As 2025 draws toward its close, Canada’s real estate landscape is marking a meaningful transition — not a collapse, not a boom — but a recalibration. What we are seeing across Toronto and key markets nationally reflects both challenge and opportunity for buyers, sellers, developers, and investors alike.
Toronto: Balance Amid Adjustment
Across the Greater Toronto Area (GTA), recent statistics show a softening in both prices and activity as we head into winter. The benchmark home price in November sat around $951,700, representing a roughly 5–6% year-over-year decline, with the average sold price about $1.04M — down from 2024 peaks.
Transactions slipped sharply on both monthly and yearly comparisons, reflecting buyer caution and seasonal trends. Inventory remains elevated relative to transactions, but recent decreases in new listings have helped keep conditions roughly balanced rather than strongly favouring either buyers or sellers.
The market tone is measured and deliberate. Homes are staying on the market longer than we saw during the frenetic pandemic years, and price negotiation is a real factor once again. Mortgage rate cuts earlier this year have helped at the edges, but affordability constraints — especially where incomes haven’t kept pace with legacy price levels — continue to temper demand.
National Trends: Divergence by Region
Canada’s broader housing market paints a varied picture:
National activity remains in a balanced zone, with total MLS® listings somewhat elevated but not extreme, and the national sales-to-new-listings ratio aligning with long-term norms.
Eastern and Prairie markets are showing relative resilience, with places like Montreal demonstrating gradual recovery in sales and price strength, particularly in low-rise segments, even as Toronto and southern Ontario slow.
Housing starts posted a notable increase in November, suggesting that builders are responding to persistent demand for new supply.
Economists forecast that Canada’s overall home price trajectory will remain subdued through 2026 before broader recovery resumes — underlining the importance of regional selection rather than blanket assumptions about “the market.”
Where Smart Capital Is Flowing
As the housing cycle evolves, opportunities are shifting. Here are the key segments we’re watching:
1. Emerging Growth Corridors
While Toronto and Vancouver remain major economic hubs, other regions are gaining attention for growth, relative affordability, and demographic tailwinds:
Kawarthas & Peterborough (Ontario) — scenic communities benefiting from both lifestyle demand and investor interest.
Thunder Bay & Northern Ontario markets — pricing is still accessible and demand is beginning to build.
Quebec cities with stable affordability and strong economic foundations continue to draw buyers priced out of larger Ontario/BC markets.
These markets don’t deliver Toronto-like instant appreciation, but for patient investors, they blend sensible valuation with upside.
2. Condos: Strategic Entry + Rental Potential
In Toronto’s core, the condo segment — especially in midtown — remains an effective entry point for long-term wealth building. Midtown’s combination of transit access, lifestyle appeal, and relatively lower per-square-foot cost makes it a compelling choice for first-time investors and rental portfolio builders alike. Demand from urban professionals and students supports rental absorption even as prices recalibrate.
Downtown continues to attract tenants consistently, though carrying costs and condo fees mean that patient capital and long-term outlook are essential.
3. Income-Producing Real Estate Instruments
For investors seeking real estate exposure without direct property management, Canadian REITs (Real Estate Investment Trusts) are increasingly attractive. They offer diversified exposure across residential, industrial, office, and retail sectors, with many paying monthly dividends and requiring no mortgage approval or hands-on landlord duties.
Strategic Takeaways for December 2025
Toronto’s market is more balanced than bearish, and disciplined pricing is key for sellers; buyers have more leverage, but values are holding within reach of long-term fundamentals.
Regional diversification is paramount: focus beyond the usual suspects to areas with stronger affordability and economic drivers.
Condos remain a wise play for new investors — particularly where rental demand is sustained and entry prices are softened.
REITs unlock capital efficiency, making them a strong complement or alternative to direct property investment.
Looking ahead to 2026, prudent investors will benefit from prioritizing fundamentals over headlines, tempering expectations with data, and aligning strategy with long-term demographic and economic realities.
Real estate may not move as fast as in the past decade’s headlines, but solid returns still accrue to those who combine patience, insight, and courage to act when others hesitate.
If you would like bespoke insights for your portfolio or community, I’m here to talk — let’s position your capital where it thrives.
-Marta Pozniakowski — Real Estate Broker, Market Strategist & Investor Advocate
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