Victor Alvarez - Toronto Real Estate Expert

2025 TORONTO CONDO MARKET FORECAST

FOREWORD

The resale condo market continues to struggle due to inventory surplus and subdued demand, as buyers and sellers remain on the sidelines. Condominiums with the right pricing and timing strategy are selling. It will take time for the surplus inventory to get absorbed, until then, buyers – especially first-time home buyers will continue to benefit from ample choices and negotiating power.

Prices might soften further, if not, price growth will be modest in 2025, but delaying your sale could cost you. To stand out in a competitive market, the right pricing strategy and timing are critical to securing the best deal.

The condo market is expected to rebound at varying timelines in 2025, nonetheless; people are concerned about the cost of food, shelter, transportation and the softening of the job market, they are also concerned about the new leadership coming up south of the border with unpredictable trade, and immigration policies, the federal elections coming up this year at home, and the global conflicts, that could potentially cause “ripple effects” in the Toronto, GTA, and Canadian housing market.

For the right pricing strategy and timing, call 647-223-0562 or email at victor.alvarez@bell.net.

THE TORONTO REAL ESTATE MARKET IN 2024

The Toronto real estate market in 2024 was significantly influenced by high borrowing costs, which remained a substantial hurdle, stifling affordability and keeping many potential buyers—especially first-time buyers—out of the market. Despite this, a year-over-year increase of 16.4% in new listings provided buyers with greater choice, effectively preventing price growth across all segments.

Although activity throughout the year was modest, a shift in buyer sentiment emerged late in the year, following back-to-back 50-basis-point interest rate cuts. These reductions slightly improved market conditions.

As a result, the Greater Toronto Area recorded 67,610 home sales in 2024, representing only a 2.6% increase from the previous year, and sales remained well below historical norms. Among market segments, single-family homes, including detached and semi-detached properties, performed better, with values stabilizing. In contrast, high-rise condo apartments experienced more pronounced price declines, and pre-construction starts and sales stalled significantly in 2024.

Toronto Real Estate Market Report -Year Review 2024

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Toronto Real Estate Market Report -Year in Review 2024

2025 FORECAST

Market segments are expected to rebound at varying timelines in 2025. Policy changes, such as extended amortization periods and allowing buyers to finance properties up to $1.5 million with less than 20% down, combined with anticipated further declines in interest rates, will continue to improve buyer sentiment and stimulate market activity

Low-Rise and Single-Family Homes

Sales of low-rise, single-family homes, including detached and semi-detached properties, are expected to see the most activity and price growth in 2025. While some forecasts predict relatively flat home prices, we believe values in this segment will rise significantly, potentially pricing out buyers sooner than anticipated. Buyers will likely realize that their window of opportunity within the freehold and low-rise market is narrowing rapidly.

Condo Market

The resale condo market, which faced significant challenges in 2024 due to high investor ownership, is poised to benefit. Higher inventory levels will begin to be absorbed by first-time buyers who can no longer afford low-rise homes. As a result, condo sales are expected to outpace new listings throughout the year.

Pre-Construction Segment

The pre-construction market will take more time to recover. Currently, the cost of acquiring pre-construction units far exceeds the resale market, and builders are unable to lower prices due to high construction costs. Developers will likely focus on selling off existing inventory before launching new projects. The best opportunities in 2025 may lie in the assignment market, where original buyers unable to close may sell units below current market values. However, as interest rates continue to decline, this opportunity may not last long.

RENTAL MARKET IN 2025

Relief for renters may be on the horizon, albeit at the expense of future real estate supply. High construction costs and municipal development fees have led many developers to shift planned condo projects toward purpose-built rentals. Over 70% of planned condo developments are now being reallocated to rental properties.

Inventory in the rental market will remain elevated at 1.5-2 months of supply, compared to the 10-year average of 0.9 months. This will continue to provide renters with more options and force some landlords to adjust rental rates to stay competitive and even keep current tenants.