May 2025 Stats – Market Update

What Trends are we Seeing?

The month of May continued to bring similar numbers on a year-over-year basis which point to a suppressed real estate market.  On the Toronto Regional Real Estate Board (TRREB), total inventory increased 41.5 per cent year-over-year, new listings increased 14.0 per cent year-over-year, number of sales were down 13.3 per cent year-over-year, and average selling price was done four per cent year-over-year.

There is no doubt that the real estate market is experiencing a shift, however, perspective is everything.  What we know is that affordability, to the extent that it can be applied to the Toronto and Greater Toronto Area (GTA), has been improving.  Consumer mindset within the Toronto and GTA real estate market has been conditioned that when the real estate market turns it happens quickly and traditionally with rapid average price increases.  The quagmire that would be participants in the real estate market find now is trying to figure out how close we are to the tipping point of change and in which direction will things turn.

Here are some insights that bucks the suppressed market trend and contributes to confusion for all that are paying attention.  Total number of transactions increased on a seasonally adjusted basis from April 2025 to May 2025 by 8.4 per cent and average price on a seasonally adjusted basis increased from April 2025 to May 2025 by 0.3 per cent.

What we are noticing in our book of business:

• Single family detached listed under two million in strong communities selling within 10 days
• Listings between $3.5 million and $4.5 million getting second and third looks from buyers contemplating acting
• Condo market surprisingly showing signs of life with showings and sales in the sub-$700,000 price category
• $10.0 million plus price point getting limited activity despite a pick-up in inquiries

Purchasers and sellers in the two million and below category are generally going to be driven by lifestyle decisions to move into certain neighbourhoods or change product type.  This coupled with some improved affordability due to decreased rates and a slight sense of anxiety that if the real estate market does turn their price point generally feels the impact of the upward swing in prices the most it makes sense that we’re seeing decision being made by purchaser to come off the sidelines.  Sellers in this price point are accomplishing their lifestyle goals and hedging their bets against a potential downward swing in the real estate market due to extreme uncertainty on a global scale.

What Lies Ahead?

Not an easy task for the Bank of Canada (BoC) right now.  The Federal Government postponement of their budget adds to the uncertainty that the market statistics are providing.  This may be a stall tactic intentionally being used to allow for a slow play on the trade war to unfold without any bold decisions being made to stimulate or recess the economy which in hindsight will look like panic.  The biggest challenge we face current is that the headline numbers do not tell the entire story, the devil is in the details as they say.

The unemployment numbers were released Friday June 6^th, post BoC interest rate announcement to hold at 2.75 per cent.  Unemployment sits at seven per cent which is the highest since 2016 outside of the pandemic.  Despite a tapering of immigration, we are adding one job for every four works added to the labour force.  Total number of unemployed has swelled to 1.6 million which is a 13.8 per cent increase from a year ago.  The unemployment figures, for many, provide the most clarity of future rate cuts.  Even within them though, we saw some bright lights, full time employment increased by 58,000, private sector employment increased 61,000 and public sector employment decreased by 21,000, all signs of a healthier workforce composition.

The Gross Domestic Product (GDP) figures which has been released in May showed that annualized Q1 2025 GDP was 2.2 per cent.  At the outset this looks like a healthy economy where a GDP of 2.0 per cent is reasonably and 3.0 per cent is “nice to have”.  What we see when we investigate a bit further is that the GDP figure was driven by forward paced export purchases early in the year to avoid incoming tariffs and that the baton handoff from Q1 to Q2 looks like a fumble with Q2 2025 GDP predicted to be negative setting the stage for a potential technical recession (nobody likes that word!).

Inflation’s headline number of 1.7 per cent would initially imply that the BoC had room to stimulate the economy and fend off against uncertainty coming at the global level.  However, excluding the removal of the carbon tax along brings inflation to 2.3 per cent and the Consumer Price Index Common which the BoC relies on more for rate decisions (excludes volatile items) is sitting above three per cent.  Inflation is the BoC mandate and despite uncertainty and some poor economic conditions foreshadowing it isn’t easy for the BoC to move to stimulus mode.

Despite the second consecutive rate hold in a row after seven reductions, here’s some food for thought:

• The underlying inflation trends are where they were Sept/Oct 2009 when the economy was crawling out of the great recession and the policy rate sat at 0.25 per cent
• This standard measure of inflation is where we were at in April 2002 when policy rate was 2.25 per cent
• In both cases, the worst of the economy was in rear view mirror not trending downward
• CPI common measure is same as it was just before COVID when the policy rate was 1.75 per cent

Among economists there doesn’t seem to be any doubt that interest rates will drop further this year. Figures as low as 1.5 per cent are being discussed and it is commonly accepted we will be between 2.0 per cent to 2.25 per cent.  This is part of the challenge both seller’s and buyer’s face today.

For buyers, part of the decision on whether to make a purchase depends on where you are coming from and what you are purchasing.  One thing that is for certain, with a Sales to New Listing Ratio of 29 per cent (definitive buyer market territory), there is less pressure from competing buyers as a general statement.  Look for your next opportunity and only act if it exists, not out of pressure to do so as.  With the current and potential market conditions it is important to make the right purchase which you can hold for five to 10 years.

For sellers, intertwining product type, geographical area and price point will be part of your decision-making process.  Your north star will be timeline paired with your take on probable outcomes of the market conditions over your timeline.

What is Happening with Sale Prices

Number of Transactions Trend

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

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

Footnote: Source of statistical data is from the March 20205 and April 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