February 2025 GTA Monthly Housing Report
Slow Start to 2025 as Uncertainty Puts Buyers on Hold
Economic and political uncertainty on both sides of the border likely caused buyers to pull back in January. The resignation of Prime Minister Trudeau and inauguration of President Trump last month raised many questions regarding the outlook for political leadership and economic policy, including a potential trade war. With prices remaining high and new listings rushing back into the market, buyers felt less urgency to act, particularly as interest rates were widely expected to continue declining.
Sales Fall for Second Straight Month: Sales in January fell 8% from a year ago to 3,847 homes, the second consecutive month of annual declines. Aside from 2023, it was the slowes January for resale housing activity since 2009, falling 16% below the 10-year average.
New Listings Spike to Near Record High: After a large swath of homes were taken off the market in December, new listings surged 49% year-over-year in January to 12,392 homes, nearly matching the all-time high for a January period set back in 2007 (12,417). New listings were 40% higher than the 10-year average. The 17,157 active listings available at the end of the month were up 70% from a year ago and 83% above the 10-year average.
Buyer’s Market Return: Buyer’s market conditions reemerged in January as the sales-to-new listings ratio fell to 31% (a balanced market is 40-60%), which was the lowest ratio for a January period since the Global Financial Crisis in 2009. As well, months of supply climbed to 4.5 — more than double the 10-year average.
Average Prices Down 16% from 2022: Average selling prices remained stable in January compared to a year ago despite softening market conditions, recording a 1.5% increase to $1,040,994. However, average prices dipped 2.5% from December to a 12-month low, falling 16.2% below the market high reached three years ago in January 2022. Despite the reduction in prices over the past three years, the 10-year average annual rate of price growth was 7.3%.
Sales Fall the Most for Condos: Sales declined in January across all housing types, led by a 12% year-over-year decrease in condo apartment sales. Detached sales declined 8% from a year ago, while sales for semis/rows/towns held up best with a 2% decrease. Sales for semis/rows/towns were 6% below the 10-year average, whereas detached sales were 18% below the 10-year average and condo apartment sales were 21% below the 10-year average.
Low-Rise Active Listings Up 90% from Last Year: New listings for condo apartments increased 42% annually to 4,589 units — a record-high for a January period. This pushed active listings at month-end 47% higher than a year ago to 6,913 units, also a January high and 60% above the 10-year average. New listings for detached homes also shot up quickly with a 54% annual increase, causing active listings to jump 90% from a year ago to 6,832 units. Active listings for semis/rows/towns also grew 90% compared to last year.
Market Conditions Soften for All Housing Types: Months of supply for condo apartments reached 6.0 in January, which was 2.5 times higher than the 10-year average. Detached supply doubled compared to a year ago but remained fairly balanced at 4.3 months. Supply for semis/rows/towns remained lowest among all housing types at 3.4 months, although increasing quickly compared to a year ago (1.6 months) to reach its highest January level since 2009.
Condo Prices Held Up Best Since 2022: Condo apartments were the only housing type to see average prices decline compared to a year ago (-1.6% to $670,675), falling to a 47-month low. Compared to the market high three years ago, average condo prices have dropped by a total of 10.4%. While detached prices were up 2.1% annually in January to $1,377,430, they were down 21% from the 2022 peak. Average prices for semis/rows/towns were 17.9% below the high from three years ago, rising 1.6% from a year ago to $951,371.
Half of Condos Selling for Under $600K: For the first time in several years, half of all condos sold for under $600K in January 2025. The 50% share of units sold for under $600K was up from a 47% share a year ago, which occurred as the share of units selling for $600-699K declined from 25% to 23% and the share of units selling for $700-799K decreased from 13% to 11%. In the low-rise market, the distribution of sales by price range was mostly unchanged from a year ago, with slight increases in the $1.25-1.49M range to 16%, the $1.75-1.99M range to 4% and the $2M-plus range to 7%.
Lower Down Payments Fail to Spark Sales Growth Above $1M: Condo apartment sales decreased compared to a year ago across most price segments, with the exception of some higher-priced units in the $900-999K range (+6%), the $1.25-1.49M range (+11%) and the $1.75-1.99M range (+25%). In the low-rise market, sales grew strongly for $600-600K homes with a 21% annual increase, while $1.75-1.99M sales increased 6%. Despite the introduction of lower down payments for homes up to $1.5M, sales declined 6% for $1-1.249M homes and were unchanged for $1.25-1.49M homes.
Sales Activity Rises for Houses in Toronto: The detached market continued to outperform in the City of Toronto during January, with sales up 3% annually (including 14% growth in Toronto West). In the 905 Region, detached sales fell 15% from a year ago and supply rose to 4.4 months, which was higher than the 4.1 months in Toronto.
Sales for semis/rows/towns increased 18% annually in the City of Toronto, including 35% growth in Toronto Central. Meanwhile in the 905 Region, semi/row/town sales fell 9% from a year ago.
Condo Supply Reaches Nearly 7 Months in Central Toronto: The condo apartment market performed better in the 905 Region in January. Sales in the 905 decreased 8% annually (compared to a 15% decline in Toronto), while average prices moved up 1% from a year ago (compared to a 3% decrease in Toronto) and supply reached 5.6 months (compared to 6.1 months in Toronto). The weakest condo market conditions were found in Central Toronto, where sales fell 20% annually, average prices declined 3%, and supply rose to 6.8 months.
Key Takeaways
The positive momentum experienced in the market during the fall that was brought on by interest rate reductions has faded over the past two months, largely due to seasonal factors as well as significant political upheaval underway in both Canada and the United States. Ultimately, uncertainty has begun to outweigh affordability improvements (from both reduced interest rates and mortgage policy changes).
While the economic and political fog will likely linger for some time, buyers should begin to re-enter the market during the spring as interest rates continue to fall. The Bank of Canada cut interest rates by a further 25 basis points on January 29 to 3.0% — the sixth consecutive cut — and 5-year bond yields have dropped below 3%, which is starting to bring fixed rate mortgages below 4%. The Bank of Canada mentioned that a trade war with the U.S. has the potential to bring significant economic damage, requiring lower interest rates to help stabilize the economy.
As long as Canada avoids an economic shock, lower interest rates should feed through into improved consumer confidence and higher sales throughout the year. The Toronto Regional Real Estate Board is forecasting 76,000 sales in 2025, up from 67,609 sales in 2024, which is a reasonable projection under the current circumstances.
Supply will be an important variable to watch closely this year. While the surge in new listings in January was partly the result of a very large number of homes being put back on the market after being pulled late last year, more than 1 million mortgages are up for renewal in Canada this year (roughly 400K in the GTA) at significantly higher interest rates than originally contracted, which will cause more listings to occur. As well, condo completions are on track for another record year in 2025 with a projected 30,000 units finishing construction.
TRREB is forecasting average price growth of 2.6% in 2026, which is also reasonable if not slightly optimistic. However, most growth will likely arrive in the second half of the year and will be focused on the low-rise housing market. The condo market is likely to see further mild price declines this year given its oversupply situation.