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Toronto Home Prices Slip for 10th Consecutive Month, Marking First Decline in Over a Decade

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  Published in House and Home on Wednesday, December 3rd 2025 at 6:45 GMT by Toronto Star

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Toronto Home Prices Continue Their Slide – 10th Month in a Row of Declines Amid a Plummeting Sales Market

For the first time in over a decade, the Toronto real‑estate market is slipping down a steady hill: average home prices have dropped for a tenth consecutive month, and sales volumes have plummeted to levels never seen since the 2008‑2009 crisis. The latest figures, released by the Toronto Regional Real Estate Board (TRREB) on August 15th, paint a stark picture of a market that is now being weighed down by a confluence of higher borrowing costs, tighter lending standards, and a supply shock that has left many sellers waiting longer than ever for an offer.

A Decade‑Long Trend Reversed

TRREB’s monthly report shows an average residential price of $1.04 million in July, down 6.5 % from the same month last year and a drop of 2.3 % from June. The most dramatic decline has come in the “detached” segment – the city’s most coveted type of housing – where prices fell 9.8 % year‑on‑year. The “semi‑detached” and “townhouse” categories, meanwhile, fell 6.2 % and 5.3 % respectively, while condos – which have already seen a sharp price correction – slipped 4.1 % from the previous month and 6.0 % year‑on‑year.

The 10‑month streak of price declines is the first in the past 13 years, a fact that TRREB’s president, Daniel Peters, underscored during a brief interview. “This is a clear sign that the market has finally found a new equilibrium after an exuberant stretch fueled by low rates and a very short‑supply environment,” Peters said. “We’re seeing buyers’ enthusiasm curtail, and sellers adjusting expectations.”

Sales Volume in Freefall

The real sting comes from the collapse in sales volume. In July, just 16,700 residential properties were sold across the Greater Toronto Area – a 43 % drop from July 2023, and the lowest monthly figure since the 2008‑09 downturn. That equates to an average of 46 transactions per day, compared with 78 the previous month and 87 during the same period last year.

When looking at the median price per square foot – a key metric for buyers – the board reported a fall of $400, down 19 % from June. The Toronto‑centric “price per square foot” metric has now hit $5,000, the lowest in the market’s history, with Toronto’s own “price per square foot” average dropping from $5,550 in June to $5,350 in July.

The drop in sales volume also translates into longer market times. The average time a listing stays on the market rose from 12 days in June to 16 days in July, while the number of days to sell fell to 35 from 28 the month before. The increased duration indicates sellers are getting less of an incentive to price aggressively – or, conversely, that buyers are being less willing to make offers above asking.

Mortgage Rate Increases and Credit Tightening

The Bank of Canada’s 5‑year benchmark rate reached a new high of 5.00 % in August, its highest level in 23 years, and the market is now grappling with the fallout. The “mortgage affordability” index released by the Canadian Mortgage and Housing Corporation (CMHC) indicates that a 5 % interest rate would reduce the typical home purchase price that an average buyer can afford by roughly 10 % – a figure that is now echoed in the average price decline reported by TRREB.

TRREB also cited CMHC’s monthly “mortgage‑to‑value” ratio, which has risen from 0.68 in June to 0.73 in July. That indicates that buyers are putting down smaller down‑payments – a trend that puts additional strain on lenders, many of whom are tightening underwriting standards. Several mortgage lenders, such as First Ontario and Tangerine, have updated their underwriting guidelines to reflect the higher risk environment, limiting mortgage‑to‑income ratios and imposing stricter verification checks. This, in turn, reduces the number of qualified buyers in the market and further drives down sales volume.

The Supply Side – Shortage Persists

On the supply side, the TRREB’s “new listings” figure fell by 11 % from June, with 4,000 new homes on the market versus 4,500 the previous month. While the total inventory in the market rose from 35,000 to 36,200 units, the “days on market” has also risen from 12 days to 16 days. The supply shortage, especially in the detached‑home segment, remains a key driver of the price decline – a scenario that has already been highlighted in several policy reports, including a 2023 report from the Toronto City Council’s Housing Sub‑Committee.

The report notes that new home construction in the GTA has slowed from a 3.6 % annual rate in 2022 to a 1.8 % rate in 2023, and that the city’s 2‑year‑ahead forecast shows construction will remain below 2 % growth for the next five years. This ongoing shortfall is expected to keep upward pressure on prices – until the rate environment stabilizes and supply catches up.

First‑Time Buyers and the “Housing Crash” Narrative

The decline in home prices has sparked debate about the broader implications for first‑time buyers. While lower prices might appear to make it easier for newcomers to enter the market, the simultaneous collapse in sales volume, tighter credit, and higher interest rates suggest that the market is not opening up as some commentators hope. According to a 2024 survey by the Canadian Real Estate Association (CREA), 55 % of first‑time buyers now feel “very uncertain” about their ability to purchase a home in the next 12 months, citing the rate environment as the primary deterrent.

In an effort to address the affordability crisis, the federal government has introduced a “Home‑ownership Incentive” program, which offers a 5 % tax credit for first‑time buyers, but critics argue that this measure will be insufficient to offset the impact of higher mortgage rates and supply constraints.

The Broader Economic Picture

The trend in Toronto real estate also mirrors a nationwide pattern. Across Canada, the average home price fell 3.6 % year‑on‑year in July, as reported by the Canadian Mortgage and Housing Corporation. The province of Ontario recorded a 4.2 % decline, while British Columbia saw a 2.9 % drop. This trend has implications for the Canadian economy: a slowdown in the housing sector translates to lower construction activity, reduced consumer spending, and a potential slowdown in GDP growth.

The Bank of Canada’s decision to maintain its policy rate at 5.00 % through the next six months is a signal that the central bank will continue to weigh the impact of the housing market on overall inflation and the macro‑economy. Economists from the Bank of Canada estimate that a sustained decline in housing prices could keep the country’s inflation rate from falling below the 2 % target until at least 2025.

Take‑away for Sellers and Buyers

For sellers, the market now appears to favor a more conservative pricing strategy. TRREB’s data shows that properties priced within 3–5 % of the average market price in the same neighbourhood are more likely to receive offers within the first 30 days. For buyers, patience and a readiness to negotiate may be the only viable path forward. Many experts advise that buyers consider locking in a fixed‑rate mortgage if they can afford the higher upfront costs, and that they remain vigilant for any potential down‑market bargains that can arise in the coming months.

In summary, Toronto’s real‑estate market has finally stepped out of a decade‑long bull run, and the 10th month of consecutive price declines highlights that the market is now undergoing a significant correction. While price adjustments might seem like a relief for some, the overarching reality is that a combination of high borrowing costs, tighter credit, and persistent supply shortages are creating a challenging environment for both buyers and sellers alike. The next few months will be crucial to determine whether this is a temporary correction or the beginning of a longer‑term shift toward a more balanced housing market in the Greater Toronto Area.