

1. What is the state of the Toronto housing market

Home Price Overview

Metro Toronto has a population of roughly 7.1 million and was ranked 15 of the best 100 cities in the world.

Toronto is an attractive city to live in for many reasons, including:

• Cultural diversity: Toronto is one of the most multicultural cities in the world, with people from all over the globe calling it home. This makes for a vibrant and exciting city with a wide variety of cultures, languages, and cuisines to experience.  

• Economic opportunities: Toronto is a major economic hub, with a strong job market in a variety of industries. This makes it an attractive place for people looking to advance their careers.  

• High quality of life: Toronto consistently ranks as one of the most livable cities in the world. It is a safe and clean city with a high standard of living.

• Things to do: Toronto has a lot to offer in terms of entertainment and recreation. There are world-class museums, art galleries, and theaters, as well as a wide variety of restaurants, bars, and nightclubs. There are also many parks and green spaces to enjoy.  

• Education: Toronto is home to several world-renowned universities and colleges, making it a great place to pursue higher education.  

• Transportation: Toronto has a good public transportation system, making it easy to get around the city.  

Overall, Toronto is a great place for people of all ages and backgrounds to live. It offers a high quality of life, a vibrant culture, and a strong economy.

The Toronto real estate market is experiencing a dynamic shift with a long-term trend toward higher supply.

GTA Detached House Prices

The detached house market is currently balanced, with buyers and sellers holding equal negotiating power, though conditions are trending in buyers' favour. Inventory levels have improved from the previous year, with months of inventory increasing moderately. Purchase demand has risen over the past year, but supply of active listings has grown at a faster pace.

Since the peak in Spring 2022, detached house prices have dropped significantly and plateaued. Both benchmark and median detached house prices have declined modestly over the past three months, continuing the trend in favour of buyers.

We believe politicians hope to guide the market toward a typical annual real estate cycle with price growth of 1% to 3% annually— in line with income growth.

Demand (purchases) in the GTA is low. Many people want to buy a home, but affordability is so poor that would-be buyers have been sidelined.

New homebuyers can't afford to get onto the first rung of the homeownership ladder, and high rates prevent existing owners from taking the next step. Fewer households that want to upgrade to a larger home can qualify for a new mortgage at the current rates.

The low supply of active listings mainly fueled price rises, but today, listings are running higher than they have been in the past three years.

Metro Toronto New Construction Home Prices

The prices of new homes have been declining, which means that some homebuyers who locked in pre-sale contracts after 2021 may end up paying significantly more than recent buyers in the same development. Economic fundamentals suggest that these prices will likely continue to fall.

Pre-sales have also decreased notably, with apartment sales experiencing the most significant decline.

While it may seem possible to negotiate price concessions with developers in this market, it's important to note that they often resist straightforward price reductions. Instead, developers typically try to redirect buyers' attention to aspects such as the project's location, the benefit of smaller deposits, amenities, and overall quality. If any concessions are available, developers are more likely to offer extras first, such as an additional parking spot or storage locker, or upgrades to premium fixtures, before considering a lower sale price.

Does this concern you? Read the Pros and Cons of Buying Pre-sale Homes

Market Risks

Based on Mortgage Sandbox Analysis, Toronto is at moderate risk of a significant market correction. Here are some key considerations.

1. Market Balance: The market is balanced, and the number of months of inventory is consistent with last year.

2. Price Volatility: Prices have experienced high volatility and appear disconnected from local income levels, indicating a potential bubble risk.

3. Construction Levels: Construction activity aligns with recent years, suggesting that the market can likely absorb the current pipeline of completed units without significantly impacting prices.

4. Buyer Pool: Toronto is a large property market with a substantial number of potential buyers. Sellers should still be able to find interested buyers even in a slow market.

5. Interest Rates: Interest rates are currently lower, as we are in the easing phase of the interest rate cycle. Falling rates increase property buying budgets and tend to stimulate property markets. It may take up to 18 months for the full effects of this easing to be felt.

Given these trends and economic imbalances, the city is assessed to be at a moderate risk of a market correction.

Metro Toronto Condo Apartment Prices

After breaking records during the pandemic, apartment prices in Metro Toronto are trending downward. The widening gap between the benchmark price and the median indicates that the benchmark has more room to fall.

The condo apartment market is currently a buyer's market, with buyers holding the upper hand in negotiations. However, inventory levels have dropped compared to last year, which somewhat disadvantages buyers. Purchase demand has increased over the past year, though supply of active listings has grown at a slower rate.

Purchases have dropped off dramatically this year compared with the previous three years, while there is a record-breaking inventory level. Typically, these conditions lead to price concessions.

However, buyer interest improved in September, but it’s too early to establish if this is a trend.

A 2023 report by CIBC and Urbanation “found that, on average, condo investors that closed on their newly completed units in 2023 experienced negative cash flow to the tune of $597 per month.”

Buyer activity in the condominium apartment market has decreased, and it has also shifted toward lower-priced units. That means larger floor plans and luxury condos are sitting on the market for longer and likely are not seeing bidding wars.

With more people working from home, we expect developers will begin marketing larger (i.e., 2 and 3 bedrooms) apartments to meet buyer preferences. As the supply of more generous floor plans comes to the market, it may depress the values for small floor plan condos.

