Toronto Real Estate Market Update

Toronto Freehold Market Update: Buyers Are Back!

After months of hesitation, buyers are jumping back into the Toronto freehold market—and for good reason. Since June 2024, the Bank of Canada has implemented seven consecutive rate cuts (including a 0.25 basis point cut on March 12th), while major mortgage rule changes have further enhanced affordability.

What’s Driving the Surge?

• Lower Interest Rates: Borrowing is cheaper, making homeownership more attractive.
• Extended Amortizations: In December 2024, the government brought back 30-year amortizations for insured mortgages.
• Higher CMHC Limits: The insured mortgage cap jumped from $999,999 to $1.5M, allowing buyers to qualify for a wider range of homes with a smaller down payment.

The Math: Then vs. Now

• December 2024: A $1.5M home required a $300K down payment (20%).
• Today: That same home requires just $125K down, a $175K difference.

As a result, homes that were previously listed/sold below the $999,999 cap can now easily push well past $1M, as more buyers can qualify at higher price points.

Case Study: Alderwood Semi-Detached Home

A semi-detached home in Alderwood was listed in February 2025 and sold in just 7 days. A clean home with a neutral renovation, the property was listed for $999,000. Based on past sales and my intuition, I estimated the market value to be between $1.2M – $1.235M.

The last comparable sale on the same street—a larger lot with more square footage and similar finishes—sold for $1,285,000 just two months ago, leading me to expect a similar result. Instead, this property sold for a whopping $1,350,000 with 16 offers!

This dramatic price jump directly correlates to lower rates and mortgage rule manipulation. Many buyers who previously capped their search at $999K are now comfortable competing well above 1 million, creating upward pressure on prices.

Thinking about selling your home and want to ensure you get the best results? The posts below can help:

• Should I Accept A Bully Offer When Selling My Home?
• What Are The Fastest Ways To Add Value To Your Home When Selling?
• What to Look For in a Real Estate Agent When Selling Your Home

The Tariff Effect & Toronto’s Resilient Freehold Market

We are in the midst of a trade war, bringing uncertainty around U.S. policy and job losses—particularly in manufacturing and auto sector hubs like Windsor and St. Thomas. As tariffs rise, economic instability follows, prompting the Bank of Canada to continue cutting rates, possibly as low as 1.5%–2%.

What Does This Mean for Toronto Real Estate? 

Lower borrowing costs/more affordable mortgage rates will reignite demand in the Toronto freehold market. As interest rates decline, the mortgage stress test will ease, making it easier for buyers to qualify for larger mortgages. Many who paused their home search in 2023 due to high borrowing costs are now jumping back in.

Etobicoke’s Freehold Market Stands Strong 

I like to call Etobicoke “the wall”—one of the most resilient micro-markets in the GTA, standing stronger than the 905. Why?

• Homeowners here tend to be more affluent, in stable professions, and less impacted by tariffs.
• Top-tier school districts, transit, parks, and easy highway access keep demand high.
• Luxury markets like The Kingsway, Edenbridge-Humber Valley, and Norseman Heights defied market predictions, with prices rising from 2023 to 2024.

While other parts of Ontario felt the impact of higher rates, Etobicoke’s core neighbourhoods never saw the same level of decline. With limited inventory, strong local demand, and high-end buyers, freehold prices continue to trend upward—and with further rate cuts on the horizon, this trend will only accelerate.

Condos, Assignments & Investment Opportunities

While the freehold market is heating up, the condo segment is facing a sharp decline, particularly for smaller units under 600 sq. ft. However, demand remains steady for boutique-style buildings, hard lofts, and larger units (1,200+ sq. ft.).

Why is the Condo Market Struggling?

• Affordability challenges – First-time buyers are being priced out with stress-test rates exceeding 8%.
• Investor pullback – Many investors are exiting due to negative cash flow.
• Pre-construction oversupply – Over 30,000 units are set to be completed in 2025, with many buyers struggling to close.
• Assignment market downturn – Units are selling below original purchase prices, creating opportunities for savvy investors.

Now is a great time to watch the market for strategic investment opportunities!

Case Study: Toronto Buyers & Pre-Construction Losses 

• In 2020, a buyer purchased a pre-construction condo for nearly $2.2 million. As the closing date approached, the bank appraised the unit at just $1.6 million—a 27% decline in value. This left the buyer scrambling to cover the $600K shortfall.
• Compounding the challenge, the developer had not yet reached the 90% sales threshold, meaning the buyer was unable to sell the assignment. After exploring all options, the buyer ultimately forfeited their $439K deposit.

The Spring Market is Around the Corner!

Do you have questions about navigating the current market? Planning to buy or sell in 2025? Reach out to me at markian@thompsonsells.com or  647-282-7653. l will be happy to provide expert guidance and insights tailored to your unique circumstances!