Welcome to my blog on housing, culture and design in Toronto, Ontario, Canada!  My name is Steve Fudge. I’m a realtor and housing consultant in Toronto, Ontario, Canada. 

Welcome to this month’s installment of Dear Urbaneer, where clients and followers reach out with their shelter questions. This time around, a reader wonders what might be in store for the Toronto housing market this Spring.

Dear Urbaneer:

I know Spring has historically been a busy time for realtors. But with all that’s going on politically and economically right now, will this Spring season be like it usually is?  What might we expect?

Signed,

Is The Spring Real Estate Market Still A Thing?

Here is my reply:

Dear Spring Real Estate Market:

Sometimes a real estate market can be unpredictable and confounding, like when the Bank of Canada began increasing interest rates in March 2022 in an effort to control inflation and, to our collective shock and dismay,  the rate escalation became one of the most aggressive interest rate hiking cycles in Canada’s history, soaring 475 basis points with 10 increases over a 15-month period.

No one was expecting that, partly because in the early days of the COVID-19 pandemic, BoC Governor Tiff Macklem lowered interest rates to 0.25% to encourage economic growth, and projected interest rates would remain low until 2023, saying “We are being unusually clear that interest rates are going to be unusually low for a long time.”  Although there were early signs of inflation, the BoC considered them transitory and related to supply chain disruptions unique to the pandemic. Russia’s unexpected invasion on Ukraine in February 2022 prompted commodity prices to increase which also contributed to inflation. As a result, just twenty months later the BoC began increasing interest rates at a precedent-setting clip. 

The byproduct of bringing inflation under control sent variable-rate mortgage payments through the roof. It’s been rough for the 3.5 million Canadian households who had that type of mortgage in March 2022. It’s also impacted any household with an existing mortgage who has had to renew in the past 3 years. Rising interest rates also sent the new homes market into a tailspin, with the Toronto condo market as a whole seeing significant drops in value.

I’ve seen this hardship before. As a young, optimistic, newly licensed realtor, in 1989 I watched Toronto’s housing bubble burst. From that day forward until 1996, representing their lenders under the power of sale, I navigated the loss, sorrow and shame of homeowners who tried to stay financially afloat but couldn’t. As an antidote, from 1993 through the early 2000s, I spearheaded the concept, marketing and development of Innovative Spaces, a niche market of newly constructed and adaptively reused live/work domiciles built by small-scale developers and purchased by progressive, liberated creative non-conformists.  It wasn’t until we collectively bid farewell to the Lost Decade Of The 1990s and stepped into Y2K with wonder and possibility that the real estate market started cooking. From a lukewarm start at the turn of the century, the dial was turned to a “just like rent” slow simmer in the early 00s, becoming a gentle boil in 2009 after Canada sidestepped the subprime crisis and The Great Recession. In 2017, the market was steaming full tilt when the provincial government intervened with the Ontario Fair Housing Plan in April and the federal government announced the Mortgage Stress Test in October which quickly cooled the market for almost a year. However, by 2021 Toronto real estate was at a roiling boil, best understood as a constantly agitated bubbling spitting pot, churning when it’s at its most scorching.

Historically, real estate markets are characterized by a few things: first, they ebb and flow, with values riding through peaks and valleys, pushed by various economic factors. That Toronto’s could sustain an upward trajectory for so long (barring government interventions) is unusual. In the past, Toronto real estate has oscillated in ten year boom and bust cycles. Second, by and large, there is a seasonality to real estate here, with the spring season being the kickoff, and historically the hottest season for buying and selling property.

In 2025, however, while both of these statements remain true, their aspects are different. And that is largely because the influences driving real estate values (or tamping their growth) are changing.

People frequently ask me if we’ll see a “typical” Spring market in 2025. The answer is yes, and no. On one hand,  the volume of sales have dropped and prices have softened, as Buyers stepped to the sidelines to watch and wait for steadier ground. However, I believe that the Seasons to Real Estate is deeply embedded in our psyche, and signals to many buyers and sellers alike that it’s time to get busy, real-estate wise. I dive deeper into “why” this happens, below. Read on!

