How Do We Describe What We Are Seeing Right Now?
A moderate drift downwards in sales price with no rate drops to stop the downcycle for now. The market is nuanced.
Until a rate drop occurs (which requires some economic stability/predictability), the market will remain uncertain.
The real estate market in 2025 has been far from predictable, “normal”, or clear-cut. This has been an unusual market that has performed better than we initially expected.
In what other markets could a near halving of sales equate to a relatively moderate price adjustment? If a manufacturer of widgets discovered that half their sales had dropped off, there is a good chance that prices would have followed. But, alas, not Toronto’s real estate market. While there have been value changes, especially in one-bedroom condos downtown, freehold housing has been stronger, despite a moderate amount of price softening.
With the uncertainties surrounding where tariffs will land and their impact on the Canadian economy, given the limited Bank of Canada rate reductions, we are left wondering what will happen next. This is why the market has been so nuanced and complex to predict.
We are touching on a few key elements that frequently arise in our conversations with clients, in the hope of providing you with a deeper understanding of how to make informed decisions and what to consider along the way. Although we cannot predict the market, we strive to add value to our clients in every way possible.
Pitfalls of Most Pricing Strategies Today:
Why are there so many listings on MLS? (near record level of listings on MLS) Real estate agents, in many cases, are not pricing at market prices; they are pricing at what values were three and a half years ago. In other words, the listing strategies are not competitive, which means the houses and condos are sitting on the market for an exceptionally long time, eroding the property’s value. A stigma arises in the buyer’s mind: “What’s wrong with this house? What am I missing here?”
In many cases, Realtors are pricing at what sellers “want,” which often has no bearing on the marketplace. If pricing is set at a “wanted” price and there is too great a delta between that and the value, the house will stagnate. That “want” price is another way of stating a slogan of: I Don’t Want To Sell. So it begs the question, why is that home on the market?
The next level of understanding is how the buyer will interpret that; they will think that the listing strategy is just trying to take advantage of them. The net result is that the buyer will take their time and wait for another listing to come out, which erodes the value of the initial listing. The buyer will wait for a deal where they can get what they “want.” It’s a starting contest, and the buyer, given time, will win – if the sellers aren’t prudent and priced for market conditions.
Pricing correctly in today’s market is integral. What is that price? That depends, of course, on where the house is (some neighbourhoods are much stronger than others), and what the state of the home is. The general rule of thumb is that you must have a unique point of difference that sets you apart from your competition. Why is your home better? In some cases, particularly in one-bedroom condos in buildings with a dozen identical units, the unique point of difference must be price, and the value proposition must be compelling.
Get the listing and pricing strategy wrong from the start, and you will have an exceptionally difficult time recovering the maximum value for the property.
Thinking about buying a home? Click here to browse my featured listings.
Looking for more insights into Toronto real estate? Check out these related posts from my blog!
- Where to Buy A Toronto Condo If You Don’t Want To Live Downtown
- What Are Must-Make Repairs Before You Sell Your Toronto Home?
- Is Rosedale A Family Neighbourhood?
Time Value of Money
Keep in mind the time value of money; if you are exiting the market (be it an investment condo, leaving the city, or an estate sale), the sooner you receive the funds, the sooner you can re-allocate them to another investment vehicle. There is a time value of money; get that money working for you, rather than having the equity in the property tied up for an unnecessarily long time.
Although the stock market in the US and Canada is unpredictable, it has far outpaced real estate over the last few years…and, despite all expectations, this trend is expected to continue into the current calendar year. Many sellers can resolve the perceived discrepancy between their desired value and market value relatively quickly and be done with the potential stress of selling real estate.
Foreign Buyer Ban – Lift It (with a caveat):
We would like to see the foreign buyer ban removed from Toronto, even if just for condos, to allow our neighbours to the south to move north and boost our real estate market. Condo sales drive the real estate market. The condo market slowdown has led to an industry-wide softening.
When housing values were skyrocketing to the point of unaffordability for buyers in Canada, the federal government considered it prudent to ban foreign buyers (with some exceptions). Considering Toronto is our primary focus, and single-family housing is affected by this ban, we will focus on this element for this discussion.
As we have seen with the number of listings on the MLS, the price softening, and the number of pre-construction condos coming to completion, there is a surplus of housing in our city. It may not be affordable to all, which is proving accurate, but there is a need to absorb the housing. This would stabilize our economy, like it or not. Canada’s economy relies heavily on its housing industry for job creation and the sale of Canadian commodities, such as lumber, steel, and copper.
There are some disgruntled Americans who would like to purchase here in Toronto, as we get the emails and take the calls. Allowing Americans to buy here in Canada could give a real boost to stabilizing values and lend a helping hand to the housing industry.
Have questions about buying or selling in today’s market? I have answers! Reach me by email at ryan@ryanroberts.ca or call 416-925-9191.
