Toronto remains the most active real estate market in Canada, and its direction in 2025 will be shaped by key factors like interest rates, immigration levels, infrastructure development, and housing supply. While 2022 and 2023 were marked by high volatility and uncertainty, 2024 brought some stability, and now 2025 is poised to deliver moderate growth with localized surges in both demand and pricing.

This forecast breaks down where the market stands, where it’s going, and which neighbourhoods are becoming increasingly important for buyers and investors.

Where Things Stand: 2024 Market Recap

To understand what’s ahead, we need to look at how 2024 closed out.

According to the Toronto Regional Real Estate Board (TRREB), the average home price in the Greater Toronto Area (GTA) in December 2024 was $1,095,000, representing a 4.7% year-over-year increase. Here’s how different segments performed:

• Detached Homes: Averaged $1.6 million in Toronto proper, slightly up from $1.55 million in 2023.

• Townhouses: Increased in popularity due to affordability pressures, reaching an average of $925,000.

• Condos: Flat to mildly positive growth, with an average of $730,000, depending on location and amenities.

Sales volume improved in the second half of 2024 following a series of Bank of Canada rate cuts. The key overnight rate ended the year at 4.25%, down from a high of 5% in mid-2023. The lower borrowing cost encouraged more buyers to re-enter the market, especially those who had paused during 2022–2023.

New listings remained low, with only a marginal year-over-year increase. Active inventory hovered below pre-pandemic levels, keeping competition intense in many desirable neighbourhoods.

Toronto Housing Market Predictions for 2025

Analysts predict moderate price growth across most housing categories in Toronto for 2025. The pace of appreciation is expected to stay under 6%, barring any sharp economic changes. Here’s what the numbers look like:

Price Forecast by Housing Type (GTA-wide):

These projections are based on input from CMHC, RBC Economics, and Scotiabank, all of which point to a more balanced market heading into mid-2025, with price movement dependent on region, inventory, and affordability conditions.

Factors Driving the 2025 Toronto Market

1. Interest Rates Continue to Ease

The Bank of Canada is expected to cut interest rates again in mid-2025, possibly bringing the overnight rate closer to 3.75%. Lower rates improve affordability, particularly for first-time buyers using fixed-rate mortgages. The stress test threshold may also drop slightly, giving more people the ability to qualify for larger loans.

2. Population Growth

Immigration targets set by the federal government aim to bring in over 485,000 newcomers in 2025, with a significant portion landing in Ontario and the GTA. These new arrivals increase demand for both rental and ownership housing, especially in Toronto proper and surrounding cities like Mississauga, Brampton, Vaughan, and Markham.

3. Housing Starts and Construction Pipeline

There was a significant uptick in building permits in 2023–2024, especially after zoning changes in Toronto allowed for more multi-unit development on single-family lots. However, actual construction completion timelines are lagging due to labour shortages and high material costs. Many of the 2023 starts will not be ready until late 2025 or 2026.

4. Rental Market Pressure

The average Toronto rent for a 1-bedroom was $2,650/month in Q4 2024, up 9% year-over-year. Rent growth is expected to continue in 2025, putting added pressure on tenants and encouraging some to shift toward ownership.

5. New Transit Infrastructure

Major projects like the Ontario Line, Eglinton Crosstown West Extension, and GO Expansion are drawing attention to areas like East York, Mount Dennis, and Liberty Village. These zones are likely to see appreciation ahead of project completion.

Neighbourhoods and Zones to Watch

Not all neighbourhoods in Toronto will perform equally in 2025. Based on infrastructure development, buyer activity, and relative affordability, the following areas stand out:

1. Scarborough

Still undervalued compared to central Toronto, Scarborough is benefiting from LRT extensions and new condo developments. Detached homes under $1.2 million are still common here, making it attractive for families.

2. Etobicoke

Condo density is increasing near the Kipling and Islington subway stations, and areas like Mimico are gaining investor interest. Etobicoke offers proximity to downtown with more space and newer buildings.

3. East York

The Ontario Line is a game-changer for this area. Buyers are flocking to neighbourhoods like Danforth Village, where older homes are being renovated and prices remain more affordable than Riverdale or Leslieville.

4. North York

Demand remains strong around Yonge and Sheppard, with ongoing high-rise construction and mixed-use developments improving liveability. The subway access keeps it attractive for working professionals.

5. Durham Region

Oshawa, Pickering, and Whitby continue to see price growth as more buyers are priced out of Toronto proper. Detached homes under $900,000 are still available, and the GO train makes commuting viable.

What Buyers & Investors Should Expect in 2025

For Buyers:

• More mortgage flexibility: If rate cuts continue, expect fixed mortgage options below 5% in late 2025.

• Tighter competition in low-inventory neighbourhoods.

• First-time buyers should explore programs like:

  • First Home Savings Account (FHSA)

  • Land Transfer Tax Rebates

  • Shared Equity Incentives

Buyers waiting for a “market crash” are unlikely to see prices fall in 2025. Instead, focus on timing purchases around mortgage rate movements and new listings in spring and fall.

For Investors:

• Rental demand is strong, especially for 2-bedroom condos near transit.

• Condo investors are seeing gross yields between 4%–5.5% in some areas.

• Consider holding periods of 3–5 years, as major infrastructure completion will further lift values post-2026.

New investors should watch for rising condo maintenance fees, as inflation and aging buildings start affecting operating budgets.

Risks to Monitor

The 2025 forecast assumes economic stability and consistent policy direction, but several risks remain:

1. Recession or job losses in major sectors (tech, finance) could lower demand.

2. Policy shocks, like rent control expansion or tax changes on secondary properties.

3. Mortgage defaults increasing due to renewals at higher rates (especially for 5-year fixed holders from 2020).

4. Global factors, including oil prices, war-related disruptions, or U.S. economic instability.

While unlikely to derail the entire market, these factors could temporarily freeze activity or shift pricing in specific segments.

Final Thoughts

Toronto’s housing market in 2025 is positioned for a stable, slightly bullish year. Prices are forecast to rise modestly, interest rates are easing, and neighbourhood-specific growth will depend on infrastructure access and inventory levels.

Buyers should expect more competition in the spring and fall markets, while investors may find the best returns in emerging transit zones. Continued population growth and a slow-moving construction pipeline will keep housing in short supply, supporting prices in the short to mid term.

Monitoring local zoning policy, rate announcements from the Bank of Canada, and immigration intake will be essential throughout the year for anyone involved in real estate decisions.