Based on Moe’s video of January 9, 2025. For this month’s numbers, see GTA Housing Market Today.
این مقاله به فارسیRead in FarsiHere is my call for 2025, made in January 2025. Interest rates keep falling toward a policy rate near 2.5 percent by year end. Toronto prices rise about 5 percent. Total sales beat both 2023 and 2024. The market is balanced overall, condos stay weak, rents come down, and freehold homes between 1 and 1.5 million dollars are the hottest part of the market.
My name is Moe Asgarian, a real estate broker in Toronto with RE/MAX, and every January I put my predictions for the year on the record so we can look back at the end of it. 2025 is a harder year to read than most, because two big political changes are landing at once: the Trump administration takes office, and in Canada the Liberal government ends after 11 years. Here are nine predictions about the market and the economy behind it.
Interest Rates Keep Falling in 2025
My first prediction is that interest rates come down again, and that at the end of 2025 we are talking about a policy rate of around 2.5 percent. Some analysts say Canada's economy is in worse shape than that and rates have further to fall. I do not think rates drop by more than they did in 2024, but the decline will be meaningful. The reason is the economy itself. Lower immigration also creates a labour market shock in the short term, and all of that points the central bank toward cuts.
A Change of Government in Ottawa
My second prediction is that the Trudeau government steps aside sooner or later. I have said before that this government is dealing with more crises than it can carry and that its life is short. Exactly when depends a great deal on Justin Trudeau's personal decision, but I expect the Liberal government to be out within the first two or three months of 2025. Polls at that time put the Conservatives under Pierre Poilievre first in line to replace them. He had just done a long interview with Jordan Peterson, the controversial Canadian academic with a popular podcast, and the tone of it was effectively an interview with the next prime minister of Canada.
Fewer Newcomers to Canada
Third, 2025 is the year we clearly feel the drop in immigration. Canada's immigration policy shifted through the final months of 2024 and the news kept pointing the same way: fewer new arrivals, and tighter rules wherever the government can tighten them. The reason is that a great many people arrived over the past few years and the cultural and economic results were not satisfying, and with Trump in office Canada needs to watch its own interests more closely. It does cost the economy. Think of the international students who arrived over the year or two leading up to 2025 and supplied something close to 20 percent of net domestic income in Canada and in large provinces like Ontario. They are not coming in the same numbers, and that is lost income. Even so, this reset looks necessary, and whichever government is in power in 2025 will put immigration order near the top of its list.
Toronto Condos: More Supply, No Real Price Growth
Fourth, condos do not get more expensive in 2025. The forecasts point to roughly 40,000 new or brand new condos entering the Toronto market in 2025, and that is on top of inventory that is already high at the start of 2025, with a lot of units that simply are not trading. So I do not see meaningful growth in the condo segment. Micro condos are the sharpest version of the problem. They are too small to appeal to end users, and investors are not making much money on them either, so I expect them to sell poorly.
Prices Up About 5 Percent, With More Sales Than 2023 or 2024
Fifth, I expect prices across property types in Toronto to rise about 5 percent by the end of 2025. Next to many other markets that is a good year, but it sits below Toronto's own long run record: over the 45 years up to 2025, prices here rose roughly 6.7 percent a year. Five percent still means opportunity, especially for an end user who is going to live in the home. Buy with 20 percent down, see the home gain 5 percent over the year, and you have earned about 25 percent on the money you actually put in.
Sixth, the number of transactions goes up. Based on what we saw at the end of 2024, I think the rise in sales across Toronto and the GTA continues, and I am confident 2025 finishes ahead of both 2024 and 2023. Lower interest rates and the new mortgage rules bring more first time buyers into the market than in 2024 or 2023, and that alone lifts the transaction count.
A Balanced Market, Lower Rents, and the 1 to 1.5 Million Dollar Band
Seventh, 2025 is a balanced year. A balanced market is one where neither the buyer nor the seller has the upper hand, and my read is that by the end of the year neither side will have won. Within that, the condo market leans toward buyers and the freehold market leans toward sellers.
Eighth, rents come down by the end of 2025. The help going to first time buyers moves some of them into owning, which thins out rental demand. High condo inventory pushes supply the other way. And fewer newcomers matters, because people in their first years in Canada are generally looking to rent rather than buy. We already saw the trend late in 2024, when average annual rent in Ontario came down by six and a bit percent, and I expect the same direction through the end of 2025.
Ninth, freehold homes between 1 and 1.5 million dollars have a very good year. The main reason is that going into 2025 the government raised the ceiling for insured mortgages, the ones where you can put down less than 20 percent, from 1 million dollar homes to 1.5 million dollar homes. That is an attractive policy and I expect a lot of first time home buyers to use it and to go looking for exactly that kind of house so they qualify. If you want to talk through where your own plan fits in a year like this, fill out the form at the bottom of this page or book a free consultation. Stay well and take care.
Frequently Asked Questions
Where were Canadian interest rates expected to end 2025?
My prediction, made in January 2025, was that by the end of the year we would be talking about a policy rate of around 2.5 percent. Some analysts argued the economy was weaker than that and rates would go lower still. My view was that rates would not fall by more than they did in 2024, but the drop would still be significant, driven by economic problems and by a short term labour market shock from lower immigration.
Why were Toronto and Ontario rents expected to fall in 2025?
Three reasons. First, the new help for first time buyers pushes some renters into buying their first home, which takes demand out of the rental pool. Second, high condo inventory adds rental supply. Third, Canada was set to take fewer immigrants in 2025, and newcomers usually rent in their first years rather than buy. In late 2024 average annual rent in Ontario had already come down by six and a bit percent.
Why were 1 to 1.5 million dollar freehold homes expected to lead the Toronto market in 2025?
Because the government raised the cap on insured mortgages, the ones where you can put down less than 20 percent, from homes priced at 1 million dollars to homes priced at 1.5 million dollars. That change, in place at the start of 2025, puts freehold homes in that band within reach of buyers who could not assemble a 20 percent down payment, and first time buyers in particular were expected to use it.