If you’ve been watching the Toronto real estate market, you know things are shifting. February 2025 was all about buyer advantage—with more listings, slightly softer home prices, and a cautious approach from buyers. So, what does this mean if you're thinking about buying or selling in the GTA housing market?

Home Prices See a Small Drop

In February 2025, the average home price in Toronto and the GTA came in at $1,084,547, marking a 2.2% drop from February 2024. The MLS® Home Price Index Composite benchmark also edged down 1.8% year-over-year.

Month-over-month, prices softened slightly after seasonal adjustment, showing that Toronto home values are stabilizing but still adjusting to market conditions.

More Homes for Sale, Giving Buyers Options

February saw 12,066 new listings hit the market—up 5.4% from last year. That means buyers have more homes to choose from, leading to better negotiation power in the Toronto housing market.

For sellers, this means pricing your home competitively is key. Overpricing could leave you sitting on the market longer than expected.

Home Sales Slow Down, But Opportunity Awaits

Despite more listings, home sales dropped 27.4% year-over-year, signaling that buyers are taking their time. High mortgage rates are a major factor, making affordability a challenge for many. But with a potential interest rate cut in Canada later this year, we could see demand pick up in the second half of 2025.

Why Are Buyers Waiting?

Beyond mortgage rates, economic uncertainty and Canada’s trade relationship with the U.S. are making some buyers hesitant. According to TRREB President Elechia Barry-Sproule, many GTA residents want to buy, but monthly mortgage payments remain a challenge.

Jason Mercer, TRREB’s Chief Market Analyst, noted that lower borrowing costs and a clearer economic outlook could bring more buyers into the market later in 2025.

What This Means for Buyers & Sellers

For Buyers:

With more homes for sale in Toronto, now’s a good time to shop around and negotiate. If you find the right property, you might be able to secure a deal. Plus, if mortgage rates drop, you could refinance at a lower rate later.

For Sellers:

The market is competitive, so pricing realistically and presenting your home well (think staging, decluttering, and professional photos) can make all the difference. Work with a GTA real estate agent who understands the latest trends to maximize your sale price.

What’s Next for the GTA Housing Market?

The next few months will be key. If interest rates in Canada drop, expect home sales in Toronto to pick up. For now, it’s a buyer’s market in many areas, but the landscape could shift quickly.

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The Bank of Canada has lowered its key interest rate by 25 basis points, bringing it down to 2.75%. This decision could have a broad impact, influencing mortgage rates, loan costs, and overall economic activity.

Why Did the Bank of Canada Lower Interest Rates?

Simply put, the economy has been slowing down, and while inflation has moderated, it remains a concern. The Bank of Canada is working to balance price stability with economic growth. Lowering interest rates makes borrowing more affordable, potentially encouraging increased spending and investment by individuals and businesses.

What’s Going On with the Economy?

Canada’s economic growth has been sluggish in recent months. While job creation continues, wage growth has not kept pace with rising living costs. Inflation has come down from its peak, but essentials like groceries and rent remain expensive.

Additionally, global economic uncertainty—such as U.S. trade policies and tariffs—poses potential risks to Canada’s exports. If trade slows, economic growth could be further impacted. The Bank of Canada is closely monitoring these factors as it makes decisions on future interest rate adjustments.

How Does This Affect You?

For Homeowners and Buyers

• Variable-rate mortgage holders may see a slight decrease in monthly payments.

• Those renewing a fixed-rate mortgage could benefit from lower rates compared to last year, making it essential to shop around for the best deal.

• First-time homebuyers may find borrowing slightly more affordable, though home prices in many cities remain high.

For Loans and Credit Cards

Lower interest rates can reduce costs for personal loans, lines of credit, and business financing. While credit card interest rates are less directly impacted, those carrying debt may want to explore lower-interest alternatives.

What’s Next?

The Bank of Canada will continue assessing inflation and economic performance before making further rate decisions. If economic conditions improve, additional cuts may not be necessary. However, if inflation remains high or the economy weakens further, another rate reduction could be on the horizon.

This rate cut is designed to provide economic stability and make borrowing more accessible. Whether you're a homeowner, prospective buyer, or simply managing your finances, staying informed will help you make well-informed financial decisions. Keep an eye on future announcements to stay ahead of potential changes.