Unlike last year, as we move to the end of 2025, we approach it with caution and mild anticipation. Last year all economic indicators, political sentiment, population growth, supply and lower borrowing costs, pointed to a healthy recovery in the residential resale market for the greater Toronto area. Then came an uncertain global trade environment, a Canadian election with new Liberal party leadership, sharp declines in immigration, and a rapid growth in inventory all contributing to one of the slowest residential resale markets in three decades.

By year end 2025 the Toronto and Region resale market will deliver approximately 62,500 property sales. To put this number into historical perspective, in 1996, near the end of a long recessionary period, 65,760 homes traded hands. The average sale price for all properties sold, including condominium apartments, will come in at $1,060,000, an annual decline of a little more than 5 percent compared to 2024. Sales and average sale prices have declined in response to lower demand, lack of affordability and near record breaking levels of available inventory.

Inflection Point?

The big question is – have we now reached an inflection point? The answer is a weak yes. 2026’s residential resale market is going to be influenced, and advanced, by inherent housing structural problems, particularly in the condominium apartment section, political policy initiatives, global macro-economic factors, as well as local issues like job growth, population decline and housing supply.

The Landscape Ahead

We begin 2026 with a Bank of Canada overnight lending rate that is more than 30 percent lower than at the beginning of 2025. However, borrowing costs are, unfortunately, only marginally lower. The latest labour figures indicate an improved labour market, albeit driven by a high ratio of part-time employment. Government policies have been initiated to assist with, amongst other things, home ownership, with GST (federal) and PST (provincial) taxes no longer payable by first time buyers of new construction properties, subject to various limits. The macro economic environment is showing improvement as Canda and the Provinces adjust and adapt to the global trade uncertainty initiated by the American administration. New supply of available properties is contracting, improving sales-to-listing ratios.

Most importantly, affordability has also improved, albeit not significantly. All of these factors point to a real estate resale landscape that is poised for improvement, but still far from the heady days of the Covid-19 pandemic or even the decade of home sales prior to the pandemic. Sales of existing homes will increase in 2026. Lower borrowing costs, which are forecast to remain stable, will nudge home sales upward, but sales will still be much lower than historical norms. An increase of 8 percent is not unrealistic. That will result in total sales of just less than 70,000 for 2026 in the greater Toronto region.

The availability of homes for sale will remain high, although volumes are not expected to reach the record levels that were approached in 2025. Next year will continue to see “uncommitted sellers” on the market, testing the resale waters, holding out for prices that were reminiscent of the pandemic years. Those sellers will push up inventory levels, and days on market, although their numbers will be smaller than in 2025. In 2026 more sellers will approach the market realistically, which will further a growth in sale volumes, but the higher level of available properties will provide buyers with time, choice, and ultimately leverage. Improved sale volumes will be, to some extent, at the expense of average sale prices. It is once again expected that average sale prices will retract by 3 to 5 percent, resulting in an average sale price of around $1,000,000 for all properties sold, including condominium apartments, by year end 2026. The average sale price of condominium apartments in the region can be expected to come in at approximately $650,000, but higher in the City of Toronto.

Constrained Optimism

The Toronto and surrounding region marketplace has been in decline since the first quarter of 2022. By 2026, almost 5 years later, the resale market will have pushed through its long downward adjustment. It will begin to advance, modestly, not with great excitement, but cautiously. Joyful no, but finally a market moving forward positively, with constrained optimism.

Written By: Chris Kapches, C.E.O.