Has Toronto Real Estate Hit Bottom? What First-Time Buyers and Upsizers Need to Know in 2025

April 8, 2025

Let’s be honest — the last couple of years in Canadian real estate have been a rollercoaster. Sky-high prices, rapidly rising interest rates, inflation, job worries, and now global tariff drama... it’s no wonder people are asking, "Is now the time to buy, or should I wait?"

If you’re a first-time homebuyer or someone looking to upsize, here's a clear breakdown of what’s happening in the Toronto real estate market, what’s likely to come next, and what it means for you.

The Big Picture: Why Things Got Weird

Over the past year, global tariffs — especially those recently implemented by U.S. President Trump — have made life more expensive and uncertain for Canadian businesses. These new trade policies have disrupted supply chains, pushed up import costs, and dampened business confidence.

Meanwhile, Canada is heading into a federal election, and economic uncertainty is high. While our own political direction is up in the air, the U.S. has already shifted gears — and the shockwaves are being felt here.

To add fuel to the fire, layoffs in tech, retail, and finance have hit Canada hard. Consumer confidence has taken a hit, and when people are nervous about job security, they tend to wait on big decisions — like buying a home.

Interest Rates Are Finally Coming Down

After keeping the Bank of Canada overnight rate at a 23-year high through most of 2023, the central bank began easing rates in 2024. As of spring 2025, that rate sits at 2.75%, which is a big deal for mortgage affordability.

️ Lower rates = lower monthly payments = more people starting to look again.

The Bank of Canada is also navigating the fallout of U.S. tariffs with caution, hoping to avoid tipping Canada into recession. There’s strong market speculation that the BoC will cut rates again on April 16th, possibly by as much as 50 basis points — a move that could further improve conditions for buyers. Check the latest BoC rate here

The Job Market Isn’t Perfect — But It’s Not Terrible

Yes, unemployment rose to 6.8% in late 2024. In Q1 2025, we saw mixed results:

  • January 2025: Job gains brought unemployment down to 6.6%

  • February: Held steady at 6.6%

  • March: Spiked back to 6.7%, with 33,000 jobs lost – many in response to tariff-related economic shifts Source: Statistics Canada

While inflation is under control and the economy is still growing slowly, these numbers show a fragile job market. If you’ve got a stable income, it’s a cautiously optimistic time to explore real estate. But this is something to watch closely.

So, Has Real Estate in Toronto Bottomed Out?

Short answer: Very likely.

  • Average home price in the GTA (March 2025): $1.09M

  • Year-over-year price change: -2.5%

  • Prices have stabilized since mid-2024, following the 15–20% correction from 2022 highs Source: TRREB Market Watch

Many experts believe the “crash” already happened — what we’re seeing now is the market finding its floor. As interest rates drop and confidence returns, modest price growth could follow.

Why This Market Could Heat Up Again

  1. Rates are falling. That means buying power is rising.

  2. Almost no new construction for sale. Builders are focused on purpose-built rentals, not condos or homes for purchase.

  3. Immigration and population growth remain strong. Demand will come roaring back — it’s just a matter of when.

In 2024, Toronto housing starts dropped 50% year-over-year. That’s a future supply problem in the making.

What This Means for First-Time Buyers

  • You now have more negotiating power than you’ve had in years.

  • Interest rates are dropping.

  • Government programs like the First Home Savings Account (FHSA) and 30-year amortizations are helping boost affordability.

Tip: Talk to a mortgage broker, get pre-approved, and explore your options now. This might be the best window in years to enter the market — calmly, and on your terms.

What This Means for Upsizers

  • The price gap between your current home and your dream home has shrunk.

  • You can sell in a quieter market and buy the upgrade at a discount.

  • Falling rates could allow you to port your mortgage or blend your existing low rate with a new one.

Tip: Sell first, then buy. You’ll avoid the risk of carrying two properties, and you can negotiate well on both ends of the deal.

What This Means for Renters Thinking About Buying

  • Rents actually dropped during the winter of 2024–2025 — an unusual dip.

  • It was a slow rental market, with many units sitting longer and price declines across GTA.

  • But this dip may be temporary — and as rates fall, more renters will become buyers.

Tip: If your lease is up, talk to a mortgage broker and a real estate agent. In many areas, monthly ownership costs are now lower than rent — especially with incentives like FHSA and extended amortizations. This may be your best shot to get in before demand picks up again.

What to Expect Next

If the April 16th rate cut happens and tariffs begin to settle — or if political clarity returns after Canada's upcoming election — we could see:

  • More buyers entering the market this summer

  • A slow but steady rebound in home prices

  • A return to a seller’s market in 2026, due to lack of housing supply