Similarly, despite some headwinds, a lot of buyers have been waiting out interest rates, and awaiting softer prices, while life events, (which is the historical trigger for buying and selling homes, such as births, deaths, divorces and relocations) have continued, so these buyers will be engaging, and sellers will (and are) listing their properties more actively.

All that to say, I am anticipating we’ll see an active spring market, BUT, with headwinds coming from political uncertainty, and continued softness in the condominium markets, it won’t be as dynamic as it has been historically.

One of the issues is the residual effects of living through a booming Toronto real estate market that lasted two decades, peaking over a 12 month period from March 2021 thru March 2022  when the Bank of Canada began increasing interest rates in an effort to bring down inflation. Those heady days are especially fresh in the minds of property owners, and many are having a difficult time adjusting their expectations to the current reality that most properties aren’t worth what they were three years ago. This is compounded by the Endowment Effect – which is a cognitive bias where people assign a higher value to items they own compared to items they don’t – leading to a reluctance to trade or sell them. 

In other words, realtors are mostly navigating the expectation of Sellers, and trying to align their perspective to the reality that our market is shifting. This generally means using real time data to demonstrate that today’s market values are a reflection of current conditions, which are dramatically different to the early 2020s when interest rates were dropping as Covid19 was rising. 

Let’s take a look at these influences, and what is happening in the real estate market, and what buyers and sellers should expect from this spring market, some of which include:

• We are in the midst of a trade war, which could have an impact on job growth, housing prices and the cost and opportunity of creating more supply.
• There have long been two storylines in Toronto real estate, often at odds with each other: freehold housing and the condominium market.
• The condominium market continues to soften dramatically, with an oversupply of similar units, previously held by investors, looking to cash out, with dropping rents and high interest rates challenging their ROI. 

A Shifting Market

What will happen this spring in Toronto real estate? One simply has to glance through headlines to get a good understanding.

This article from the Globe and Mail is a must-read for both buyers and sellers wondering about what might be happening this spring in the Toronto real estate market: With politics in flux, some home buyers see an opportunity.

 It does a really good job of exploring the various factors at play currently in the real estate trenches, and looks at different scenarios.

In the luxury markets, some high-end buyers may be considering moving back to the United States, given the looming tariff war, but are taking a first step by reducing their real estate holdings. They are looking to downsize their luxury $8-$12 m properties closer to the $ 4-$6 m range.

Meanwhile, there are motivated buyers, cash in hand, looking in the same price point, who are living in the United States, and wanting to move back to Canada- but are looking for “bargains”.

Also pushing this particular buyer segment are a weak Canadian dollar, and a relatively cheaper interest rate environment, compared to the United States.

According to this Globe and Mail article, some of these buyers are trying to take advantage of the emotional state of nervous sellers with the landscape of political upheaval and get them to sell well below asking.

In this context, sellers should think hard about pricing strategy, and the advice here is to price accordingly, and attractively, to enhance potential, serious buyers, which is your best bet at selling for close to your ask, rather than encouraging bargain hunters.

This is putting downward pressure on prices, which again, might prove opportunistic for buyers, but it’s still wise to be budget-conscious and to mitigate vulnerability in a choppy market.

Click here to read a relevant  article from RBC, and one from the Globe: “Trade Turbulence Shakes Canada’s Housing Market Foundations and Residential Real Estate Retrenches In Face Of Tariff Threat.“

While it is true that the various markets: the freehold and condominium have very different outlooks, because of vast differences in supply and buyer activity, with condo prices to flatten or even fall, against freehold prices likely to remain steady, the truth is that the psychological toll of tariffs could cut across all markets, overstepping the dynamics of supply and demand that typically drive markets and price fluctuations.

That to say, no matter what buyers are buying, if the tariff situation makes them feel uneasy about their potential purchase, they won’t buy. Click here to read a great Toronto Life article: “Homebuyers May Have To Wait Years For The Market To Rebound”: A Toronto Realtor Explains The Brutal Toll Of Trump’s Tariffs”

Will the Most Recent Interest Rate Cut Motivate Buyers?

While lowering borrowing costs is generally a good thing for homebuyers, the consensus among industry experts is that this alone may not be enough to encourage buyers who are otherwise hesitant, or whose circumstances make them more vulnerable and/or concerned about economic volatility.

