Has the GTA Real Estate Market Hit Bottom? Evidence-Based Insights for 2025 and Beyond
The Greater Toronto Area’s real estate market has faced a cycle of dramatic ups and notable downs over the past several years. For buyers, sellers, and investors watching the market closely through 2025, there is a burning question on everyone’s mind: Has the GTA market reached its lowest point yet? Based on current data from TRREB, Bank of Canada trends, major bank forecasts, and economic indicators, the answer is nuanced. The market shows signs of having softened and reached a form of equilibrium, but it has not yet embarked on a clear and sustained recovery.
In this article, we break down the evidence, explore key trends, and offer strategic scenarios that help property owners and investors make data-driven decisions as we move toward 2026.
A Market in Transition: What the Data Tells Us
The Toronto Regional Real Estate Board’s most recent statistics reflect a market that is more balanced than it has been in years. Average home prices in the GTA have declined from pandemic peaks, with the composite benchmark below levels seen earlier in the decade. As of October 2025, the average selling price was reported at approximately $1,054,372, down more than seven percent compared to the previous year, while sales activity softened and new listings rose year-over-year, giving buyers more choice and negotiation power.
This shift reflects a long-expected cooling after years of unusually rapid appreciation. Sales were lower than the prior year, even as listings grew, suggesting that 2025 has already deviated substantially from the seller-dominated conditions of the early pandemic era.
This change in pace continued a trend of rising inventory and slower sales throughout much of 2025, with the months of inventory approaching levels that support a more balanced or even buyer-leaning environment compared to the intense demand seen in previous years. Canada Housing Market
Interest Rates Remain a Key Influence
Interest rates are one of the strongest drivers of real estate demand and pricing. After the period of rate increases that began in 2022 and peaked around 2023, the Bank of Canada began easing rates in 2024 with the intent of supporting broader economic activity. This rate relief has had a mixed impact on real estate. While lower borrowing costs can support buying activity, broader economic caution and affordability challenges have kept many potential buyers on the sidelines. Storeys
Affordability remains a central concern in the GTA. Even with falling prices and lower rates compared to the highs of recent years, many buyers still find entry difficult due to lingering high debt service ratios and stricter lending criteria. The impact of borrowing costs on purchasing decisions cannot be overstated, and the full effect of rate cuts often shows up only after time lags in incomes, lending policies, and buyer psychology.
Inventory and Distressed Listings
Another compelling data point is the notable rise in distressed property listings. In 2025, the number of Power of Sale listings in the GTA reached record territory, up significantly compared to the previous year and many times higher than pre-pandemic levels. Better Dwelling
Distressed listings are typically not a huge share of total inventory, but their rapid growth signals financial stress for some owners and investors, and it also contributes to downward pressure on prices in certain segments of the market. When homes are listed under financial duress, they often sell at discounted prices relative to typical market valuations, and this can influence broader pricing trends.
Overall, more inventory combined with slower sales activity suggests we are living through a transition period rather than a dramatic crash. Values are adjusting, and the pace of sales is testing buyer appetite at current pricing and financing conditions.
Looking Beyond Residential to Market Nuances
While much attention focuses on residential statistics, the GTA’s real estate ecosystem is larger than single-family homes and condos. Industrial, commercial, and multifamily segments operate under their own dynamics, though they are not immune to macroeconomic conditions.
For example, industrial properties have continued to see strong demand because of supply chain modernization, e-commerce distribution needs, and limited land availability near major transportation routes. Many investors look at industrial assets as a hedge against broader market weakness in other sectors.
On the residential side, condo markets have been relatively more resilient in 2025 compared to detached properties, reflecting varied preferences, affordability differences, and rental demand patterns. nesto.ca
Signs That the Bottom May Be Taking Shape
A number of indicators suggest that the market may be nearing a bottom or may already have in certain price tiers:
Buyers Gaining Negotiation Power:
With listings up and sales softer than in past years, buyers have more leverage in negotiations. Sellers are finding they need to adjust expectations to close deals in current conditions.
