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GTA Housing Market Rebounds After Downturn

  //house-home.news-articles.net/content/2026/02/11/gta-housing-market-rebounds-after-downturn.html
  Published in House and Home on Wednesday, February 11th 2026 at 16:20 GMT by The Globe and Mail
      Locales: Ontario, CANADA

From Downturn to Upturn: A Shift in Momentum

The late months of 2025 were characterized by a cooling market, heavily influenced by the Bank of Canada's aggressive monetary policy. Rising interest rates effectively priced many potential buyers out of the market, leading to a slowdown in sales and a moderation of prices. However, the stabilization of interest rates, with the central bank holding steady at 5% since July, has unlocked pent-up demand. Furthermore, increasing buyer confidence, bolstered by anticipation of future rate cuts, is driving a renewed wave of activity.

According to TRREB president Josh Merton, the current momentum is a result of a "perfect storm" of factors. "January's results confirm that the market is shifting and buyers are re-entering the market," Merton stated. "Low interest rates continue to play a key role, but there's also a greater sense of optimism among buyers and a significant lack of inventory."

Supply Constraints Exacerbate Price Increases

While demand is surging, the supply of available properties remains constrained. New listings in January totalled 11,477, a 2.2% decrease year-over-year. This imbalance between supply and demand is a primary driver of the escalating prices. Robert McLister, a mortgage broker and co-founder of Ratehub.ca, describes the situation as a "coiled spring." "The market had been down for so long, and now that rates have stabilized and we're seeing some signs of rate cuts, buyers are jumping back in." The limited inventory is forcing buyers to compete more aggressively, pushing prices higher.

Impact on Affordability and First-Time Buyers

The return to an "intense" market is raising concerns about affordability, particularly for first-time home buyers. The rapid price appreciation witnessed in January could potentially shut many out of the market, reversing the gains made in housing accessibility during the downturn. The prospect of continued price increases, fueled by further rate cuts, is adding to these concerns. Without a corresponding increase in housing supply, the dream of homeownership could become increasingly elusive for many.

Forecasts Point to Continued Growth

Industry experts are predicting that the upward trend will continue throughout 2026. RE/MAX Canada is forecasting an 8% increase in the GTA's average home price, projecting a figure of around $1.3 million. Royal LePage is slightly more conservative, predicting a 6.5% increase to $1.27 million. These projections suggest that the market is unlikely to experience a significant correction, even if the Bank of Canada begins to lower interest rates.

The key question is whether the anticipated rate cuts will exacerbate the supply shortage and accelerate price growth even further. If the central bank moves aggressively to stimulate the economy, the GTA housing market could experience a repeat of the intense bidding wars and rapid price appreciation seen in 2022. However, a more cautious approach to monetary policy, coupled with efforts to increase housing supply, could help to moderate price growth and maintain a degree of affordability.

Looking Ahead: What to Watch For

Several key indicators will be crucial in determining the future trajectory of the GTA housing market. These include:

• Bank of Canada Interest Rate Decisions: The timing and magnitude of any future rate cuts will have a significant impact on buyer sentiment and borrowing costs.
• New Listings: An increase in the number of properties coming onto the market would help to alleviate the supply shortage and moderate price increases.
• Government Policies: Government initiatives aimed at increasing housing supply, such as streamlining the approval process for new developments, could play a vital role in addressing the long-term affordability crisis.
• Economic Growth: Overall economic conditions, including employment rates and wage growth, will influence buyer confidence and their ability to afford a home.

The January data clearly demonstrates that the GTA housing market is entering a new phase. While the rebound is encouraging, it is essential to monitor these key indicators closely to ensure a sustainable and equitable housing market for all.