Is the GTA Market Rebalancing? Mid-Year Trends Every Buyer Should Know

Is the GTA Market Rebalancing? Mid-Year Trends Every Buyer Should Know

As we move through the second half of 2025, a clear shift is emerging in the Greater Toronto Area (GTA) real estate market. After several years of rapid appreciation, tight supply, and aggressive competition, market conditions are now rebalancing—with significant implications for homebuyers, sellers, and investors alike.

Here’s what every buyer should understand about the evolving landscape and where opportunities may lie.

1. Inventory Is Rising—And That Changes Everything

One of the most defining changes in 2025 has been the sharp increase in inventory. As of June, the GTA recorded over 31,600 active listings, the highest number in nearly three decades. This represents a year-over-year increase of more than 34%, creating a noticeable shift in negotiating power from sellers to buyers.

The sales-to-new-listings ratio, a key indicator of market balance, dropped to 32% in June—firmly in buyer’s market territory. For context, a balanced market typically sits between 40–60%. Below that, buyers tend to gain leverage in negotiations, with more time to review options and fewer bidding wars.

Key takeaway: Buyers now enjoy more choice, less urgency, and increasing negotiating power in most submarkets.

2. Price Trends Are Stabilizing—but Still Soft

After hitting record highs in 2022 and seeing correction throughout 2023 and 2024, GTA home prices continued to soften in early 2025—though signs now point to stabilization.

• The MLS Home Price Index (HPI) for the GTA fell to approximately $995,100 in June, down 5.5% year-over-year.

• Detached homes have declined by an average of 4.7% annually, while condos saw steeper drops of up to 6.3%, particularly in the downtown core.

• Month-over-month, the benchmark price ticked slightly upward in May (+0.1%) for the first time since late 2024, indicating a potential bottoming-out trend.

Key takeaway: While prices are still below peak levels, the pace of decline is slowing. Buyers may soon lose their window for deep discounts.

3. Buyer Activity Is Rebounding—Cautiously

After a subdued winter and early spring, transaction volumes have started to rebound.

• In June, the GTA recorded over 5,000 home sales, up 8% from May and the highest monthly total in five months.

• The return of demand is closely tied to improving affordability, as mortgage rates gradually decline following policy changes from the Bank of Canada.

The overnight lending rate, which peaked at 5.0% in mid-2024, has since been reduced by 225 basis points, bringing average 5-year fixed mortgage rates below 4.3% for qualified buyers. This has expanded affordability for many first-time and move-up buyers.

Key takeaway: Buyers are returning to the market, especially those previously sidelined by high borrowing costs. However, most remain cautious, selective, and value-driven.

4. Segment & Regional Divergence

Not all areas or property types are behaving the same way in this market. Understanding the nuances is key to spotting opportunity.

• Condos: Heavily impacted by oversupply, particularly in downtown Toronto. Prices are down sharply, and many investors are offloading units amid tighter rental regulation and flattening returns.

• Freehold homes: Especially in suburban markets such as Durham, Halton, and York Regions, detached and semi-detached homes remain more resilient. Demand from families and new immigrants supports price stability.

• Luxury properties: Homes above the $2 million mark have seen longer days on market and greater price flexibility. Buyers in this segment are negotiating aggressively.

Key takeaway: While urban condos offer value, the best-performing assets remain well-located freehold homes in transit-accessible suburbs.

5. What Should Buyers Do Now?

The current climate may be one of the most favourable for buyers since before the pandemic. However, to take full advantage of this transitional market, strategy is essential.

✅ Get Pre-Approved and Lock in Rates

With rates trending lower but still volatile, buyers should secure pre-approvals and lock in favorable fixed terms before the next rate shift.

✅ Focus on Value, Not Hype

Ignore legacy pricing. Focus on fundamentals like location, school zones, transit access, and long-term livability.

✅ Negotiate—Then Negotiate Again

Sellers are increasingly open to price adjustments, conditional offers, and closing flexibility. Use the increased supply to your advantage.

✅ Consult Local Data

Work with professionals who provide neighbourhood-specific insights. What’s happening in downtown Toronto may not reflect the trends in Vaughan, Whitby, or Mississauga.