Stabilizing Price Declines:
While prices have fallen compared to pandemic peaks and remain lower year-over-year, the pace of decline has moderated in recent months. This indecision in pricing suggests that a bottom might be forming as markets search for equilibrium between supply and demand.
Interest Rate Relief Taking Effect:
Rate cuts by the Bank of Canada are beginning to influence affordability positively, as shown in some segments of higher sales activity in late 2025. Toronto Regional Real Estate Board
Inventory Levels Reflect More Balanced Conditions:
Months of inventory—a key measure of whether buyers or sellers control market conditions—has increased toward levels that historically indicate buyers and sellers are closer to equal footing, especially compared to pandemic-era supply shortages. Canada Housing Market
None of these trends individually confirms that the market has bottomed out, but taken together, they do suggest that pricing pressure has eased from its most extreme levels and that the market may be finding a new normal.
Scenario Studies for Strategic Planning
Based on current conditions, here are several evidence-based scenarios that homeowners, investors, and developers should consider:
Scenario One: Slow Recovery With Buyer Anchoring
In this scenario, the GTA sees modest improvement in sales and a slow upward drift in prices through 2026. This outcome hinges on continued interest rate stability or small incremental rate cuts, positive employment trends, and gradual improvement in affordability. If buyer confidence improves, inventory could tighten, stabilizing or lifting prices in targeted segments.
This scenario aligns with forecasts that expect modest national price increases and a gradual resumption of activity as affordability improves. RBC
Action Plan:
Owners considering selling in 2026 might prepare properties for premium positioning early. Buyers could negotiate favourable terms in late 2025 and early 2026 before a broader price turn.
Scenario Two: Sustained Buyer Advantage and Compression
In this scenario, the market remains balanced or slightly favours buyers well into 2026 due to lingering affordability challenges, cautious consumer sentiment, and policy uncertainty. Price growth remains muted, and inventory levels remain elevated.
Action Plan:
Investors and buyers should plan for longer negotiation timelines and focus on value optimization through renovations, income rental strategies, or repositioning. Sellers may need to be flexible on terms and pricing to attract quality offers.
Scenario Three: Targeted Rebound in Certain Segments
Different segments may bottom at different times. For example, entry-level properties and condos might recover earlier due to improving affordability, while luxury homes and high-priced detached segments may lag. Multifamily and rental-driven assets may find rebound strength before other asset classes due to continued rental demand and lower borrowing costs.
Action Plan:
Diversification across property types and price segments can hedge risk. Working with appraisal experts such as Innovative Property Solutions (IPS) helps investors understand relative value and timing differences across these segments.
What the Evidence Means for 2026 and Beyond
The GTA real estate market in 2025 is not definitively at the bottom in every sense, but it is moving toward balance after years of imbalance between supply and demand. The pressure from reduced affordability, higher inventory, and cautious buyer behaviour has corrected much of the exuberance seen earlier in the decade.
As we head into 2026, a sustainable recovery is possible if interest rates remain stable or gradually decline, employment remains strong, and buyers feel confident about long-term financing conditions. Many buyers and investors who paused in early 2025 are now returning to the market with a clearer sense of risk and expectation.
From a valuation perspective, this environment rewards those who focus on evidence rather than emotion. Professional and data-driven insights help uncover real value, as opposed to chasing short-term price movements.
Conclusion
Has the GTA real estate market hit bottom yet? The evidence suggests it may be close in some segments and approaching equilibrium across many parts of the market. However, broader economic factors, inventory levels, and consumer confidence continue to influence direction. For anyone planning to buy, sell, or invest in the GTA, embracing a data-driven approach while planning for flexible scenarios through 2026 is the smart way forward.
Partnering with trusted valuation experts such as Innovative Property Solutions (IPS) can provide the localized insight and data perspective necessary to navigate this transitional market with confidence and clarity.
