2025 in Review: Frozen, Not Broken
If you only read one number about the 2025 Toronto real estate market, read this one: the GTA recorded approximately 62,000 residential transactions over the full year. For context, the long run normal for TRREB is roughly 93,000 transactions per year. That means 2025 landed about 34% below normal, one of the slowest years the region has seen outside of the early pandemic.
A number that big usually makes people assume the market is crashing. It isn’t. And the gap between what the headlines suggest and what actually happened is where all the useful information lives.
What actually happened to prices
Across the GTA, average prices in 2025 were roughly flat to modestly lower compared to 2024. Some segments, like detached homes in the far 905, saw more pressure. Others, like entry level condos under $600,000 in the core, held up better. But the headline was not a crash. The headline was stasis.
That matters because 34% fewer transactions would usually imply a market flooded with desperate sellers and bargain hunting buyers. That is not what we saw. We saw a market where both sides mostly opted out.
Why did sellers step back?
Several reasons at once:
- Renewal math: Many homeowners locked in ultra low fixed rates in 2020 and 2021. Anyone still holding one of those rates has an expensive reason to stay put until renewal forces the conversation.
- Paper anchoring: Sellers compared 2025 offers to 2022 peak prices and decided they would rather wait than accept a number that felt like a loss, even when the number was still historically high.
- Construction slowdown: Move up buyers who might have upgraded held off, in part because new construction has slowed dramatically, reducing the pipeline of move up options.
Why did buyers step back?
The buyer side is simpler. Two words: rates and fear.
Even after the Bank of Canada started trimming, mortgage rates in 2025 were still meaningfully higher than anything most buyers had seen in their adult lives. The monthly payment on a $900,000 home at 4% fixed is a very different conversation than the same home at 2% fixed. A lot of 2025 buyers did the math and decided to keep renting for another year.
Layered on top of that was fear. Fear of buying the top. Fear of a recession. Fear of bad economic news that never quite arrived but always felt like it might.
What a frozen market tends to do next
This is the part that matters for anyone planning a 2026 move. Frozen markets do not thaw in an orderly, gradual line. They thaw in lumps, often starting the moment the psychological pressure breaks. Here is what we usually see coming out of a year like 2025:
- Inventory gets squeezed first. Sellers who waited out 2025 start listing, but so do buyers start bidding. For a few months, demand runs ahead of supply and well priced homes see bidding wars again.
- The top of the market moves first. Move up buyers with equity and certainty act faster than first time buyers who are rate sensitive.
- Condos catch up later. Entry level condos in the core tend to lag the detached market by one to two quarters.
- Months of inventory is the tell. The cleanest leading indicator is the sales to new listings ratio. If it crosses back above roughly 50% on a sustained basis, the thaw is real.
What this means for you
If you are a buyer
Do not wait for a perfect bottom call. Nobody rings a bell. If your financing is solid and your time horizon is five years or longer, the risk of buying in the first half of 2026 is mostly the risk of looking slightly silly for six months. The risk of waiting until the crowd has confirmed the bottom is the risk of bidding against that crowd.
If you are a seller
Pricing strategy matters more than ever in a frozen market. The penalty for pricing even slightly high is weeks of stale days on market, at which point buyers assume something is wrong with the property. Price sharply, stage well, and be ready to go. When the thaw comes, sharply priced listings capture the first wave of released demand.
If you are an investor
Cap rates are finally making sense again on some condos in the core. That is the direct consequence of softer prices and firmer rents. We have not been able to say that for most of the last five years, and it is worth looking at the math again even if you had written off Toronto cash flow.
The bottom line
2025 was a hard year for anyone trying to move, and an unusually quiet year for anyone watching from the sidelines. But the shape of the slowdown, frozen rather than falling, is important information. Markets that freeze because everyone is waiting can turn much faster than markets that are falling because everyone is selling.
If you are trying to figure out what this means for your specific plans, we would love to have a real conversation. No pressure, no pitch, just honest market input applied to your actual situation.