2025 Toronto Real Estate Predictions: What to Expect (and How to Survive It)

2025 Toronto Real Estate Predictions: What to Expect (and How to Survive It)

What a rollercoaster 2024 turned out to be! The Toronto real estate market kept us all on our toes with rising interest rates, economic uncertainty, and a shifting housing landscape that had everyone—from first-time buyers to seasoned investors—scrambling to adjust.

Now, as we look ahead to 2025, one thing is clear: uncertainty is the name of the game. We’ve got new mortgage rules kicking in, potentially lower interest rates on the horizon, and an economy that’s still finding its footing. Oh, and let’s not forget the global picture: a new U.S. president is settling into office, and here at home, we don’t even know who will be running Canada next! (Is it just me, or does it feel like we’re all waiting for the next plot twist?)

With all of that said, one thing I do know is this: the Toronto real estate market will always surprise us. It’s influenced by a mix of policies, trends, buyer and seller behavior, and sometimes even just good old-fashioned FOMO. So, after talking to buyers, sellers, and agents, keeping an ear to the ground, and trusting my own "hunch," I’ve put together my predictions for what 2025 might have in store.

‍

Remember, these predictions are based on trends, news, historical patterns, and, of course, my own personal opinion. Let’s dive in!

1. Interest Rates Will Continue to Drop

‍

After a series of rate hikes in recent years, we’re finally seeing a reversal. Interest rates are expected to drop by 0.5%-0.75% throughout 2025. This will ease borrowing costs, especially for first-time buyers, and give buyers more flexibility to stretch their budgets. Lower rates tend to drive market activity, so expect to see a bit more hustle and bustle out there.

2. Prices Will Increase Modestly

Prices are projected to rise modestly—think 5%-7%—but not equally across the board. The biggest gains will likely be seen in detached and semi-detached homes in Toronto, fueled by new mortgage rules that allow buyers to spend more. With the insured mortgage cap rising from $1 million to $1.5 million, buyers will have access to significantly more borrowing power, creating greater demand for these types of homes.

3. Condos Will Continue to Struggle

Condos, especially smaller units like bachelors or those under 400 square feet, will face continued headwinds. Oversupply, high investor ownership, and shifting buyer preferences toward larger, family-friendly spaces are making it a tough market for condos. That said, not all condos are doomed—mid-sized units in desirable neighborhoods may hold their ground.

4. New Builds Will Struggle Even More

Pre-construction homes and condos are likely to have an even tougher time. Rising construction costs, delayed timelines, and cautious buyers concerned about overpaying or waiting years for completion will keep this segment under pressure. Developers may need to get creative to entice buyers, so watch for incentives like upgrades or rent-to-own schemes.

5. A Balanced Market for Buyers and Sellers

For the most part, 2025 is shaping up to be a balanced market. That means fewer bidding wars and a little more breathing room for buyers—though sellers can still expect fair prices. Of course, some segments will lean one way or the other. Affordable homes will likely see more competition, while luxury properties may sit on the market a bit longer.

6. Rental Rates Will Decrease

After years of climbing rental prices, we may see a slight dip in 2025. Lower interest rates will encourage more renters to transition into homeownership, reducing demand. However, rental demand will likely remain strong in key areas like university districts and downtown Toronto, so don’t expect rents to plummet across the board.

7. More Purpose-Built Rentals Will Be Built

One bright spot for renters: more purpose-built rental projects are in the pipeline. These properties, built specifically as rentals, offer much-needed supply to a competitive market. Keep in mind that any purpose-built rental constructed after 2018 is not subject to rent control, which gives landlords more flexibility in setting rents.

8. Semi-Detached Homes in Prime Toronto Locations Will See the Biggest Price Gains

If there’s one market segment poised for big gains, it’s semi-detached homes in desirable Toronto neighborhoods. Limited supply, walkable streets, and proximity to downtown make these properties highly sought-after. The new mortgage insurance cap increase from $1 million to $1.5 million will be a game-changer here, giving buyers more access to financing and driving up demand.

‍

Final Thoughts

So, there you have it—my 2025 Toronto real estate predictions. Just like 2024, this year is shaping up to be full of twists and turns, and let’s be honest, there’s no crystal ball for what’s ahead. But if there’s one thing I’ve learned from this market, it’s that being prepared and staying adaptable is half the battle.

Whether you’re buying your first home, selling to upsize (or downsize), or trying to make sense of the rental market, having a plan—and a trusted guide—goes a long way. Remember, these predictions are a mix of trends, conversations, and a healthy dose of my own hunches, so take them with a grain of salt and use them as a starting point for your own real estate journey this year.

As always, if you’ve got questions, need advice, or just want to chat about the market, I’m here to help. Here’s to navigating 2025 together—whatever surprises it throws our way!

Ok! That's it for now. Thanks for reading and have a great day! 👋 - Tyson CR

‍‍Want to know what the current value of your home is or what's going on in your neighbourhood?

Please feel free to reach out! I'm happy to prepare a completely free, no obligation custom market report just for you

If you or anyone is thinking of a move don’t be shy and reach out.  

After all, everyone’s individual situation requires an individual and unique strategy and plan.

‍