Some regional markets are improving across Canada – but the GTA is still facing an uncertain future
Some regional Canadian housing markets are showing signs of life as 2025 draws to a close, with others remaining sluggish. Among those yet to stir is the Greater Toronto Area (GTA) market, where the ongoing condo crisis continues to weigh against the overall outlook.
Sales in the GTA were actually up in August compared with the same time last year, rising by 2.3%. But they remain mired well below historical norms – and just 118 new condos were reportedly sold that month, signalling that the meltdown in the preconstruction space is rumbling on.
A perfect storm of has battered the Toronto market over the last 18 months, from rising interest rates to appraisal woes and plunging investor demand.
Lower immigration has also been a factor, according to Canada Mortgage and Housing Corporation (CMHC) lead economist for the Toronto market Jordan Nanowski (pictured top).
In October, then-immigration minister Marc Miller announced that the federal government was pausing plans for population growth in the short term, trimming targets for half a million new arrivals in 2025 to 395,000.
For 2026, targets were lowered from 500,000 to 380,000 – falling to 365,000 by 2027. Nanowski said Toronto, typically a hub for new immigrants, has already seen the effects of that policy change.
“I do think [the condo slowdown] was largely because Toronto attracts the highest percentage of immigrants within Canada. Roughly 30% of individuals coming into Canada end up in Toronto,” he told Canadian Mortgage Professional.
“So I think that supported the really strong housing demand that we saw around the pandemic and all of this activity.”
The good and bad news facing Toronto’s economy
Tariff turmoil because of the trade war launched by US president Donald Trump shortly after taking office this year also hasn’t helped. Ontario is a hotbed for a host of industries pummelled by tariffs, although Nanowski sounded a positive note on Toronto’s chances of avoiding a sharp economic downturn.
“There’s one silver lining in that the Toronto CMA is relatively more economically diversified than the other major CMAs in Ontario,” he said.
According to a Canadian Chamber of Commerce study released earlier this year, Toronto was among the major Ontario CMAs with the least dependency on goods exports to the US, calculated by percentage of gross domestic product (GDP).
“So while Toronto isn’t completely insulated from these impacts, it’s relatively better off,” Nanowski said. “We do have certain automotive hubs in the GTA like Oshawa and Alliston which would be a little significantly more impacted.
“But all in all, we really benefit from that diversification. However, of course, depending on the severity of a trade war, it could have a substantial impact regardless.”
Prices, rents expected to continue moving lower
Prices have slid in Toronto amid its continuing housing slowdown – most notably in the beleaguered condo sector, but also across the market.
The MLS Home Price Index Composite benchmark fell by 5.2% in August compared with the same time last year, according to the Toronto Regional Real Estate Board (TRREB).
But prices are still significantly higher than many other Canadian markets, keeping first-time buyers on the sidelines as they wait potential further price drops and interest rate cuts.
Still, rents are on the way down – potentially giving first-time buyers more leeway to save in the years ahead. The trend of declining rents, according to Nanowski, is one that isn’t likely to vanish anytime soon.
“There’s definitely going to be a higher [condo] vacancy simply because a lot of units are getting pushed onto the market,” he said. “There’s still a very large amount of units under construction in the GTA.
“A good proportion of those are rental apartments and half of the condos in that segment will be rented out. So there’s still a lot of supply that’s going to get pushed through and put downward pressure on rents.”
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