The Toronto real estate market was an absolutely wild ride in 2025!
Very little of what was expected to happen actually happened, which means that predicting what could, would, or should take place in 2026 will be that much more difficult.
We’ve always felt that in order to anticipate the future with any degree of accuracy, one should look back on what’s taken place prior.
So with a window to 2026, let’s see what happened in 2025 and how this can affect what’s in store for the year ahead!
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Interest Rates.
Long-gone are the days of a policy interest rate of 0.25% from the Bank of Canada, which ended on March 3rd, 2022, when the Bank of Canada increased the policy rate to 0.50%.
By July 13th, 2023, that policy rate had increased to a whopping 5.00%.
But only eleven months later, a period of easing began, with the bank of Canada cutting the policy rate nine times between June of 2024 and October of 2025, taking the rate all the way down to 2.25%.
The first interest rate policy announcement is scheduled for January 28th, 2026, and we expect the Bank of Canada to hold their policy rate.
In fact, we expect the 2.25% rate to be held until the end of 2026.
If we did see a change, it would be only 25 basis points, so not enough to really move the needle on either affordability or home prices.
The moves have already been made, and thus we don’t believe that buyers are going to “wait” on the sidelines anymore. This has implications for all of our other 2026 predictions as well. Listen to our latest podcast episode for more on our forecasts for the year.
Questions about interest rates? Here are a few more posts you might find interesting:
- Are Interest Rates Actually Important When Buying a House?
- Are There Benefits to Refinancing Your Home?
- Fixed Rate Vs. Variable Rate Mortgage
Property sales.
After seeing a record 122,133 sales in Toronto in 2021, that number declined significantly to 75,652 in 2022, which was the fewest we had seen since 2002.
But that figure declined even further in 2023 when a mere 66,315 properties traded hands.
There was a slight uptick in 2024 to 67,984 sales, and coming into 2025, there was reason for optimism. The Bank of Canada was cutting interest rates, affordability was being resorted, and getting a federal election “out of the way” would alleviate concern in the buyer pool. But whether it was the strained relationship between the USA and Canada and/or the rhetoric coming from the White House, real estate buyers did not jump back into the market as expected.
Toronto is on pace to produce only 63,000 sales in 2025, which would result in a new all-time low.
There are two ways to look at this, with a window to the future:
- The ‘trend’ is declining, and we’ll see fewer than 63,000 sales in 2026.
- The trough in the market is behind us, and it’s only up from here.
We believe the latter is true, and now that the Bank of Canada has dramatically cut interest rates and massively increased borrowing power, we believe that Toronto will see over 75,000 sales in 2026.
Historically-speaking, 75,000 sales would still rank as the fifth-lowest this millennium, but it would signal a shift from a market of declining sales to one that’s on the ascent.
In 2025, homes stayed on the market for longer. Find out if it’s a good idea to buy a home that’s been on the market for a long time.
Home prices.
In response to the COVID-19 pandemic and the potential economic destruction that it could cause, the federal government slashed interest rates to 0.25%, and that, combined with a desired change in lifestyle and personal circumstances among the population, led to a massive buying spree in the real estate market.
We already covered how a record 122,133 sales took place in 2021, but it’s worth noting that the average GTA home price increased from $839,363 in January of 2020, before the pandemic, to a record-high of $1,334,554 by February of 2022.
That figure stands as the peak, and the market has declined ever since.
The monthly high in 2023 was $1,196,101 in May.
The monthly high in 2024 was $1,165,691, also in May.
And the monthly high in 2025 was $1,101,879, in, you guessed it – May.
These numbers show a market that’s clearly on the decline, and the latest data from November of 2025 shows an average home price of $1,054,372.
We believe that in 2026, the market will turn around. Lower interest rates, greater borrowing power, increased consumer confidence, and a period of four years having elapsed since the “peak” in early-2022 will result in more sales, which will drive prices higher.
An important distinction will need to be made in 2026, however.
We expect the freehold market to significantly outpace the condominium market, and we expect the 416 to significantly outpace the 905.
Learn more about pricing with these posts next:
- How to Price Your Home to Sell
- Should I Price My Home Below Market Value?
- Negative Equity in Real estate: What Sellers Need to Know
Condo market.
No segment of the GTA real estate market was hit as hard as the condominium market in 2025, and unfortunately, we expect this to continue in 2026.
But first, and important distinction must be made between two very different types of condos:
- Pre-construction condos.
- Resale condos.
Here at Toronto Realty Group, we have never advised the purchase of a pre-construction condo, let alone sold one.
