TRREB February 2025 Market Review
The Greater Toronto Area (GTA) real estate market continued its trajectory of high inventory and tempered buyer activity in February 2025. While buyers had ample negotiating power due to rising listings, affordability challenges and economic uncertainty kept many on the sidelines.
Market Performance in January 2025
GTA REALTORS® reported 4,037 home sales through TRREB’s MLS® System in February 2025, marking a 27.4% decline compared to February 2024. In contrast, new listings totaled 12,066, reflecting a 5.4% increase year-over-year. The market remains well-supplied, but lower transaction volumes signal a cautious buyer sentiment.
Affordability remains a key concern, as high mortgage rates continue to impact the purchasing power of many households. However, with interest rate cuts expected later in the year, market conditions could shift, making home ownership more accessible for a broader range of buyers.
Real Estate Market Activity
With demand cooling, home prices saw modest declines compared to last year. The MLS® Home Price Index Composite Benchmark fell 1.8% year-over-year, while the average selling price for all home types sat at $1,084,547, reflecting a 2.2% dip from February 2024.
On a month-over-month basis, both the MLS® HPI Composite and the average price edged lower after seasonal adjustments. However, despite price softening, some market segments continued to show resilience.
Detached and semi-detached homes in suburban areas maintained steady demand, supported by families prioritizing larger living spaces. Conversely, the condominium market remains under pressure, with buyers hesitant due to interest rate volatility and economic uncertainty. Condo prices have adjusted downward, creating opportunities for investors and entry-level buyers looking for long-term value.
Economic Factors and Policy Considerations: The Uncertainty Factor
Beyond mortgage rates, broader economic factors are influencing buyer behavior.
“On top of affordability concerns, home buyers are displaying more caution due to economic uncertainty,” said TRREB Chief Market Analyst Jason Mercer. “The evolving trade relationship with the United States has likely prompted some households to take a 'wait and see' approach. If trade tensions ease and borrowing costs decline as expected, we could see stronger sales activity in the second half of 2025.”
Additionally, recent political changes, including the Ontario provincial election and ongoing shifts in federal policy, are shaping the housing landscape. TRREB CEO John DiMichele emphasized the need for clarity from policymakers. “Existing and prospective government leaders must articulate their plans on housing supply, affordability, and economic stability. Clear direction will help restore consumer confidence and support a healthier housing market,” he noted.
Strategic Considerations for Buyers and Investors
Market Segments: Detached Homes Hold Steady, Condos Face Pressure
Detached and Semi-Detached Homes: The demand for ground-oriented housing remains stable, especially in suburban and urban communities where space is a priority. However, sellers in this segment are facing more competition, leading to increased price flexibility.
Condominiums: Buyer hesitation persists, contributing to slower sales and more negotiable pricing. For investors, this creates an attractive entry point, especially with expected rental market resilience.
Townhouses: Offering a middle ground between detached homes and condos, townhouses continue to appeal to families looking for affordability without sacrificing space. The segment has seen moderate price adjustments but remains a viable option for buyers who are ready to enter the market.
Interest Rate Outlook and Investment Considerations
A potential shift in Bank of Canada policy remains one of the most crucial factors shaping the market outlook. Many industry experts anticipate rate cuts later in 2025, which could fuel increased demand, particularly among first-time buyers who have been waiting for affordability to improve.
For investors, current market conditions present a strategic opportunity. With lower competition in certain segments, there is greater negotiating power when acquiring properties. Rental demand remains stable, driven by continued population growth and the limited supply of affordable housing options.
Looking Ahead
The GTA real estate market is in a transitional phase. While buyers currently hold leverage due to increased inventory and price flexibility, economic conditions and policy decisions will ultimately shape market momentum for the rest of the year.
For buyers, the current climate presents an opportunity to enter the market before competition heats up. For sellers, realistic pricing and strategic positioning are key in attracting serious buyers. Investors, meanwhile, can capitalize on negotiable pricing in select segments, particularly condominiums, while keeping an eye on rental market performance.
With affordability pressures, shifting buyer confidence, and upcoming interest rate adjustments, staying informed and proactive will be essential in 2025. As Toronto’s real estate market navigates this period of change, strategic decision-making will be key for buyers, sellers, and investors alike.
Source: TRREB Market Watch