We’ve seen seven interest rate cuts in Canada. By all logic, the real estate market should be heating up again. But it’s not.
Buyers are cautious. Sellers are hesitating. Prices are still soft. What’s going on?
One major factor is external: Donald Trump is back in office, and with him comes a renewed wave of tariffs, financial pressure, and global uncertainty. Even though these issues originate outside our borders, their impact on Toronto’s housing market is very real.
If you look around, this isn’t just a Toronto issue. Housing markets worldwide are sluggish. Investors are nervous. Even tech stocks have taken a hit lately.
What’s holding everything back? Uncertainty.
Whether it’s global politics, interest rate expectations, or trade wars, people tend to wait when things feel unpredictable. That hesitation slows the market.
But here’s the catch: uncertainty doesn’t always lead to disaster. It creates opportunities for those who are prepared.
Let’s look at what the numbers tell us.
Year-over-year price drops (approximate):
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Detached homes: -4%
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Townhouses: -2.8%
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Condos: -4.8%
From the 2021 peak:
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Detached: -18.6%
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Townhouses: -16.7%
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Condos: -17.5%
Yes, it’s been a painful correction but over the long term, Toronto real estate has still grown substantially. In fact, over the last 10 years, all three property types have more than doubled in value.
Markets move in cycles. And based on the timeline, we’re likely nearing the tail end of this correction phase.
Let’s break it down.
1. U.S. Trade Pressure Is Back
Trump’s return means higher tariffs and friction in global trade. Ontario’s major exports cars, electronics, and metals are exposed. This creates economic uncertainty that affects both jobs and confidence.
2. Interest Rates Are on Hold, for Now
The Bank of Canada has paused further cuts for now, mainly to stay aligned with the U.S. Fed. But most experts still expect more cuts later in the year. Lower borrowing costs would be a major boost for buyers.
3. New Housing Supply Is Crashing
In Q1 2025, new home starts in the GTA hit historic lows. Developers have scaled back heavily. That means the number of available homes could drop sharply between 2027 and 2029, leading to future price pressure as supply tightens.
Despite the chaos, here are four things we can be reasonably confident about below:
- New housing supply is falling, and it will take years to recover.
- More rate cuts are expected, the current pause likely isn’t the end.
- Immigration will remain strong, supporting long-term demand.
- Real estate is cyclical, this downturn won’t last forever.
This isn’t the first time Toronto real estate has faced headwinds. It won’t be the last. But if history tells us anything, it’s that those who stay calm and think long-term tend to come out ahead.
Don’t panic. Don’t chase trends. And don’t underestimate the strength of Toronto’s fundamentals.
“The market moves like the seasons. Don’t make winter decisions in a spring market or vice versa.”
Stay informed. Stay patient. And if you’re planning to buy, sell, or hold, make that decision based on strategy, not fear.