The December Toronto and Region residential resale data is now in (Toronto Regional Real Estate Board, TRREB), and it does not paint a pretty picture. To quote from T.S. Eliot’s 1925 poem The Hollow Men, 2025’s residential market is ending “Not with a bang but a whimper”. Sales were down, inventory was elevated, average sale prices declined, and properties remained on the market longer than pre-pandemic days.

In December 3,697 homes traded hands, 8.9 percent fewer than the 4,056 that were reported sold in 2024. As 2025 came to an end, there were 17,005 properties on the market available to buyers, 17.5 percent more than at year-end 2024. The average sale price continued its decline, coming in at $1,006,735, 5.1 percent less than the average sale price of $1,060,496 achieved last year. Properties remained on the market for 41 days (on average) before they sold, almost 14 percent longer than the 36 days it took properties to sell in December of 2024.

On an annualized basis the average sale price declined by 4.7 percent. It started the year at $1,120,241 and ended the year at $1,067,968. The average sale price for all homes sold, including condominium apartments, peaked in 2022 at $1,193,771. In February of 2022 the average sale price came in at – gasp! – $1,334,062. December’s average sale price of $1,006,735 represents a 25 percent decline from the peak average sale price achieved in February 2022.

During 2025, 186,753 new listings came to market. (This figure is slightly deceptive in that potentially as many as 35 percent of these properties were re-listed properties, homes that had already been on the market but did not sell. Notwithstanding this double counting, 186,753 new listings is still an extraordinary high number.) This high volume of inventory meant buyers had the benefit of time, choice, and negotiating leverage.

In total there were 62,433 sales reported throughout the Toronto Region in 2025. That compares to 70,274 properties reported sold in 2024, a double-digit decline of 11.4 percent. In perspective, this figure is even more startling. In 1998, 66,876 properties were reported sold. At that time condominium apartment construction was still in its infancy, with condominium apartments forming a small part of the overall market. In 1996 and 1997 sales totalled 69,530 and 66,876, respectively. At that time the reporting boundaries of TRREB were smaller and the population of the Toronto Region was almost half of what it was in 2025.

There were a number of factors responsible for the worst resale market in decades. At the beginning of 2025 expectations for an improved market were high. These expectations were dashed by the new American administration. The resale market thrives on certainty, and flounders on economic anxiety and uncertainty. The tariff chaos and uncertainty initiated by the American administration immediately caused the resale market to stall, a position that remained unchanged throughout the year.

In addition to macro-economic anxieties, affordability, or lack thereof, negatively impacted the buying decision of consumers, and in particular homebuyers. During 2025 the Bank of Canada reduced its overnight benchmark rate on three occasions to 2.25 percent. Although this was helpful, it had a marginal impact on borrowing rates. Again in 2025 fixed mortgage costs were driven by bond yields and not by the rate established by the Bank of Canada. At year end five-year uninsurable mortgage interest rates were 4.45 percent. Three-year rates were 3.95 percent, and for those borrowers with higher tolerance levels, variable rates at 3.60 percent were available. Although by historical comparison these rates do not seem unreasonable – in 1996 five- year mortgage interest rates were almost 8 percent – in 1996 the average sale price was only $205,249. Other parts of Canada, where average sale prices are substantially less expensive – for example, Winnipeg where the average sale price of ground level properties is approximately $450,000 and around $300,000 for condominium apartments – are less impacted by prevailing borrowing costs, and should experience more positive and favourable market results in 2026.

The downward market cycle that the Toronto Region has been struggling with since the pandemic peak of 2022 does not appear to be at an end. Macro- economic uncertainty continues as we move into 2026. There is concern about the Canadian economy, jobs and consumer costs, and borrowing costs remain high, impacting affordability, particularly in the Toronto Region. The greater Vancouver area will experience, and has experienced, similar negative affordability issues that confront the Toronto Region.

There is general consensus amongst industry leaders, economists, and real estate pundits that in 2026 the Toronto Region will see modest growth in home sales, but unfortunately, at the expense of average sale prices. It is expected that average sale prices will decline by 3 to 5 percent in 2026, reducing the average sale price in the Toronto Region to approximately $1,000,000 by year end, a number reminiscent of average sale prices for the Region on the eve of the Covid-19 pandemic in early 2020. Condominium apartment prices, which finished the year at $663,227 in the City of Toronto, and $555,110 in the 905 Region, can expect an even steeper decline than ground level properties.

Optimistically sales for 2026 might come in at 70,000 properties reported sold. This would be a 12 percent increase compared to the 62,433 homes that changed hands this year. To achieve these numbers international politics need to be stable, positive economic growth will be required, and we need to see affordability improvement. Unless all these positive factors come together, sales in the range of 66,000 to 67,000 are more realistic, clearly an improvement over the annus horribilis that the home ownership market experienced in 2025, and perhaps the first step towards a market that reflects the Toronto Region’s growth and population over the last decade.