At Mortgage Sandbox, we would like developers to build 4 and 5 bedroom condos because:

• Not everyone can afford to buy a house for their family.

• Canadians who work from home need more room to segregate workspace from living space.

• Many Canadians with longer working hours find it challenging to stay on top of necessary house upkeep (i.e., mowing lawns, clearing eaves, shovelling sidewalks).

• Many people prefer to live in higher-density neighbourhoods with all the essential amenities within walking distance.

Metro Toronto Townhouse Prices

Still a challenge for first-time homebuyers

Toronto home prices are not affordable.

A first-time homebuyer household earning $97,000 (the median Metro Toronto household before-tax income) can only get a $345,000 mortgage. If they were to save a $85,000 down payment, they would only be able to buy a home valued at $430,000. The Median condo apartment price is over $600,000, so for them to buy a typical condo apartment, a household needs an inheritance or a very generous gift from family. For most people, that is not possible.

What about the rest of Canada?

Read the Ottawa Forecast, Montreal Forecast, Hamilton Forecast, and the Vancouver Forecast.

2. Where are Metro Toronto prices headed?

There is a lot of uncertainty in the forecasts for looking out toward 2027. Many of the forecasters we've surveyed have different expectations for:

• Will the federal government’s recent migration policy pivot lead to a shrinking population?

• Will mortgage rates drop to the 2 to 3 percent range that Canadians have grown used to?

• Will Canada’s trade wars with China and the United States lead to a recession?

How do we arrive at our forecast range? Check out our full assessment of the five factors that drive these forecasts. These five forces help explain why several forecasters are anticipating price drops.

At Mortgage Sandbox, we provide a price range rather than attempting a single prediction because many real estate risks can impact prices. Risks are events that may or may not happen. As a result, we review various forecasts from leading lenders and real estate firms. We then present the most optimistic estimates, the most pessimistic prediction, and the average forecast.

Would you like to learn more about real estate risk? We've written a comprehensive report explaining the uncertainty level in the Canadian real estate market.

Our forecast inputs:

• CMHC Housing Outlook

• Fitch Ratings Global Housing Forecast

• Reuters Housing Forecast Poll

• Royal LePage House Price Forecast

• RE/MAX Housing Market Outlook

• Canadian Real Estate Association Quarterly Forecast

• RBC Home Resale and Price Forecast

• TD Bank Economic Housing Outlook

• BMO Housing Outlook

• C1 Central 1 Ontario Outlook

3. Is this a good time to sell a Toronto property?

From a seller’s perspective, more changes in the market influence prices downward, so this year may be a better time to sell than in two years.

The annual real estate cycle usually favours sellers in the first half of the year.

Sellers should always consult a mortgage broker early to prioritize flexible loan conditions and reduce the risk of mortgage cancellation penalties. Find out more about the benefits of a mortgage broker.

Planning to Sell? Check out our Complete Home Seller’s Guide.

4. Is this a good time to buy Toronto real estate?

Prices have been falling, and supply is high, so prices could fall further. Mortgage rates are relatively high and falling. Also, the annual real estate cycle usually favours buyers in late summer and autumn.

These factors would lead buyers to conclude that later in 2025 or 2026 will be a better time to buy than now.

It's almost impossible to time the market perfectly. However, if you are buying your forever home and don't plan to sell for ten years, the risks of buying now are lower than a year ago.

If you are considering buying, be sure to drive a hard bargain and pay as close to market value as possible. Also, don't bite off more than you can chew when it comes to financing.

Planning to Buy? Check out our Complete Home Buyer’s Guide so we can walk you through the end-to-end process and get you ready to buy your new home!

Here are some recent headlines you might be interested in:

• No more rate cuts, says RBC, but others believe BoC will decide to resume (Wealth Professional | Aug 11)

  Financial market has Bank of Canada policy rate at 2.25% by year-end, survey finds (Financial Post | Aug 11)

• ‘We just got lucky’: How some GTA homebuyers are finding space in a changing market (CTV News | Aug 09)

• Greater Toronto housing market sees best July in four years: real estate board (CP24 | Aug 06)

• Is Toronto’s real estate market crashing? Home prices will keep dropping, experts say — but it won’t feel like any crash we’ve had before (The Toronto Star | Jul 28)

• Economists see slimmer chance of interest rate cuts in Canada this year (Financial Post | Jul 21)

• Here’s why the Bank of Canada could be done cutting interest rates for now (Global News | Jul 19)

• Posthaste: Did the Bank of Canada cut rates too much and too fast? (Financial Post | Jul 18)

• Montreal housing market slows — but still outpaces Toronto and Vancouver (MSN | Jul 15)

• Home sales up in June, though fewer sales expected this year, says Canadian Real Estate Assoc. (CBC | Jul 15)

• I don't think we are bouncing back': Struggling Toronto housing market could remain fragile through 2025, realtors say (Financial Post | Jul 15)

• Canadian buyers are losing interest in US housing, Redfin data shows (MSN | Jul 05)

• We must lower the cost of building homes,' says mayor as Toronto releases designs for garden, laneway suites (CBC | Jul 04)

• Real estate expert says it’s a ‘great time of entry’ for homebuyers in the GTA (BNN Bloomberg | Jul 04)

• ‘Signs of recovery’: Toronto-area home prices drop more than 5 per cent since last June (CP24 | Jul 04)

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