February 2025 Stats – Market Update

What Trends are we Seeing?

February 2025 Toronto Regional Real Estate Board (TRREB) delivered an average price drop of 2.2 per cent on a year-over-year basis.  This relatively unchanged average price metric flew in the face of inventory figures which would otherwise call for a much deeper price correction.  Total inventory soared 76 percent higher in February 2025 compared to that of February 2024 with a total of 19,536 properties available.  Total number of sales decreased by 27.4 per cent year-over-year in February 2025 and the month-over-month sales figures decreases from January to February 2025 by 28.5 percent.  The Sales to New Listing Ratio (SNLR) dropped to 33 percent in February 2025 which is indicative of a market empirically defined as a buyer’s market.  With prices remaining relatively unchanged we step back to examine the big picture.

What we see is that the real estate market is behaving as it has historically.  A few months back we sighted that often what is seen with a market adjustment is an initial drop in average price and number of sales and then a relatively stable period with little change from a price perspective for between three to five years.  Looking at the monthly average price illustration over a prior three-year comparison, we see textbook results.  Affordability in Toronto and the Greater Toronto Area (GTA) is undoubtedly a key player in this narrative.  Despite downward trending interest rates buyers still face affordability issues as monthly payments on an average priced home of $1,084,547 won’t be easy; as a result, sales are down.  However, sellers who are priced appropriately are able to find enough buyers out there willing to make the sacrifice.

On the ground, what we are seeing, which the headlines don’t reflect, are two words: “multiple offers”.  In the bread and butter of the real estate industry, spanning $1.0 million to $2.0 million, we are seeing offer dates being set and multiple offers submitted.  In some instances where predatory pricing has been used, we’ve even seen pre-emptive offers come forward to take the home off the market before the bid date.  A changed dynamic to these situations from historic multiple offer situations is that the winning bids are coming embedded with conditions on inspection and/or finance.  It seems that sellers are holding the line relatively flat on price and that buying power is presenting itself on being able to have conditions included in their winning bid.

What Lies Ahead?

“Uncertainty” will without question be one of the most used words of 2025.  The on-again and off-again trade war coinciding with general geopolitical uneasiness makes for a challenging decision-making process.  Those challenges will be faced on a macro scale as institutions like the Bank of Canada (BoC) chart a rate pathway for 2025 and on a micro level as individuals and families make sale and purchase decisions.  With the BoC next rate announcement on our doorstep (March 12^th, 2025) we examine the key contributing factors to their decision-making process.

The most recent inflation figures rolled in at 1.9 per cent for January 2025, up slightly from Decembers 2024’s 1.8 per cent.  Notable is that without the GST break, estimates for the inflationary figure run between 2.5 and 2.7 percent.  The cost of shelter increased by 4.5 percent. This was previously a consistent driver of inflation that despite the higher number is starting to ease.  Rents fell for the first time since August 2022, which is an indicator of the broader health of the real estate market as there are many would-be sellers out there choosing to rent as they cannot achieve their sale price and subsequently flooding the market with rentals and putting a downward pressure on rents.

The gross domestic product (GDP) figures for Q4 2024 tell a tale of an economy making headway and having seen the impact of falling interest rates.  Q4 GDP was reported at 2.6 percent, beating the 1.7 percent estimate.  Two factors not indicative of systemic economic improvements would be the GST break and an increase in exports as organizations moved to get ahead of the impending trade war.  While these figures look like a strong economic narrative, much concern exists over what Q1 2025 will look like as consumer confidence has been squashed by tariff talk.  The BoC will likely have to absorb these figures with a grain of salt.

The most recent figures which were released that will play into the BoC rate decision were the unemployment figures (released March 7^th, 2025).  The economy added 1,100 jobs which was a far cry from the 20,000 that had been expected. The unemployment rate held at 6.6 percent, largely driven by the slowest population growth since April 2022.  The in-depth review of where the economy had job gains versus job losses shows signs that the tariff threats resulted in a reduction of business confidence and hiring for trade-sensitive goods producing jobs and that it was domestically focused service jobs that produced gains.

As each of the above noted figures were released, economists went from predicting a hold on interest rates, to a 50/50 BoC decision, to a 75 per cent probability of a rate reduction and most recently we sit at an 85 percent probability of a rate reduction.  The downward pressure on the economy, at this stage, seems to be outweighing the inflationary concerns of tariffs and reciprocal tariffs.  Expect a 25-basis point interest rate reduction from BoC on March 12^th, 2025.

For buyers, with interest rates continuing to trend downward where we are seeing bond rates tumble and the five-year fixed mortgage options now starting with a “3”, it is likely a perfect window to make your real estate move before the BoC is faced with the dilemma of inflationary pressures and deciding between holding the interest rate flat or increasing it.

For sellers, it is prudent to inspect what is happening in your immediate market and product type.  The SNLR of 33 per cent and an overall buyer’s market may not match with potential for multiple offers and general buyer demand that your sale could achieve.  Keep in mind that we are in a different market than historically seen where properties were being sold within hours.  Depending on the neighborhood, average days on the market can run between 20 to 30 days, which in the grand scheme of things illustrates a more normalized process.

With any sort of real estate objectives, unless they run on a 10-year horizon, the market we face today will likely be similar to the market we face over the next few years.  The uncertainty and geopolitical uneasiness are not likely to dissipate within months.  Moreso, as buyers and sellers become accustomed to the roller coaster environment, action will be taken as opposed to sitting on the sidelines.

What is Happening with Sale Prices

Number of Transactions Trend

When comparing February 2025 to February 2024, we saw the following trend:

When comparing February 2025 to January 2025, we saw the following trend:

Looking into the different geographic pockets of Toronto and the GTA we notice the following changes in number of transactions when comparing February 2025 year-over-year to February 2024 and month-over-month to January 2025. The breakdown per area and product type are as follows:

Footnote: Source of statistical data is from the January 2025 and February 2025 Market Watch report of the Toronto Region Real Estate Board (TRREB) MLS.

A – Monthly Percentage Change in the Number of Units Sold

B – Month Over Month Average Price Percentage Change

C – Seasonally Adjusted Month Over Month Average Price Percentage Change

D – Monthly Percentage Change in Average Sale Price