March 2025 GTA Monthly Housing Report

Brewing Trade War and Winter Storms Push Buyers to Sidelines

• While February usually marks the start of a seasonal uptrend in sales, the combination of heightened economic uncertainty emanating from a brewing trade war with the U.S. and severe winter storms pushed activity down to one if its lowest levels of the past three decades. However, with sellers also backing off last month, prices held fairly steady with only a mild decrease from a year ago.

• Sales Decline Steepens: Total MLS sales in February dropped 27% from a year ago to 4,037 homes, the lowest February result in over 25 years outside of the Global Financial Crisis in 2009 (4,005). Sales declined annually for the third consecutive month, following an 8% decline in January and 2% decline in December, with activity falling 40% below the 10-year average.

• New Listings Level Out: After a wave of supply entered the market during January, new listings began to level out in February. New listings dipped 3% month-over-month and increased 5% year-over-year, which followed a 49% annual spike in January. New listings were 6% above the 10-year average, while active listings at month-end were 82% above the 10-year average, rising 76% over the past year.

• Market Conditions Favour Buyers: The sales-to-new listings ratio of 33% remained firmly in buyer’s market territory for the second straight month (a balanced market is 40-60%), falling to the lowest February level since at least 1996 and significantly below the 10-year average of 59%. The 4.8 months of supply on the market was 2.5 times higher than the 10-year average of 1.9 months.

• Mild Price Decline: Despite weak market conditions, average selling prices remained resilient, posting a mild 2.2% annual decline in February to $1,084,547, which was a three-month high. Average prices have consistently stayed above $1 million since February 2021. While average prices were 18.7% below the market high in February 2022 ($1.3M), they were 19.2% higher than the average in February 2020 just prior to the onset of COVID-19, maintaining 10-year average growth of 7%.

• Largest Sales Decline for Detached Homes: Detached homes experienced the largest year over-year decline in sales among all housing types in February with a 31% drop. This compared with annual sales decreases of 28% for semis/rows/towns and 22% for condo apartments.

• Detached Inventory Doubles: Active listings for detached homes more than doubled over the past year, increasing 103% to their highest February level since 2019. Semis/rows/towns saw active listings rise 95% annually to their highest level since 2009, while active listings for condo apartments increased 47% from a year ago and by 97% compared to two years ago to reach a record high for a February period.

• More than 6 Months of Supply for Condos: The 6.2 months of supply on the market for condos was nearly double the level from a year ago (3.3 months) and reached its highest February level in at least the past 25 years. Months of supply for detached and semi/row/town homes were nearly three times higher than last year at 4.6 months and 3.6 months, respectively, while remaining at comparatively more balanced levels than condos.

• Prices Fairly Steady Across All Housing Types: There has been minimal overall movement in average selling prices across all housing types during the past two years. Despite having the weakest market conditions, average condo prices decreased only 1.3% year-over-year in February, with a two-year decrease of 2.6%. At an average of $688,055, condo prices were at their lowest February level since 2021, down 14.0% from the market peak in 2022. Average prices for semis/rows/towns decreased 2.5% from a year ago to $968,292, also its lowest February level since 2021, with a drop of 19.3% since 2022. Average detached prices edged up slightly by 0.2% year-over-year to $1,445,879, marking a 19.6% total correction over the past three years.

• Luxury Condo Sales Rise: Luxury condos were the only segment of the GTA housing market to experience an increase in activity over the past year, with an 8% gain in sales priced at $2M plus. However, $2M-plus condos represented only 1% of condo sales with a total of 14 transactions in February (one extra sale from last year). At the same time, condo sales between $1.75-1.99M dropped 50% from a year ago (3 vs 6 sales). In the low-rise home segment, sales fell the most compared to a year ago for $1.5-1.749M (-48%) and $1.75-1.99M (-47%) price ranges, which combined for an 11% share of sales and are above the new price limit of $1.5M for allowable down payments of less than 20%.

• Market Conditions Stronger in 416 than 905: Across all housing types, market conditions were stronger in the City of Toronto (416 Region) than the surrounding areas of the GTA (905 Region). In the detached market, average prices in the 416 rose 8% annually, compared to a 3% decline in the 905 Region, with 4.2 months of supply in the 416 vs. 4.7 months in the 905. Similarly, average prices for semis/rows/towns were up 1% from a year ago in the 416 while falling 5% in the 905, with 3.5 vs 3.7 months of supply.  For condo apartments, sales held up better in the 416 than the 905 over the past year (-18% vs. -30%), with average prices stable in the 416 (compared to a 5% decline in the 905) and 6.0 months of supply (vs. 6.6 months in the 905). The highest levels of supply for condo apartments were in Halton Region (9.7 months) and Peel Region (7.6 months).

Key Takeaways

• The February results provide an important reminder of how much buyer confidence impacts housing market activity. Although the economy performed better than expected during the last few months of 2024, and interest rates have continued to move lower, the uncertain outlook caused by a quickly evolving trade war with the U.S. has undermined the positive traction the housing market was gaining during the fall.

• While the situation is changing day-to-day, the 25% tariffs on Canadian goods threatened by the U.S. is expected to result in a similar retaliatory tariff on U.S. imports, causing severe economic damage on both sides of the border. According to economists, a 25% tariff would likely cause a recession in the year ahead, as Canadian exports to the U.S. represent roughly 20% of total GDP.

• As trade negotiations continue in the interim, expect extreme financial market volatility and further downward pressure on interest rates. The Bank of Canada is expected to continue lowering rates to help combat economic uncertainty and provide insurance against a potential economic downturn. While tariffs have the ability to add to inflation as higher costs are passed onto consumers through higher prices, the focus at the momentum will be on stabilizing the economy.

• In the near-term, homebuyers are likely to remain hesitant, leading to a further accumulation of pent-up demand. In that regard, the spring housing market is expected to be soft. If an all out trade war with the U.S materializes, the housing market will likely continue to see lower levels of sales and prices throughout the year. However, if trade negotiations can avoid a recession, pent-up housing demand should begin to re-enter the market in short order.

• Housing prices have remained resilient during the past two years despite dealing with higher interest rates and economic uncertainty. Ultimately, higher tariffs will place upward pressure on construction prices and housing replacement costs, providing further support for home prices. As well, further downward pressure on interest rates will lessen the burden on the one million-plus homeowners in Canada that will see their mortgages renew in 2025.

***Prepared Exclusively for Royal LePage Signature Realty by Urbanation Inc.***