As we step into 2025, the Toronto housing market is set to gradually recover after a challenging 2024. High interest rates shaped last year, but recent rate cuts and growing economic optimism are paving the way for a steadier, more active market. This quarterly update focuses on current market conditions, with a spotlight on the condo market – a key choice for first-time buyers and investors alike.
2024 in Review
The Toronto Regional Real Estate Board (TRREB) reported that 2024 ended with a 2.6% increase in sales compared to 2023, totaling 67,610 transactions. The standout trend, however, was a 16.4% surge in new listings, giving buyers more options and bargaining power. This shift in supply and demand kept prices steady, with the average selling price edging down by just 0.8% to $1,117,600.
Condos saw the biggest price drops among housing types, largely due to affordability challenges and fewer first-time buyers entering the market. TRREB highlighted that many potential buyers held off, waiting for further interest rate cuts, which hit the lower-priced condo segment the hardest.
Image: TRREB
Interest Rates: A Game-Changer
Borrowing costs were a major factor in the 2024 housing market. High interest rates for most of the year made affordability a challenge. However, the Bank of Canada introduced significant rate cuts in the second half of 2024, helping improve market conditions. More rate cuts are expected in 2025, which could boost buyer confidence and activity. TRREB President Elechia Barry-Sproule said: “Further rate cuts in 2025 and home prices remaining below their historic peaks should result in improved market conditions over the next 12 months.”
Condo Market Outlook: Why 2025 Is the Year to Act
The Toronto condo market remains an affordable and accessible option for homebuyers, especially first-time buyers. RE/MAX notes that condos priced between $450,000 and $750,000 are a popular choice for those entering the market.
While condo prices dipped in 2024, this creates a great opportunity for buyers in 2025. With borrowing costs coming down and prices still below their peak, condos offer strong value for those looking to invest in Toronto real estate. Plus, the higher inventory from 2024 gives buyers plenty of options to find a home that fits their needs and budget.
What’s Driving the Market in 2025?
Several key factors are driving optimism in Toronto’s housing market this year:
Lower Borrowing Costs: Continued interest rate cuts are reducing mortgage payments, encouraging more buyers and sellers to return to the market.
Steady Price Growth: RE/MAX forecasts a balanced market with a slight 0.1% increase in average home prices and a 12.5% rise in sales.
First-Time Buyers: Increased confidence among first-time buyers, noted by RE/MAX and the Canadian Real Estate Association (CREA), is expected to energize the condo market.
Improved Accessibility: Policies like longer mortgage amortizations and relaxed lending rules are making it easier for more people to achieve homeownership.
Challenges to Watch
Despite a positive outlook, affordability remains a challenge, especially in Toronto’s competitive market. RBC points out that high property values continue to stretch buyers’ budgets, slowing recovery in the condo market. Affordability strains “set an impossibly high bar to clear for many first-time homebuyers. We expect those strains will keep sales recovery gradual and price increases minimal in the year ahead. Toronto and Vancouver – Canada’s most expensive markets – could even see further erosion of condo prices amid rising inventories.” However, these challenges are eased by the availability of more affordable units and improving financial conditions.
Advice for Buyers in 2025
For those considering purchasing a condo in Toronto, now is a great time to start exploring your options. With prices remaining stable and borrowing costs on the decline, buyers have a window of opportunity to secure a property before the market heats up again.
At BAZIS, we specialize in creating thoughtfully designed condominium residences that cater to modern lifestyles in Toronto. Our projects are built with quality, style, and convenience in mind, offering the perfect investment for homebuyers and investors alike.
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