Introduction: Toronto’s Housing Puzzle in 2025
Toronto real estate market 2025 – In 2025, the Toronto real estate market finds itself in a unique position. Home sales are returning, buyer confidence is building, but challenges remain — from pre-construction fallout to the controversial foreign buyer ban, and the global ripple effects of U.S.–China trade tensions. As industry professionals, economists, and buyers alike grapple with these realities, it’s clear: this isn’t a market for the faint of heart — it’s a market for the informed.
This blog explores Toronto’s 2025 housing market through the lens of on-the-ground transactions, developer insights, and global economics, helping you better understand where the market stands, where it’s headed, and how to navigate it effectively.
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The Toronto Real Estate Market Is Moving — But Cautiously
Despite a sluggish start to 2025, recent weeks have seen renewed buyer activity. Agents report stronger sales volume, particularly in single-family homes and urban condos. Some buyers are returning with confidence, and deals are happening — but often under very different conditions than just a few years ago.
Key Observations:
Offer activity is picking up, especially for well-priced properties.
Conditional sales are common, with financing and inspection clauses making a comeback.
Tenanted properties are moving again — investors are willing to assume leases when rent is near market rate.
Seller expectations are shifting, understanding that over-asking offers are no longer guaranteed.
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One sale discussed involved a property in Oakwood-St. Clair. Though priced at $1.05M, it sold for $1.205M — not to the highest bidder, but to the one with a firm offer and willingness to assume a long-standing tenant.
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Tenanted Properties: Risk or Opportunity?
A significant share of Toronto’s inventory includes tenanted units, especially condos and duplexes. Sellers once feared tenants would scare buyers away. But in today’s market, the right tenant profile can actually strengthen a deal — if the rent is close to market and the buyer is investor-minded.
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What Buyers Are Looking For:
Reliable long-term tenants
Rent close to current market rates
Minimal renovation or vacancy risk
Experienced agents are helping sellers preserve equity while also navigating tenant negotiations, even securing rent increases during the sale process when allowed.
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Toronto Sellers: What’s Changed Since 2021
Today’s Toronto sellers face a market that rewards realism and preparation. Offer dates don’t always deliver. Bidding wars aren’t guaranteed. And pricing for attention — not ego — is more important than ever.
Biggest Seller Mistakes in 2025:
Expecting 2021 prices
Refusing to stage the property
Ignoring current DOM trends
Believing buyers will overlook major flaws
Agents emphasize the importance of Plan A, B, and C strategies, especially with so many listings sitting longer and attracting price-conscious buyers.
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The Pre-Construction Condo Dilemma
One of the most significant threats to the Toronto market is the ongoing fallout from pre-construction condos sold at inflated prices between 2019 and 2022. Many buyers now face:
Negative equity situations
Appraisals below purchase price
Inability to secure financing for closing
A painful choice between closing at a loss or walking away from deposits
The “Standard Package” for Assignments in 2025:
Seller gives up their 20% deposit
Pays 4–7% in marketing commissions
May offer the unit at a 10–20% discount just to assign it
This means some investors are facing losses of up to 28% — even before legal fees or taxes. In extreme cases, investors are simply walking away from deals, triggering developer lawsuits and litigation.
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Why Buyers Are Still Cautious
Even with some attractive listings on the market, buyers are holding back. The reasons?
Fear of falling values in pre-construction and high-rise condo markets
Mortgage stress from higher interest rates
Media headlines fueling uncertainty
Overexposure to bad debt and negative cash flow
Still, there’s a market — particularly among opportunity investors and first-time buyers focused on long-term appreciation, not just cash flow.
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Interest Rates and Inflation: A Mixed Outlook
Rates have stabilized in early 2025 but are still high relative to the 2020–2021 pandemic lows. Mortgage approvals are difficult, and many pre-construction buyers who qualified in 2019 now can’t close.
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Compounding the problem: inflation remains sticky, even as the federal government has effectively stopped budgeting, opting instead to spend freely on housing acceleration programs.
Is This Inflationary?
Yes. And for real estate, inflation can be a double-edged sword:
Short-term pain for borrowers
Long-term gain for asset holders
If inflation persists and interest rates fall later this year, real estate prices may rise again, especially as supply dries up.
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Pre-Construction Slowdown: What’s Ahead
Toronto is facing a severe mismatch in condo supply vs. demand. Urbanation reports 30,000 completions in 2025, but fewer than 5,000 new sales. With so much product completing and so few new buyers, developers are:
Holding back new launches
Releasing inventory previously sold to defaulted buyers
Offering incentives and discounts
Pausing projects entirely
This will create a gap in supply around 2027–2028, which could drive prices back up if demand returns and supply fails to keep pace.
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The Foreign Buyer Debate: Did Canada Get It Wrong?
Many experts now argue that Canada’s foreign buyer ban, while politically popular, has hurt the new construction market and slowed much-needed development.
A Better Model: Australia
Foreigners can’t buy resale homes
But they can buy pre-construction units, which funds housing creation
Government grants immigration points for those who buy new builds
This model encourages foreign capital to support new supply, not displace local buyers — a win-win policy Canada failed to implement.
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Proposed Solutions to Revive Toronto Real Estate
Industry voices are calling for policy shifts that balance housing supply and economic growth:
Reopen pre-construction to foreign buyers, but restrict it to new builds only.
Remove assignment clauses — force buyers to close, reducing speculation.
Tie immigration points to new housing investment.
Create foreign buyer-only zones or projects, insulating local inventory.
Allow foreign students to qualify for ownership-based incentives and tuition discounts.
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These strategies could:
Stimulate the construction industry
Absorb unsold inventory
Attract new capital without disrupting resale markets
The China–U.S. Trade War’s Impact on Canadian Housing
Much of the podcast discussion also focused on the global impact of U.S.–China tariffs and the resilience of Chinese manufacturing.
Why this matters to Canadian real estate:
China is no longer relying on U.S. demand — shifting exports to Africa and Europe
The yuan is strengthening, while the Canadian dollar weakens
Foreign investors may view Canadian real estate as a safe, undervalued asset class
Chinese nationals continue to see Canada as a desirable place to educate children and park capital
If Canada reopens the door to responsible foreign investment, Chinese buyers could be key to reviving the pre-construction condo market and purpose-built rental development.
Student Visas, Tuition, and Real Estate Synergy
International students are also a huge untapped driver of real estate demand. They:
Pay 9x higher tuition fees than locals
Rent high-end downtown condos
Often have family money and interest in Canadian immigration
With student visa delays and housing shortages, smart policy could connect student residency to condo ownership, reducing housing pressure and stabilizing tuition flows.
Conclusion: What Happens Next in Toronto Real Estate?
Toronto real estate in 2025 is not crashing. But it is correcting. It’s recalibrating. And it’s redefining who the buyers and sellers are.
This is a market that rewards information and strategy — not emotion. And it demands new policies, new solutions, and a better balance between affordability, investment, and global opportunity.
Key Takeaways:
Sellers must price realistically and prepare for longer marketing timelines.
Buyers should look for value — not timing — especially in quality product and strong locations.
Pre-construction is at a turning point — many will lose money, but smart investors will buy the dip.
Policy change around foreign investment and immigration could unlock significant upside.
Toronto isn’t broken. It’s adjusting. And those who understand these shifts will be best positioned to thrive in the next cycle.