Toronto Property Prices Still Correcting Despite Settling Home Sales in Canada

Canada's home sales are stabilizing, but Toronto's housing prices are still correcting, according to a BMO report. The bank notes that while sales are settling, prices in Toronto are still adjusting due to factors such as overvaluation and a decline in demand. BMO suggests that a more balanced market is emerging, but warns that prices may continue to fluctuate in the short term.

Canada's home sales are showing signs of stabilization, according to a recent BMO report, but Toronto's housing prices continue to adjust. The bank notes that while sales are settling, prices in Toronto are still correcting due to factors such as overvaluation and a decline in demand. BMO suggests that a more balanced market is emerging, but warns that prices may continue to fluctuate in the short term.

The Greater Toronto Area (GTA) experienced a significant drop in home prices in July 2025, with the average home sold price decreasing by 5.0% year-over-year to $1,051,719 [2]. This downward trend was consistent across all property types, with detached homes seeing the smallest decline of 4.5%, semi-detached homes decreasing by 2.5%, freehold townhouses dropping by 8.8%, and condo apartments falling by 9.4% [2].

Despite the price correction, sales activity in the GTA surged in July 2025, with 6,100 homes changing hands, marking the highest July sales total since 2021 [2]. This increase was driven by a 13.2% year-over-year rise in sales, indicating a return to market confidence. However, the surge in sales was accompanied by a 26.5% increase in active listings, suggesting that sellers are motivated by heightened macroeconomic uncertainty [2].

The Bank of Canada's seven consecutive rate cuts in 2024 through early 2025 had initially brought hope for a price boost in the housing market. However, the increased inventory of homes for sale has led to longer selling times and more price negotiations, favoring buyers [2]. The sales-to-new-listings ratio (SNLR) for July 2025 was 35%, indicating a buyer's market [2].

In the City of Toronto, market conditions were similar to the broader GTA, with the average home price decreasing by 7.8% month-over-month and the median price falling by 6.6% year-over-year [2]. The city's home sales increased by 11% annually, but the median home price was still down 3.4% year-over-year [2].

Looking ahead, BMO suggests that the housing market may continue to see price fluctuations in the short term, as the market adjusts to the increased inventory and economic uncertainty. However, the bank also notes that a more balanced market is emerging, with sales stabilizing and prices correcting.

References:
[1] https://www.reddit.com/r/TorontoRealEstate/comments/1n8grnh/canadian_real_estate_is_crashing_at_one_of_the/
[2] https://wowa.ca/toronto-housing-market