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If I had to summarize the 2025 real estate market in one word, it would be “Adjustment”.
As we close the book on December, the latest report from the Toronto Regional Real Estate Board (TRREB) confirms what many of us felt on the ground: the market has shifted. It was a year that tested the patience of sellers and offered a long-awaited window of opportunity for buyers.
Let’s look at the honest numbers, the challenges we faced, and why—despite the headwinds—I see strong reasons for optimism as we head into 2026.
The Hard Truth: A Year of Cooling
We cannot sugarcoat the data. 2025 was a challenging year for volume.
- Sales Activity: Total home sales for the year dropped by 11.2% compared to 2024. In December alone, transactions were down 8.9% year-over-year.
- Price Adjustment: The average selling price in the GTA dipped to $1,067,968 for the year, a 4.7% decrease. By December, the average price hovered just above the $1 million mark ($1,006,735)
- Inventory Pressure: Active listings surged by 17.5% in December. For sellers, this meant more competition and longer wait times (Average Days on Market rose to 41 days).
What does this mean? It means the “frenzy” is gone. Economic uncertainty and consumer confidence weighed heavily on the market. Buyers pressed pause, waiting for clarity, while inventory accumulated.
The Silver Lining: Why the Door is Open
However, a cooling market is not a “bad” market—it is a balanced one. The challenges of 2025 have created the specific conditions for a recovery.
1. Affordability is Returning The combination of softening home prices and negotiating power has improved affordability in a way we haven’t seen in years. The downward pressure on prices allowed savvy buyers to negotiate aggressive deals that wouldn’t have been possible 12 months ago.
2. The Macro Picture is Stabilizing Real estate doesn’t exist in a vacuum. The economic indicators are turning in our favor:
- Inflation is Tamed: Inflation dropped to 2.2% in October 2025, back within the target range.
- Rates are Friendly: The Bank of Canada Overnight Rate sat at 2.3% in November, with the Prime Rate down to 4.5%. This is a massive improvement for mortgage holders compared to the peaks of previous years.
3. Pent-Up Demand The demand for housing in the GTA hasn’t disappeared; it has merely been delayed. As TRREB President Daniel Steinfeld noted, once consumers feel that the economy is on solid footing, sales will increase as “pent-up demand is satisfied”. We are already seeing unemployment trending down (8.7%), which rebuilds that essential confidence.
Looking Ahead to 2026
The market has reset. We are entering 2026 with a healthier baseline.
For Sellers: Patience and presentation are key. With inventory high, your property must stand out and be priced sharply to compete.
For Buyers: This is your moment. You have the luxury of choice and the leverage of negotiation—two things that rarely exist in the Toronto market for long.
The bottom of the market is often only visible in the rearview mirror. With interest rates stabilizing and affordability improving, the window to act before the next cycle begins may be narrower than we think.
Let’s navigate this new landscape together.
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