Here is a lengthy breakdown of what happened in Toronto’s pre-construction condo market, as posted on Toronto Realty Blog: “The House Of Cards That Was Always Going To Fold”
In 2025, the media routinely ran headlines about “the condo market” but failed to distinguish between presale and resale.
The presale market has completely imploded, evidenced by this statistic from Urbanation:
“New condominium apartment sales in the Greater Toronto Hamilton Area (GTHA) totaled 319 units in Q3-2025, the lowest quarterly total since Q3-1990. Sales were down 54% from a year ago and fell 92% below the latest 10-year average for Q3 periods.”
The “house of cards” blog post above explains how and why we got to this point, with pre-construction condos, rather bizarrely, selling for 40-50% premiums over that of resale by 2021.
Suffice it to say, it’s near impossible for developers to sell pre-construction condos in 2025, and that will continue in 2026.
Read more about condos in Toronto with these posts next:
- How to Rent Out Your Condo
- Can You Sell a Condo with a Special Assessment?
- What is the Purpose of a Condo Association
But what about the resale market?
As bad as the headlines, sentiments, and consumer confidence is, it might surprise people to know that the average condo price has “only” declined by 14.7% since the peak. That’s from $822,090 in February of 2022 to $701,259 in November of 2025.
That’s a period of 45-months.
But what if we drew a line back by the same time period from the peak in February of 2022? What would the increase look like from then?
The average 416 condo price in June of 2018 (ie. 45 months before the peak) was $605,530, which means prices increased by 35.8% in that time period.
So a 14.7% decline in the same period of time actually means that the market is holding together quite well.
We feel that 2026 is going be another underperforming year in the resale condo market in the GTA, with prices remaining flat, at best, and declining another 2-3%, at worst.
However, with virtually zero completions in the forecast as a result of non-existing pre-construction sales, there’s an argument to be made that we see a massive deficit in condos in 2030 and beyond.
Learn more about buying a resale condo vs. a new construction condo in Toronto.
Inflation, unemployment, GDP.
Many people are tired of reading about these three economic metrics, and it’s reasonable to assume that people interested in real estate predictions are wondering why they have to go back to Grade-12 economics for a moment!
Well, these three metrics are going to determine what happens with interest rate policy, as well as how the economy is going to take shape in 2026, and both of those things will affect home sales and prices.
After the COVID-19 pandemic, inflation in Canada soared to a high of 8.1% in June of 2022, which led to the Bank of Canada increasing interest rates from a low of 0.25% to a high of 5.00%.
Inflation has been coming down steadily ever since, dropping below 4% in 2023, then below 3% in 2024, and finally below 2% in April of 2025.
While inflation has ticked up to 2.4% in September and 2.2% in each of October and November, if the inflation numbers hold steady around the 2% mark in 2026, it will mean there’s no realistic chance of seeing an increase in interest rates. If the inflation rate drops to 1.7% like was in April and
May, and remains there, it means we could see an interest rate decrease to come.
Canadian unemployment hit a high of 9.2% in January of 2021, but was reduced to 5.0% by the end of 2022. Unfortunately, unemployment has been increasing steadily since then, and worked its way back up to 7.1% in August and September of 2025.
An unexpected decline to 6.5% in November was a good sign, but if we see unemployment remain near 7% in 2026, that too could increase the chance of an interest rate cut, which would, of course, add more fuel to the fire in the real estate market.
As for Gross Domestic Product (GDP), there’s a saying, “Three straight quarters of declining GDP means you’re in a recession.” Canada’s GDP declined in 2025 Q1 and 2025 Q2, but increased in Q3, meaning that, theoretically, the country has avoided the “recession” tag.
In a recession, interest rates are typically cut, which would, again, lead to an increase in affordability in the real estate market.
Inflation, unemployment, and GDP are all worth keeping an eye on as we move into 2026.
Final thoughts.
Say what you want about the 2025 real estate market, but it was anything but boring.
Market participants, including buyers, sellers, agents, mortgage brokers, and home inspectors, were constantly on their toes!
2026 is going to be a similar experience, and it simply means that market participants need to be more diligent and vigilant than ever.
So if you’re trying to look forward to 2026 to predict what lays ahead, make sure you get completely familiar with all that took place in 2025 to prepare you.
If you’re planning a purchase or a sale in 2026, Toronto Realty Group would be happy to help! Get in touch with us today by filling out the form on this page, calling us at 416.642.2660, or emailing us at admin@torontorealtygroup.com.
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