Toronto’s real estate market is showing signs of recovery after a challenging period marked by sluggish sales and declining condo prices. The housing market, which struggled throughout 2024 due to high mortgage rates, overvalued properties, and cautious buyer behaviour, is slowly gaining momentum. As Royal LePage’s latest report highlights, conditions at the close of last year set the stage for a more balanced and stable market in 2025. Lower interest rates, an increase in listings, and improved negotiating power for buyers are beginning to shift the narrative. While the condo market remains a notable weak spot, other property segments, such as townhomes, have seen a resurgence in demand. The question now is whether these positive trends will hold, paving the way for a healthier, more sustainable housing market in Toronto.
2024: A year of weak sales and rare price declines
For much of 2024, Toronto’s housing market grappled with weak sales and falling prices, particularly in the condo sector. This decline in prices — a rarity in a city known for its persistently high valuations — reflected waning buyer interest, high mortgage rates, and an overvalued market. By the year’s end, Royal LePage reported an uptick in home sales nationwide, spurred by lower interest rates, an increase in available listings, and greater negotiating power for buyers. Despite this improvement, the City of Toronto proper bucked national trends, with property values continuing to slide.
Snapshot of the numbers: Q4 2024 vs. Q4 2023
The report highlights a nuanced picture of Toronto real estate:
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• The average Canadian home price rose by 3.8% year-over-year in Q4 2024.
• In the Greater Toronto Area (GTA), prices increased by 2.3% year-over-year, bringing the average home price to $1,149,300.
• However, when comparing Q3 to Q4 2024, the GTA saw a 0.6% price decline, suggesting ongoing volatility.
• The City of Toronto saw its average property price dip to $1,099,900, reflecting a 2.6% quarter-over-quarter and 1.7% year-over-year decline.
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Condos falter while townhomes thrive
The condo market remains a sore spot for Toronto’s real estate landscape. High listing prices, paired with elevated mortgage costs and relatively stagnant rents, have dampened investor interest. Compounding these challenges are delinquent tenants and an oversupply of units that are difficult to sell. On the other hand, townhomes have emerged as the most resilient market segment. These properties are in high demand due to their balance of space, price point, and location, making them attractive to both families and downsizers.
Although Toronto’s very own, and VIBE cover star alum, @JamesInTheCity seems to think Scarborough freehold homes is the better bet…
The outlook for 2025: A return to growth
Royal LePage predicts that the Toronto market will rebound in 2025, with real estate values rising by approximately 5% over the year. This would bring the average home price to over $1.2 million, signaling renewed confidence in the market. The report also forecasts better market conditions for homebuyers, thanks to expected changes in lending rates and mortgage rules. However, it cautions that political and economic factors, including the U.S. political landscape, could introduce uncertainties.
Easing the frenzy: A balanced market emerges
Unlike the peak markets of previous years characterized by bidding wars, Royal LePage anticipates a more balanced dynamic in 2025. Ample inventory and tempered price growth are expected to limit the return of multiple-offer frenzies. These conditions should create a healthier environment for buyers and sellers alike.
Key takeaways for buyers and sellers
• Buyers: With more negotiating power and favorable lending conditions, 2025 may be an opportune time to enter the market, particularly for those looking at condos or properties below market value.
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• Sellers: While prices are expected to climb gradually, focusing on in-demand segments like townhomes could lead to quicker sales.
A cautious climb ahead
Toronto’s real estate market is poised for a cautious yet steady recovery in 2025. While challenges remain, the anticipated price increases and balanced conditions suggest a healthier, more sustainable market ahead. As the year unfolds, buyers and sellers alike will need to navigate the shifting landscape with careful planning and expert advice. Whether investing in a townhouse or navigating the floundering condo sector, there’s a cautious optimism about Toronto’s housing market finally finding its footing.
