Closing Out 2025: How Last Year’s Market Sets the Stage for 2026

Toronto Edition
🏡 Ana Bastas Realty | Experience the AB Advantage™

As we step into 2026, Toronto buyers and sellers are reflecting on a year that reshaped expectations, reset pricing trends, and created a new foundation for the year ahead. Looking back at 2025 helps us understand where the Toronto market is headed — especially as affordability challenges, rate stabilization, and shifting buyer preferences continue to influence behaviour.

Here’s how the 2025 market is setting the tone for Toronto’s 2026 real estate landscape.

1. Toronto Closed 2025 with Stabilizing Prices and Renewed Buyer Confidence

After multiple years defined by rapid interest rate adjustments and fluctuating buyer demand, the Toronto market ended 2025 on steadier footing.

Key observations from late 2025 include:

• Prices across many property types began to stabilize, particularly condos and townhomes.
  
  
• Detached homes saw moderate demand, especially in central neighbourhoods.
  
  
• Buyer confidence grew as interest rates signaled a potential easing cycle heading into 2026.
  
  

This level of stability — after years of volatility — is one of the strongest indicators for a more predictable 2026.

2. Inventory Levels Shifted in 2025 — And Will Matter Even More in 2026

The supply landscape in 2025 created significant ripple effects:

• Inventory rose slightly in the second half of the year, giving buyers more choice.
  
  
• Many sellers held off listing due to rate uncertainty, reducing overall competition.
  
  
• First-time buyers returned to the condo market as supply improved.
  
  

For 2026, this means:

• More balanced conditions
  
  
• Less urgency for buyers
  
  
• Strategic opportunities for sellers who list early
  
  

With several new developments scheduled to complete in 2026, condo inventory will remain a key storyline.

3. Interest Rates Began Stabilizing — A Major Turning Point for 2026

One of the biggest influences on Toronto’s 2025 market was the movement toward rate stabilization.

While rates remained elevated most of the year, late-2025 economic indicators suggested:

• Slower inflation
  
  
• Increased consumer confidence
  
  
• A potential for gradual rate reductions in 2026
  
  

Even without significant rate drops, the end of volatility alone made buyers more comfortable entering the market.

This sets up 2026 as a year of opportunity — especially for first-time buyers ready to re-enter.

4. Affordability Challenges Remain — But New Pathways Are Emerging

Toronto’s affordability conversation didn’t end in 2025, but it evolved:

• Many buyers shifted their focus to more attainable property types such as condos and stack-towns.
  
  
• Co-ownership, joint ventures, and alternative financing gained traction.
  
  
• Renters explored ownership due to rising rental costs.
  
  

In 2026, buyers will continue leveraging creative solutions, government incentives, and strategic planning to navigate affordability.

5. Sellers Saw a More Informed, Selective Buyer Pool

While demand remained steady, buyers in 2025 were more intentional:

• Offers were thoughtful and conditional.
  
  
• Homes required strong marketing and correct pricing to stand out.
  
  
• Properties in prime neighbourhoods continued to excel.
  
  

This will continue in 2026:
Sellers must position their listing strategically, or risk sitting on the market longer.

6. The Luxury & Investment Segments Showed Interesting Shifts

In 2025:

• Luxury buyers prioritized lifestyle and long-term value.
  
  
• Investors focused on rental-ready properties with strong cash-flow potential.
  
  
• Pre-construction activity slowed due to elevated carrying costs.
  
  

For 2026, both segments are expected to see renewed interest if rates begin to ease as projected.

What This Means for You

If You’re a Buyer:

• Stabilizing prices create a more predictable environment.
  
  
• Rate stability increases confidence and borrowing clarity.
  
  
• Condos and townhomes present excellent entry-level opportunities.
  
  

If You’re a Seller:

• Today’s buyers are informed — strong marketing and correct pricing are crucial.
  
  
• Listing early in 2026 may help you get ahead of spring competition.
  
  
• Serious buyers are active right now due to expectations of future rate drops.
  
  

If You’re an Investor:

• Rental demand remains strong across the city.
  
  
• 2026 may bring improved cash-flow opportunities depending on rate trends.
  
  

Toronto’s market is entering 2026 with far more balance and stability than previous years — providing opportunity for every segment of the market.

Thinking about buying or selling in Toronto this year?
Get a personalized 2026 Toronto Market Strategy Session and experience the AB Advantage™.

📞 289.670.5888
🌐 www.anabastas.ca
🏡 Ana Bastas Realty — Serving Toronto, Halton Hills, Hamilton, Burlington, Oakville, Mississauga & the Niagara Region