Here are two reads for you: What Does the Bank of Canada’s Rate Cut Mean For The Housing Market? (CTV News) and “Interest Rate Cut A ‘Silver Lining’ For Homeowners, But Not Enough To Pull Buyers Into A Spring Market, Experts Say” (The Star).

This latest rate cut was a quarter point and may be signalling underlying messages to buyers: the BOC is trying to adjust monetary policy to assist consumers, in the event of an economic downturn. Secondly, the BOC made a modest cut, perhaps indicating that there is more instability on the horizon, which would require deeper cuts. They are proceeding with caution, and hedging their bets, which is an approach that buyers may mirror.

Put this another way: if the rate cut were substantial, buyers would probably overlook, or at least have a greater comfort level with economic uncertainty, in making a big purchase, like a home.

We need to remember that inflation is very much still a thing as well, so as the cost of everything got higher over the last few years, thanks to runaway inflation, costs will get even higher if tariffs add to the price for consumers. 

While the BOC was successful in bringing inflation back within the 2 percent target, it jumped sharply in the most recent data, as the tax holiday implemented by Justin Trudeau came to an end in February, up to 2.6 percent.

There is a lot left to determine, but it’s not outrageous to think that the BOC might again have to raise interest rates to combat inflationary pressures, which will erode spending power, and may have some buyers thinking twice.

Here’s an interesting CTV News article – “Inflation’s Surprise Jump Could Push Bank Of Canada To Pause Rate Cuts–  and a useful site from the Bank of Canada: “Price Check: Inflation In Canada.“

Looking At Supply

On the supply side, new condo projects are nearing completion, as well as multiple purpose-built rental developments, which adds more supply to this pipeline, which may impact first-time homebuyers or property investors.

Also on the supply side is the vast number of mortgage renewals that are coming up in 2025 and 2026, which will invariably push more supply in the market, with most of these mortgage holders renewing at significantly higher rates. Some people simply won’t be able to afford their houses, and will list them to sale, possibly pushing prices down, both from supply and with affordability motivating these sellers to sell quickly.

This could be exacerbated if a trade war does come to pass, with economic slowdowns, recession and job losses, as well as higher costs of some goods.

This article, “Anxiety Rattles The Toronto-Area Real Estate Market” does a deeper dive into the dynamic of supply and demand, with more sellers jumping into action, but the uncertainty presented by Trump’s on-again, off-again tariffs prompting a wait-and-see attitude with buyers, which seems to be deepening as a trendline, according to the most recent stats from TRREB, which indicated a buyer’s market, thanks to this uncertainty.

Regarding the recent data, TRREB Chief Market Analyst Jason Mercer said: “On top of lingering affordability concerns, homebuyers have arguably become less confident in the economy. Uncertainty about our trade relationship with the United States has likely prompted some households to take a wait-and-see attitude towards buying a home.”

What this data underscores to sellers, is that strategy needs to be paramount. 

With more buyers than sellers, it takes longer, and expectations for pricing need to be more realistic in line with the market. As this Globe and Mail article above points out, in January 2025, 25 percent of homes in the sought-after low-rise segment sold over asking. This is compared with 50 percent over ask in March 2024, and 80 percent over ask two years ago.

This drives home the fact that while the market is still oscillating, the framework for movement is a little narrower. Value, after all, is ultimately dictated by what someone is willing to pay at a given moment in time.

This article from the Toronto Star – “How Ontario’s Housing Crisis Got So Bad” – underscores the role that low interest rates played in the frenzied pandemic real estate market, which ultimately catapulted housing prices to their peak in the early spring market of 2022. Fast forward to today, where borrowing costs are higher, but activity is continuing, but in the environment created by economic factors present today, not those in comparison to two years ago.

The Property Ladder This Spring

This uncertainty from tariffs is having an impact on everyone, but there is a segment that is feeling the effects pretty hard. Condo owners, often the first step into homeownership, and the first step up the property ladder, are hard-pressed to sell their units, to move up the ladder, hit with a triple-whammy of an oversupply, falling prices and reticent buyers thanks to political unrest.

While there is a buying opportunity for house hunters who are not tied to current real estate holdings to make their next purchase, those that are trying to follow a trade-up trajectory, will find this spring market challenging.

This article from the Globe and Mail sums up this challenge: “Young Homebuyers Seeking To Climb The Property Ladder Are Stuck With Hard-To-Sell Condos.

