Forecasting the Toronto real estate market is always challenging, and 2025 was yet another reminder that even well-reasoned projections can be disrupted by unexpected economic conditions. As the year comes to a close, reviewing the predictions made at the start of the year provides valuable insight into how the market behaved and why certain expectations didn’t materialize.
Interest Rates Shifted More Than Expected
The first prediction centered on interest rates. It was anticipated that variable rates would decrease while fixed rates would remain relatively stable. The reality was far different. Both variable and fixed rates dropped sharply, landing in the 4 percent range after being closer to 6 percent a year earlier. The scale of this decline exceeded expectations and influenced affordability across the region, although not enough to push sales activity in the way many hoped.
Price Growth Did Not Arrive
Another key expectation was that home prices—particularly in the freehold segment between $1 million and $1.5 million—would see upward movement. This price range is historically one of Toronto’s most active, but 2025 did not deliver the growth that had been forecasted.
Instead, prices remained flat or softened, despite isolated pockets of strong demand for well-presented homes in desirable areas. On average, there was no year-over-year price increase in the freehold market. Condos experienced even more noticeable declines, especially smaller units, which dropped closer to ten percent or more in many cases.
Condo Performance Was Mixed
The prediction that condos would remain stable throughout most of the year and begin to strengthen toward the end was partially accurate. While official statistics show an average decline of around three percent, real-world market activity often reflected larger adjustments.
Late in 2025, there were early signs of renewed interest in the condo sector, but high inventory levels held back any significant movement. With five to six months of inventory available, the market remained firmly tilted toward buyers.
No Market Comeback in 2025
A potential comeback year for Toronto real estate was also anticipated, but the market did not follow that trajectory. Sales volume remained historically low, marking one of the slowest years on record. While there were brief moments of upward movement during the spring and early fall, these gains were short-lived.
The overall picture shows a market that continued to correct and stabilize rather than rebound.
Sales Volume Continued to Lag
Another expectation was a noticeable increase in sales compared to 2023 and 2024. This did not happen. Instead, 2025 recorded even fewer transactions than the previous two years, underscoring the depth of the slowdown.
High borrowing costs earlier in the cycle, cautious buyer sentiment, and abundant inventory contributed to this trend.
A Surprising Sports Highlight
While real estate predictions missed the mark, one of Toronto’s biggest surprises came from the baseball diamond. Although expectations for the hockey season fell flat, the Toronto Blue Jays delivering a Game Seven overtime appearance in the World Series became one of the standout moments of the year.
What This Means Moving Into 2026
Reflecting on the predictions for 2025 shows how unpredictable the market can be, even with strong data and reasonable assumptions. It also highlights the importance of revisiting forecasts to understand what influenced the year’s results.
Interest Rates Shifted More Than Expected
The first prediction centered on interest rates. It was anticipated that variable rates would decrease while fixed rates would remain relatively stable. The reality was far different. Both variable and fixed rates dropped sharply, landing in the 4 percent range after being closer to 6 percent a year earlier. The scale of this decline exceeded expectations and influenced affordability across the region, although not enough to push sales activity in the way many hoped.
Price Growth Did Not Arrive
Another key expectation was that home prices—particularly in the freehold segment between $1 million and $1.5 million—would see upward movement. This price range is historically one of Toronto’s most active, but 2025 did not deliver the growth that had been forecasted.
Instead, prices remained flat or softened, despite isolated pockets of strong demand for well-presented homes in desirable areas. On average, there was no year-over-year price increase in the freehold market. Condos experienced even more noticeable declines, especially smaller units, which dropped closer to ten percent or more in many cases.
Condo Performance Was Mixed
The prediction that condos would remain stable throughout most of the year and begin to strengthen toward the end was partially accurate. While official statistics show an average decline of around three percent, real-world market activity often reflected larger adjustments.
Late in 2025, there were early signs of renewed interest in the condo sector, but high inventory levels held back any significant movement. With five to six months of inventory available, the market remained firmly tilted toward buyers.
No Market Comeback in 2025
A potential comeback year for Toronto real estate was also anticipated, but the market did not follow that trajectory. Sales volume remained historically low, marking one of the slowest years on record. While there were brief moments of upward movement during the spring and early fall, these gains were short-lived.
The overall picture shows a market that continued to correct and stabilize rather than rebound.
Sales Volume Continued to Lag
Another expectation was a noticeable increase in sales compared to 2023 and 2024. This did not happen. Instead, 2025 recorded even fewer transactions than the previous two years, underscoring the depth of the slowdown.
High borrowing costs earlier in the cycle, cautious buyer sentiment, and abundant inventory contributed to this trend.
A Surprising Sports Highlight
While real estate predictions missed the mark, one of Toronto’s biggest surprises came from the baseball diamond. Although expectations for the hockey season fell flat, the Toronto Blue Jays delivering a Game Seven overtime appearance in the World Series became one of the standout moments of the year.
What This Means Moving Into 2026
Reflecting on the predictions for 2025 shows how unpredictable the market can be, even with strong data and reasonable assumptions. It also highlights the importance of revisiting forecasts to understand what influenced the year’s results.
