Canada’s housing market is slowly waking up, but if you’re in Ontario, don’t expect prices to bounce back anytime soon. A new RBC housing market forecast and the latest Toronto Regional Real Estate Board (TRREB) data show that while sales are picking up, there’s still a huge inventory of homes for sale keeping prices soft.
Across Canada, easing borrowing costs and a slightly better economy are helping the market recover after a tough stretch. But Ontario (along with British Columbia) faces a unique challenge — the supply of homes for sale is at its highest level since June 2010. This creates a buyer’s market where sellers compete hard, putting downward pressure on prices. RBC expects prices in Ontario to keep falling until early 2026 before things stabilize.
In the Greater Toronto Area, July 2025 saw the busiest month for home sales since 2021, which sounds great. However, the average home price across all types still fell 5.5% year-over-year to about $1.05 million, illustrating more sales at softer prices (TRREB July report).
Condos, Rentals, and the Affordability Puzzle
Condo buyers are feeling the pinch even more. The average GTA condo price dropped nearly 6% compared to last year, landing around $686,000. Even worse, new condo sales collapsed by 69% last quarter with just over 500 units sold, the lowest in decades, according to Urbanation. This has led to record-high unsold condo inventories, with developers cancelling projects and pausing new launches, further intensifying price pressures and impacting the wider housing market.
On the rental front, slower immigration growth has reduced demand. Average rents for one-bedroom units dropped 6.4%, and two-bedroom rents fell 8.8% compared to last year (Canada rental trends). While this offers some relief to renters, it highlights shifting market dynamics.
The silver lining? Lower interest rates are making homeownership a bit more attainable than over the past three years. The Bank of Canada has kept its key lending rate steady at 2.75%, with expectations this will hold through 2026 or slightly ease later in the year (mortgage rate forecasts). This stability is encouraging more buyers to jump back into the market — even if affordability remains a challenge, especially in Ontario’s pricier areas.
What This Means for Buyers in the Next Year and a Half
With so many homes sitting unsold and prices softening, buyers have plenty of options and less pressure to act fast. RBC forecasts Ontario home prices could fall about 1% in 2025 and another 1.4% in 2026 before a turnaround. Nationally, home prices might creep up by around 0.7% by the end of 2025, reflecting more balanced markets in other provinces (RBC forecast summary).
TRREB President Elechia Barry-Sproule notes that although prices and borrowing costs are more favorable than last year, most buyers remain cautious: the market is far from a “dream deal” for many first-time purchasers. Overall, Ontario will likely stay buyer-friendly into 2026, making this a better time for buyers to negotiate, but without expectations for any sharp price drops or spikes.
For those active in the market, more listings mean more choice, and softer prices mean a better chance to afford a home or condo that might have felt out of reach just a year or two ago. Just remember, the pace of change is slow and steady, so keep expectations realistic and make informed decisions.
