Toronto's housing market is undergoing a significant transformation, moving away from the intense bidding wars and seller's market dominance of the past. The Toronto Regional Real Estate Board's recent data reveals a tightening market, with fewer homeowners listing their properties and a gradual stabilization in prices. This shift towards a balanced market is a welcome change for both buyers and sellers, offering a more equitable environment for all parties involved.
The average home price in Toronto peaked at $1,334,544 in February 2022, fueled by low interest rates and remote work flexibility during the pandemic. However, prices have since dropped by over 25%, reflecting the market's rapid shift from a seller's market to a buyer's market. In 2025, only 62,433 homes were sold in Toronto, the lowest number since 2000, indicating a market at the bottom of its cycle.
The latest report highlights a 0.9% dip in July home sales compared to the previous year, with 5,995 transactions, while new listings decreased by nearly 18% to 14,484. This data suggests a market gradually tightening, with sales increasing from June despite declining listings. Home prices have also slightly decreased, with the average selling price in July at $1,003,956, a 4.5% drop from the previous year.
A balanced market is characterized by neither buyers nor sellers having a clear advantage. Homes sell closer to their asking price, negotiations become more common, and supply better matches demand. James Milonas, a Managing Director at The Agency Toronto West, observes a shift towards a more balanced market, particularly in the freehold segment, with buyers and sellers meeting in the middle. Buyers are more comfortable with borrowing costs, and sellers have adjusted their pricing expectations.
The last time the GTA experienced a balanced market was in 2019, before the pandemic-driven market swings. Phil Soper, president and CEO of Royal LePage and Bridgemarq Real Estate Services, notes that the current market is moving towards a healthier middle ground, where negotiations are closer to the list price. Soper advises against trying to time the market, as it is now more stable and predictable.
However, many potential buyers remain on the sidelines, awaiting greater certainty around borrowing costs amid the trade war with the U.S. This hesitation may be more about consumer psychology than affordability, according to Soper. He points to Canada's stronger economic growth, forecasting an annualized GDP growth rate of 3.4% in the second quarter, compared to the U.S.'s 1.5%.
If prices continue to stabilize, confidence could return, encouraging more buyers to enter the market. Mercer suggests that a supportive pricing environment will boost confidence and attract buyers who are currently on the sidelines. This shift towards a balanced market is a positive development, offering a more stable and predictable environment for homebuyers and sellers alike.
