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Further declines shaping the new housing landscape
December 9, 2025
The 2025 year started off with a lot of optimism for agents and sellers alike. We experienced retreating prices starting in March 2022 after a very rapid increase in home prices during the pandemic from 2021 until February 2022. With the data now in front of us, home prices fell more in 2025 than the previous two years. Something noteworthy - we had a handful of month-over-month declines in 2025 that exceeded 1%. To quantify that further, the average home price was just over $1,000,000 in November 2025 which means Toronto experienced multiple months of home prices coming down $10,000 per month.
The next question you might be asking is why are the prices still declining? The data will tell you that Toronto has experienced steady increases year over year since 2018 before the aforementioned major boost during the pandemic. If one were to remove the increases from 2021 to February 2022 (approximately 27% increase in the condo market and 40% in the freehold segment), today, December 2025 we are back at the pricing at the start of 2021.
Will we see further declines? The answer is likely a yes. Sellers are still actively trying to sell property and we have elevated supply levels. Further to this, there are still many condos which were purchased in the last half decade that are nearing completion with investors challenged by the decision to either lease the units in an also declining rental market for a significantly negative cash flow or to sell the unit and take losses that in some cases will exceed 30% or more of the original purchase price. Other variables to support further declines - a challenging political market including the effects of tariffs from The United States, interest rates on mortgages that are at higher levels than pre-pandemic, the continued fear of declining prices and rents for home owners, and the lack of affordability from inflation hitting other goods.
Is there optimism on the horizon? What I can share are personal stories from the year:
I had a condo buyer this year who was able to purchase a larger 1-bed, 1-bath with parking and locker for under $500,000. When originally speaking with the buyer, she felt that until this year there was no hope of ever owning a home in Toronto.
I had a client who sold their condo, convinced that Canada was a sinking ship. Investment would dry up, political turmoil would continue impacting the country and the US tariffs would cripple the economy.
I have had multiple first-time home buyers who were able to purchase freehold properties without much competition in the market and sellers who were motivated to take upwards of 10% off the list price for their final sale price.
My wife and I were able to sell our condo (although for much less than we had hoped for), but in return were able to buy a home in a neighbourhood that would have been out of reach looking back in time.
It is worthwhile to end this on a high note because I do have optimism for the future of Toronto. New construction has almost all but haltedwith pre-construction sales down significantly. What this means is Toronto will be short housing supply as families grow, immigration continues to pour in and once the existing housing supply gets eliminated through leasing and selling activity, the direction of pricing will go up. Further, downsizing, changing hands through estate sales, new families looking for freehold properties as they have children, investors starting to see cash flow post on new investments - these are all things that will continue to happen.
Steven Figol, CPA, CA, Realtor