As we step into a new year, many are eager to know what lies ahead for the Toronto real estate market in 2025. Will the market rebound and prices start to climb again, are we going to see the cost of homes remain relatively stable, or will prices decline and present new opportunities to buyers?
While the future is never entirely predictable, many economists are forecasting a generally positive year for the real estate sector. There could be good reasons for that, as becomes apparent when we start to look at the numbers.
The Greater Toronto Area (GTA) real estate market showed strong momentum in November 2024, setting the stage for what could be a pivotal year in 2025 and perhaps giving an indication of what we can expect for Toronto Real Estate market in 2025. Home sales last month surged by 40% compared to the same month last year. That is mostly thanks to lower borrowing costs following recent interest rate cuts that made homes more affordable for many buyers.
Another factor that could cause upward pressure on house prices is a tightening of supply. While the number of new listings in the Greater Toronto Area also increased in November, the growth in listings lagged behind the rise in home sales. The result of this is that supply has been reduced; tightening the market and perhaps causing prices to drive upward if the trend continues over the coming months.
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Key GTA Real Estate Statistics from November 2024:
- Sales: 5,875 homes sold (up from 4,194 in November 2023).
- New Listings: 11,592 (6.6% year-over-year increase).
- Average Price: $1,106,050 (2.6% higher than last year).
Trends to Watch for the Toronto real estate market in 2025:
- Borrowing Costs: The Bank of Canada has provided relief to home buyers with interest rate cuts in 2024. The lower mortgage rates as a result of those cuts are expected to encourage more renters to transition into home-ownership, potentially easing competition in the rental market.
- Detached Homes: Average prices for detached properties grew significantly, particularly within Toronto. This reflects continued demand in this segment and we expect this demand to grow further in 2025 as lower borrowing costs allow people to buy more expensive properties.
- Condos: In November 2024, condo prices decreased by 2.5% compared to November of 2023, giving buyers more leverage in negotiations. The drop in prices combined with increased borrowing power could lead to a surge in first-time buyers looking to invest in condos.
- Rental market: The demand for rentals in the Greater Toronto Area remains robust. As renters move into home-ownership, rising population growth is likely to sustain high demand for rentals. The Toronto Regional Real Estate Board (TRREB) has recommended reforms to the Landlord and Tenant Board to improve access to affordable housing, but for now the demand is likely to cause a rise in prices.
What to Expect for the Toronto Real Estate Market in 2025
The Canadian Real Estate Association (CREA) anticipates significant developments in 2025 as inflation continues to decrease, borrowing costs remain low, and the economy stabilizes. These factors are expected to drive further recovery and balance the market.
For buyers, reduced mortgage rates combined with stabilizing home prices could boost affordability and purchasing power, especially following years of market volatility. For sellers, while price growth may moderate, higher demand could lead to quicker, smoother transactions.
Still, regional differences in market performance and potential economic shifts could influence outcomes, so adaptability will be key. Overall, 2025 is shaping up to be a more predictable and favorable year for the Toronto real estate market, offering opportunities for both buyers and sellers.
As we look ahead, the Toronto real estate market in 2025 promises a mix of opportunities and challenges for buyers, sellers, and renters alike. With stabilizing economic conditions, low borrowing costs, and a steadily growing population, the market is poised for continued recovery and growth. Staying informed and prepared will be key to making the most of this evolving landscape.