Given These Influences, Is The Spring Market Likely To Be Active?

Yes. That’s because, despite all of these time-based influences, there is still a seasonality to real estate, and that is because of how the buying and selling of homes factors into the lifestyles of the buyers and sellers. Typically, the holiday season and summertime are occupied with other non-real estate activities, and we often spend the winter hibernating and planning for action in the spring. This remains the same.

There are a couple of reasons for this. First, all the buyers active since autumn who, for whatever reasons, did not secure a purchase are keen if not impatient to lock something down when the New Year begins. Although this group may be suffering from buyers’ fatigue, come New Year they’re even more mentally committed because real estate dominated their Holiday narrative. Everyone in their social world is on the edge of their seats awaiting the conclusion of this tour de force. Be assured these purchasers are not lacking in motivation, but by the limited supply of turn-key well-presented well-priced listings on the market for sale. They’re ready to pull the trigger.

Joining this pool of ‘Autumn Buyers’ are the Buyers who decided it’s time to get on, climb up, or take a step down the property ladder after the New Year. Yes, some of them literally looked into each other’s eyes on New Year’s Eve, intertwined their arms while holding a glass of bubbles and said “Let’s Buy A Home This Year” but most are just regular folk whose motivation to buy is a function of the human condition. Yes, I have argued that there is a certain amount of social conditioning that compels Canadians To Make Homeownership A Priority Despite The High Costs.

but I also believe Maslow’s Hierarchy of Needs is eternally at work. The lens many of us will look through is activated when we commit to serving our future selves, and we believe that Our Future Well Being Requires Us To Secure A Safe Home That We Own. 

Those committed to manifesting this promptly use the months of January and February to qualify their purchasing power and dip their toes into the property search. For almost 2 decades in Toronto – these new Buyers watched the Autumn Buyers secure the new Spring listings in competition, learning that bidding wars were a fact of life in Toronto.

Even when the news headlines said the market was soft or softening, the Buying experience was often the opposite, or it did not apply to where they were looking, the property types they were considering, or the dwellings listed for sale in their price point.

Yup. Srsly.

Typically as March unfolds, both groups of Buyers are sufficiently exposed to property values, and the dynamics of the market. Armed with this knowledge, Buyers more aggressively compete head to head in hopes of securing their next Home. The supply of listings may be lacking relative to this potential double cohort of qualified Buyers.

Thank you for your thoughtful question! More to come about the Spring Market 2025!

Now more than ever, having a sound, data-driven strategy is essential. It’s about applying patience and following the process to stay steady in a market that is subject to headwinds. I’ve got decades of experience in the ever-changing, swiftly-moving Toronto real estate market that makes me uniquely positioned to guide you through. I’m here to help!

If you found this post helpful, these other articles on Urbaneer.com may offer you further insights and guidance:

What’s Trending In Toronto Real Estate?

The Not-So-Unbelievable(?) During A Shifting Toronto Real Estate Market

Dear Urbaneer: Has The Toronto Real Estate Market Gone SLO MO?

It’s A Different Toronto Real Estate Market, Folks!

Dear Urbaneer: A Question About Letters Of Opinion And Estimating Fair Market Value

Over A Recent 90 Day Period, We Discovered 1 In 4 Sellers Of Downtown Toronto Lofts Lost Money

Dear Urbaneer: Who Is Buying Toronto Real Estate In 2023?

Interest Rates And The Toronto Real Estate Market

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Since 1989, I’ve steered my career through a real estate market crash and burn; survived a slow painful cross-country recession; completed an M.E.S. graduate degree from York University called ‘Planning Housing Environments’; executed the concept, sales & marketing of multiple new condo and vintage loft conversions; and guided hundreds of clients through the purchase and sale of hundreds of freehold and condominium dwellings across the original City of Toronto. From a gritty port industrial city into a glittering post-industrial global centre, I’ve navigated the ebbs and flows of a property market as a consistent Top Producer. And I remain as passionate about it today as when I started.

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Thanks for reading!

-The Urbaneer Team

Steven Fudge, Sales Representative
& The Innovative Urbaneer Team
Bosley Real Estate Ltd., Brokerage – (416) 322-800

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