Sellers Rushed Into the Market After the Holidays

Overview of important developments in the Toronto Metro housing market and macro reported in January 2025

Highlights

• Toronto Metro saw a sharp increase in new listings

• The market slightly cooled, but prices remained stable

• Toronto Metro’s rental market remains weak but is gradually strengthening

• Risks emerge for pre-construction investors in 2025

• New construction sales continue to decline, with housing starts following suit

• Construction employment faces potential risks

• Population growth inputs fell but remained elevated

• Mortgage rates declined, while the gap between fixed and variable rates narrowed

• Is a strong rebound in GDP per capita on the way?

• Potential tariff impacts pose challenges for central bankers

Real Estate Market

The key development in Toronto Metro’s real estate market in January was a surge in new listings, which far outpaced the rebound in sales. This trend is evident in the raw data and even more pronounced when compared to 10-year averages.

As a result, active inventory increased, and market balance indicators, though showing mixed trends, generally weakened compared to the 10-year average.

Prices remain very resilient, with virtually no change over the past 13 months.

This is a clear example of downside price stickiness and a reminder that statistical models can become highly inaccurate. Based on market balance trends, prices should be declining, yet that is not happening.

Rental Market

The Toronto Metro rental market continued to gradually strengthen in January relative to the 10-year average.

However, it remains weak overall, causing rent prices to fall further below 2022 levels. Over the past six years, condo rents have risen only 12% in total, roughly half the inflation rate over the same period.

This is welcome news for renters but a concerning trend for real estate investors, particularly in the pre-construction segment.