Market Report | February 2025
Market Report | February 2025
Greater Toronto Area Real Estate: Market Outlook and Economic Implications
The Greater Toronto Area (GTA) real estate market continues to navigate a complex macroeconomic environment characterized by persistent affordability challenges, heightened inventory levels, and economic uncertainty. Home sales in February 2025 declined by 27.4% year-over-year, while new listings increased by 5.4%, leading to a growing supply-demand imbalance. The average selling price declined by 2.2%, reflecting weakened consumer confidence and the impact of elevated borrowing costs. Despite these headwinds, expectations of lower interest rates and potential policy shifts could provide a more constructive backdrop for the second half of the year.
Greater Toronto Area - Monthly Sales Activity
- 2025
- 2024
- 2023
- 2022
- 2021
- 2025
- 2024
- 2023
- 2022
- 2021
Market Trends and Performance
Sales Activity and Price Movements
The GTA housing market experienced a significant contraction in sales volume, falling to 4,037 transactions in February 2025, compared to 5,562 in the same period last year. This 27.4% decline underscores the ongoing affordability crisis and cautious buyer sentiment. Simultaneously, the MLS® Home Price Index Composite Benchmark fell 1.8% year-over-year, while the average selling price dropped by 2.2% to $1,084,547.
The divergence between sales and price movements suggests that while demand has weakened, sellers remain relatively firm on pricing. However, the increase in inventory could pressure valuations in the coming months if sales activity remains sluggish.
| Metric | February 2025 | February 2024 | % Change |
|---|---|---|---|
| Sales | 4,037 | 5,562 | -27.4% |
| New Listings | 12,066 | 11,443 | +5.4% |
| Active Listings | 19,536 | 11,097 | +76% |
| Average Price | $1,084,547 | $1,109,450 | -2.2% |
| MLS® HPI | - | - | -1.8% |
City of Toronto - Active Listings
- 2025
- 2024
- 2023
- 2022
- 2021
- 2025
- 2024
- 2023
- 2022
- 2021
City of Toronto Monthly Sales
- 2024
- 2023
- 2022
- 2021
- 2024
- 2023
- 2022
- 2021
Regional and Property Segment Performance
A breakdown by property type highlights varying degrees of market stress:
• Detached Homes: Sales down 32.2%, reflecting both affordability constraints and shifting buyer preferences toward more affordable housing types.
• Condo Apartments: Sales declined 24.1%, highlighting challenges in investor-led demand and shifting urban demographics.
• Semi-Detached & Townhouses: These segments saw declines of 32.3% and 27.1%, respectively, as middle-income households struggle with financing.
The increased availability of listings across all segments signals that sellers may need to adjust pricing expectations, particularly in the detached and condo markets, where supply-demand imbalances are most pronounced.
York Region - Active Listings
- 2025
- 2024
- 2023
- 2022
- 2021
- 2025
- 2024
- 2023
- 2022
- 2021
York Region - Monthly Sales
- 2025
- 2024
- 2023
- 2022
- 2021
- 2025
- 2024
- 2023
- 2022
- 2021
Macroeconomic and Policy Drivers
Interest Rates and Affordability Constraints
Current mortgage rates remain a key deterrent for buyers, suppressing purchasing power and delaying transactions. The Bank of Canada has maintained a restrictive stance to combat inflation, but market expectations suggest a potential rate cut in the latter half of 2025, which could provide relief to homebuyers. The extent to which lower borrowing costs translate into higher transaction volumes will depend on the pace and magnitude of rate cuts.
Employment and Consumer Confidence
The GTA’s labor market remains resilient, but softening employment growth and broader economic uncertainty could keep potential buyers on the sidelines. The TRREB Chief Market Analyst has noted that concerns over trade policy—particularly regarding U.S.-Canada relations—have contributed to a “wait-and-see” approach among consumers.
Market Outlook and Investment Implications
Short-Term Risks
• Persistent affordability challenges: Even if borrowing costs decline, high price levels relative to incomes will continue to weigh on demand.
• Inventory buildup: A rising supply of unsold properties could accelerate price corrections in certain segments.
• Economic uncertainty: Geopolitical risks and domestic policy shifts could further dampen market sentiment.
Medium-Term Catalysts
• Potential rate cuts by the Bank of Canada in late 2025 could improve financing conditions.
• Government intervention, such as tax incentives or relaxed lending restrictions, may help stimulate demand.
• Structural demand drivers, including population growth and immigration, remain strong, suggesting long-term support for housing demand.
While short-term headwinds persist, long-term fundamentals remain intact. Investors and market participants should monitor policy developments, interest rate shifts, and consumer sentiment as key indicators of market direction.
The GTA housing market is in a transitional phase, with sales volume declining sharply and price growth stalling. Elevated inventory levels suggest that negotiating power has shifted in favor of buyers, though affordability remains a challenge. While the market may experience further weakness in the short term, a potential easing of monetary policy in 2025 could provide a much-needed boost to activity. Investors and market participants should adopt a cautious but opportunistic approach, positioning for a potential recovery in the latter half of the year.
