Toronto Real Estate 2025: Jobs, Debt, and the Uneasy Road Ahead

September 25, 2025

We live in uncertain times. Economists aren’t calling for a housing crash, but the Toronto housing market is deeply affected by rising unemployment, heavy household debt, and slowing economic growth. For buyers, sellers, and renters, these factors matter more than any headline about prices.

The Economic Backdrop

Canada’s growth is slowing to about 1.5–2% a year. The Bank of Canada has cut its policy rate to 2.5%, bringing mortgage rates under 4%. That helps, but two hard realities remain:

  • Unemployment has climbed to 7.1%, the highest since the pandemic.

  • Household debt is among the highest in the world, amplifying the pain of renewals.

This is why experts describe the outlook as a “soft landing”: no crash, but no comfort either.

Who’s Hurting the Most

  • Peak buyers (2022): Many are selling at a loss or struggling with pre-construction closings.

  • Households refinancing: A $2,000/month payment in 2021 now costs $3,000+.

  • Investors: Negative cash flow is common as rents soften.

For these groups, the market doesn’t feel stable — it feels stressful.

Rent Relief — For Now

For renters, conditions have improved:

  • Toronto one-bedrooms fell 5.1% YoY in Q2 2025 (TRREB).

  • Rents have dropped nationally for 11 straight months (Rentals.ca).

  • Some Toronto segments are down as much as 12% YoY (MPA).

This relief is thanks to supply: over 3,100 new purpose-built rentals were completed in early 2025, a 77% jump from last year (Urbanation).

But construction starts are slowing. If fewer projects launch now, the rental market could tighten again by 2026–27.

Can Government Plans Help?

To counter slowing supply, governments are stepping in:

  • Ottawa launched Build Canada Homes to deliver affordable rentals at scale using public land and modular construction (pm.gc.ca).

  • Ontario removed HST on new purpose-built rentals and cut development charges (news.ontario.ca).

These initiatives could extend renter relief, but housing projects take years to deliver. The real test will come in 2026 and beyond.

What Economists Expect

  • Home prices: Flat to slightly down through early 2026, then modest growth.

  • Sales: Slow rebound as rates stabilize, if job losses don’t deepen.

  • Rentals: A renter’s market for now, but risks of tightening ahead.

  • Commercial: Offices stay weak, industrial cools, retail adapts.

3 Quick Facts About Toronto Real Estate Right Now

  1. Rents are falling — and have been for a year

    • One-bedroom rents down 5.1% YoY in Toronto (TRREB).

    • National rents declining for 11 straight months (Rentals.ca).

  2. Unemployment is climbing

    • Canada’s jobless rate has reached 7.1%.

    • Job insecurity is the biggest drag on housing demand.

  3. Government is stepping in

    • Build Canada Homes launched to build affordable rentals.

    • Ontario removed HST on new purpose-built rentals.

Let’s Talk About Your Options

The truth is, Toronto real estate feels very different depending on where you stand. Some households are under strain, others see opportunity. If you’re unsure how this moment affects your goals — whether you’re buying, selling, renting, or investing — I’d be happy to chat.

Reach out anytime to discuss your options and situation.