Market Insight for September 12

Toronto home prices continue to slide, and many buyers remain cautious. Traditionally, fall brings a surge of activity in housing, right alongside back-to-school, early Halloween decorations, and the pumpkin spice rush. This year, the urge to predict what comes next is stronger than ever.

Buyers entered September with leverage and a wide range of listings to choose from. Still, many are holding off, waiting for interest rates to come down further and for prices to dip even more.

At the same time, sellers are rethinking their expectations and facing the reality that it’s no longer 2022. Those aiming to “move up” rely on first-time buyers to purchase their existing homes, so they can take advantage of possible savings on their next property.

Plenty of variables could shake the market — from the upcoming rate decision to unpredictable moves by U.S. President Trump. Some realtors are hopeful that confidence is gradually returning after the sting of trade tensions, but one thing is certain: this is shaping up to be an interesting fall market.

The summer just passed was one of the slowest in years. Both sellers and agents are eager for momentum to build again. Yet, with uncertainty around tariffs, many buyers remain hesitant, especially those shopping below $800,000 — the condo segment in Toronto. Without first-time buyers, we don’t have a market.

With investor activity nearly lacking and the condo market weakening, attention is turning to a potential mid-September rate cut as a possible spark. Should the Bank of Canada trim rates by a quarter point, first-time buyers might finally step off the sidelines.

In its most recent decision, the central bank left the overnight lending rate at 2.75%, while signaling room for reductions if the economy weakens. For homeowners with variable mortgages, rates directly affect monthly costs — the higher the rate, the heavier the bill.

Fresh data from Statistics Canada showed the economy shrank 1.6% in Q2, a steeper decline than many analysts forecast, largely due to Trump’s tariffs. That has only strengthened calls for a cut.

Signs of buyer optimism are slowly reappearing. A fall market survey showed 54% believe now is a good time to strike a deal. Many can’t wait on the sidelines forever — life events keep housing demand alive.

RBC assistant chief economist Robert Hogue said earlier worries of a severe downturn have eased: “We’ve seen confidence begin to come back as summer progressed.”

Still, the Toronto Regional Real Estate Board (TRREB) reported values are falling across property types, with the average price down 23% since the winter 2022 peak.

Even so, sought-after neighbourhoods like Riverdale, Leslieville, and Roncesvalles and other pockets of the city are still holding value.

The luxury segment also remains steady, with wealthier buyers less reliant on large mortgages and therefore less exposed to rates.

While the trade war has dented confidence, Hogue noted tariffs are narrower than feared and haven’t hit the broader economy as hard. He projects further price declines through late 2025 into 2026, followed by a gradual recovery in resales — but no additional rate cuts.

Buyers now have more options and are often including conditions like financing approval or inspections. For move-up purchasers, trading in a condo or semi for a detached home can still work in their favor — taking a smaller hit on the sale but securing a larger property at a reduced cost.

Sellers are adjusting their expectations. Some who bought during the peak paid more for their home than what it’s worth now and are convinced another rate cut will bring buyers back. For now, the potential first-time buyer is still open to purchasing. But, in no rush.