As the year draws to a close, it’s natural to look ahead and wonder what the future holds for Toronto’s real estate market. With many factors influencing housing trends, this post explores five key predictions for 2025. These insights aim to provide homeowners, buyers, and investors with a clearer perspective as they navigate the dynamic market.
Prediction #1: Variable Interest Rates Will Decline
The Bank of Canada is expected to continue lowering rates, which will directly impact variable mortgage rates. While fixed rates are anticipated to remain steady, hovering around 4% to 4.5% for five-year terms, the potential reduction in variable rates offers some financial relief for prospective buyers. However, keeping rates relatively stable will help maintain a balanced market. Rapid rate decreases, particularly for fixed mortgages, could create sharp price escalations—a scenario that’s better avoided.
Prediction #2: Freehold Market Growth Will Outpace Condos
Freehold properties priced between $1 million and $1.5 million are expected to see significant price growth, likely increasing by 7% to 8%. These homes—a prominent segment of Toronto’s market—often serve as a benchmark for other price tiers. As this segment rises, higher-priced properties are likely to follow suit, benefiting from the ripple effect. Condos, on the other hand, are predicted to experience modest growth of 1% to 2%, primarily towards the latter half of the year.
Prediction #3: Condo Market Stability
Throughout most of 2025, condo prices are expected to remain stable, with more noticeable growth emerging later in the year. The market’s inventory will play a key role in this trend. Currently, there is an oversupply of one-bedroom units, while demand has shifted towards larger, two-bedroom condos. As inventory balances out, the absorption of available properties will help prices gain traction, especially in the second half of the year.
Prediction #4: The Market’s Resurgence
The Toronto real estate market is poised for a comeback in 2025. While it’s unlikely to surpass the peak levels seen in early 2022, an estimated 7% average price growth across the market is still substantial. For properties in the $1.5 to $2 million range, this translates to increases of $100,000 to $140,000. This resurgence underscores the resilience and appeal of Toronto’s housing market.
Prediction #5: Increased Transaction Volume
2025 is expected to be a year of robust market activity, with a projected 80,000 to 85,000 transactions—a notable increase compared to 2023 and 2024. Stabilized or slightly reduced rates will encourage more buyers and sellers to participate, fostering a vibrant market environment.
Setting the Stage for Success in 2025
Navigating the Toronto real estate market requires strategy and foresight. If you’re considering making a move in 2025, planning early can make all the difference. From securing favorable mortgage terms to identifying the right opportunities, preparation is key to maximizing success in this ever-evolving market.
Prediction #1: Variable Interest Rates Will Decline
The Bank of Canada is expected to continue lowering rates, which will directly impact variable mortgage rates. While fixed rates are anticipated to remain steady, hovering around 4% to 4.5% for five-year terms, the potential reduction in variable rates offers some financial relief for prospective buyers. However, keeping rates relatively stable will help maintain a balanced market. Rapid rate decreases, particularly for fixed mortgages, could create sharp price escalations—a scenario that’s better avoided.
Prediction #2: Freehold Market Growth Will Outpace Condos
Freehold properties priced between $1 million and $1.5 million are expected to see significant price growth, likely increasing by 7% to 8%. These homes—a prominent segment of Toronto’s market—often serve as a benchmark for other price tiers. As this segment rises, higher-priced properties are likely to follow suit, benefiting from the ripple effect. Condos, on the other hand, are predicted to experience modest growth of 1% to 2%, primarily towards the latter half of the year.
Prediction #3: Condo Market Stability
Throughout most of 2025, condo prices are expected to remain stable, with more noticeable growth emerging later in the year. The market’s inventory will play a key role in this trend. Currently, there is an oversupply of one-bedroom units, while demand has shifted towards larger, two-bedroom condos. As inventory balances out, the absorption of available properties will help prices gain traction, especially in the second half of the year.
Prediction #4: The Market’s Resurgence
The Toronto real estate market is poised for a comeback in 2025. While it’s unlikely to surpass the peak levels seen in early 2022, an estimated 7% average price growth across the market is still substantial. For properties in the $1.5 to $2 million range, this translates to increases of $100,000 to $140,000. This resurgence underscores the resilience and appeal of Toronto’s housing market.
Prediction #5: Increased Transaction Volume
2025 is expected to be a year of robust market activity, with a projected 80,000 to 85,000 transactions—a notable increase compared to 2023 and 2024. Stabilized or slightly reduced rates will encourage more buyers and sellers to participate, fostering a vibrant market environment.
Setting the Stage for Success in 2025
Navigating the Toronto real estate market requires strategy and foresight. If you’re considering making a move in 2025, planning early can make all the difference. From securing favorable mortgage terms to identifying the right opportunities, preparation is key to maximizing success in this ever-evolving market.
