January 2025 Stats – Market Update

What Trends are we Seeing?

January 2025 Toronto Regional Real Estate Board (TRREB) posted a 70.2 per cent increase in total inventory from January 2024 driven by i) a 48 per cent increase in new inventory and ii) 7.9 per cent less transactions year-over-year. This resulted in a Sales to New Listing Ratio of 31 percent which was a 19 per cent drop year-over-year. A Sales to New Listing Ratio below 40 per cent is indicative of a buyer’s market. The cracks are showing. Yet, from an average price perspective TRREB reported an increase of 1.5 per cent year-over-year; not broken.

Toronto was a healthy market in January 2025 with an increase in number of sales increase in three out of four house categories (Detached, Semi-Detached, Townhouse, Condo/Apartment) and price increase in two out of four categories year-over-year. The 905 area code is where we saw expectations defied with a reduction in number of sales across all four categories and yet an increase in prices in three out of four categories. Not to any surprise, the condo category had decreases for sales and average price in both Toronto and the 905.

The figures matched out experiences. At a micro level, we encountered scenarios of over 10 multiple offers on a townhouse in Toronto and three offers on a detached house in Markham.

From a buyer’s perspective we look to the fundamentals of “is it getting more expensive to purchase as the days go by or less expensive?” Considering that the TRREB average price increased by 10 per cent from December 2024 to January 2025 and that TRREB is projecting an average price of $1.4 million across all product categories (2.6 per cent growth from 2024) it appears if you have been waiting for the right time to jump into the market, now is the time to purchase.

From a seller’s point of view, the sentiment may feel very different than that of the buyer’s who stepped forward with a purchase driven by expectations of dropping interest rates and trying to get a jump start on potential buyer competition. As product sits on the market we may be wondering when a buyer frenzied market will return. Keep in mind that the changes to average price are usually within less than a couple percentage points on a year-over-year basis, if you are selling and buying within the same 30-to-60-day cycle moving forward now prior to additional uncertainty inserting itself into the market may be prudent.

What Lies Ahead?

The last 10 days have brought forward an abundance of grabbing headlines which reached a pinnacle with the United States and Canada having a staring competition across the 49^th parallel on the precipice of a trade war. Much of the posturing resulted in many economists postulating on what would happen next with interest rates. The real estate industry is one of the most sensitive to interest rate adjustments.

At the outset of last week as a 30-day reprieve from implementation of a trade war was announced the markets had priced in an 80 per cent chance of a Bank of Canada (BoC) rate reduction at its next announcement on March 12^th, 2025. In some forums, there was discussion of an interim emergency rate adjustment being implemented. The BoC has openly discussed that monetary policy will not be able to combat the impacts of a trade war on its own. Central banks, across the world, will be faced with the balancing act of downward pressure due to weaker economic activity against upward price pressures because of tariffs fueling inflation. The BoC will be forced to choose between the lesser of two evils.

On Friday February 7, 2025, the unemployment numbers were released which shifted market predictions of a BoC rate reduction in March 2025 from 80 per cent chance to a 55 per cent chance.

Canada added 76,000 jobs in January which was a tripling of expectations and reduced the unemployment rate to 6.6 per cent (projected to have been 6.8 per cent). Notable was that the manufacturing sector and construction sector had significant job gains. We have now seen two declining unemployment rates in a row, and it is the first time Canada added more jobs than the number of people welcomed to the country. These are signs that the BoC reduction in interest rates is working. It is worth noting that a lager share of the private-sector job gains were from part-time positions and that the current 6.6 per cent unemployment rate is above target “neutral-rate” meaning there is still a lot of slack in the economy.

The BoC will have the foresight of the 30-day reprieve from a trade war having gone by prior to its next rate announcement (March 12^th, 2025). It is our expectation that regardless of whether the BoC implements a reduction or holds the line it will create some sense of certainty for buyers and sellers alike unlocking the handcuffs to act and make decisions for their real estate portfolios. An Ipsos Survey indicated that 28 per cent of those surveyed were likely to buy in 2025 and that 42 per cent of those likely to buy were first time buyers. For sellers of assets below $2.0 million the cavalry may be coming. For buyer’s, in a market that over 20 years has shown cracks before but never broken, be careful not to wait too long to take next steps.

What is Happening with Sale Prices

Number of Transactions Trend

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

When comparing January 2025 to December 2024, 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 January 2025 year-over-year to January 2024 and month-over-month to December 2024. The breakdown per area and product type are as follows:

Footnote: Source of statistical data is from the December 2024 and January 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