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May 2025 Market Shift: New Era of Caution and Opportunity

The Greater Toronto Area (GTA) housing market continued to shift in May 2025, offering a clearer picture of the evolving dynamics that homebuyers, sellers, and investors must now navigate.

With significantly more inventory on the market and modestly improving affordability conditions, the pace and tone of the market have changed—though underlying economic uncertainty continues to cast a long shadow.

Is This the Window Buyers Have Been Waiting For?

In May 2025, GTA REALTORS® reported 6,244 home sales—down 13.3% compared to the same time last year. At the same time, new listings climbed by 14%, reaching 21,819. This surge in inventory has shifted the balance of power back into the hands of buyers, who are now negotiating in a less competitive, more opportunity-rich environment.

Active listings soared to nearly 31,000, representing a 41.5% increase year-over-year and marking the highest inventory level since 2002. Buyers today are not only facing less pressure to compete but also have more leverage to negotiate pricing, terms, and conditions.

Is the Market Finding Its Pricing Floor?

The average GTA home price in May settled at $1,120,879—a decline of 4%compared to May 2024. The MLS® Home Price Index Composite benchmark also fell 4.5% year-over-year.

Month-over-month, however, both the average price and benchmark saw modest gains, suggesting a market that is bottoming out and slowly adjusting to broader economic signals.

Importantly, borrowing costs have eased compared to one year ago, giving prospective buyers a slightly better affordability position, despite ongoing challenges in mortgage qualification and lender scrutiny.

No Rate Cut—Yet: BoC Stays the Course

On June 4th, the Bank of Canada held its overnight interest rate steady at 4.50%, citing encouraging inflation data and early signs of economic cooling. While some anticipated a rate cut to jumpstart housing demand and consumer confidence, the central bank opted for a more cautious stance. It acknowledged that although core inflation is trending downward, wage growth and shelter costs remain elevated, warranting a wait-and-see approach.

For real estate, this means more of the same in the short term: rates that are still restrictive by recent historical standards, but stable enough to encourage cautious re-entry by sidelined buyers.

Renewals and refinances remain a financial pressure point for many households, particularly those facing upcoming mortgage term expiries at higher rates.

Affordability Improves, But Confidence Wanes

Despite the technical improvements in affordability and increased supply, economic confidence remains fragile. Buyers are not rushing in. Trade disputes with the United States, tepid GDP growth, and ambiguity around federal housing policy execution are contributing to consumer hesitancy.

The prevailing mood is one of deliberation. While some well-capitalized buyers are acting on opportunities, many are waiting for either further rate relief or more clarity on the trajectory of home prices and the economy as a whole.

Opportunity Awaits the Informed and Prepared

The spring market has made it clear: this is not a crash, nor is it a boom. It is a recalibration.

The current environment favours buyers with long-term perspectives and access to financing, as well as sellers who price appropriately in light of today’s market realities. Above all, it reinforces the need for informed, strategic decision-making—working with a REALTOR® who understands the neighbourhood, the product type, and the financial landscape has never been more essential.

As we look ahead to the summer and fall markets, the next interest rate decision and broader macroeconomic signals will be pivotal. But for now, the message is clear: inventory is up, affordability is modestly improved, and opportunity exists—for those ready to move with eyes wide open.

Let’s Talk Strategy in a Shifting Market

Have questions about what these latest numbers really mean for you—or how rising U.S. tariffs, economic uncertainty, and rate volatility might affect your next real estate move?

Now more than ever, it’s essential to have informed, strategic guidance rooted in today’s market realities. Whether you’re planning to buy, sell, or simply assess your options, I’m here to provide a clear, confident path forward.

Canada’s Economic Challenges Amid G7 Summit Discussions

As the 2025 G7 Finance Ministers and Central Bank Governors’ meeting unfolds in Banff, Alberta, Canada finds itself at the center of discussions on global economic stability. Amidst rising trade tensions and domestic economic challenges, Canada’s position within the G7 is both pivotal and precarious. 

1. Fiscal Health

  • Net Debt-to-GDP Ratio: Canada maintains the lowest net debt-to-GDP ratio among G7 nations, projected at 41.6% in 2025. This favorable position is attributed to substantial financial assets, including the Canada Pension Plan and Employment Insurance reserves. 
  • Gross Debt-to-GDP Ratio: Despite the low net debt, Canada’s gross general government debt is estimated at 112.5% of GDP, reflecting the total liabilities without accounting for financial assets.

2. Economic Growth

  • Real GDP Growth: The Bank of Canada has revised its 2025 growth forecast to 1.8%, down from an earlier estimate of 2.1%, citing trade tensions and policy measures affecting population growth. 
  • Per Capita GDP: While overall GDP has shown resilience, real GDP per capita growth has been modest, averaging around 0.3% annually over the past decade. 

3. Inflation and Monetary Policy

  • Inflation Rate: Headline inflation decreased to 1.7% in April 2025, primarily due to falling energy prices and the removal of the federal carbon tax. 
  • Core Inflation: Core inflation measures, which exclude volatile items, have risen above 3%, indicating persistent underlying price pressures. 
  • Interest Rates: In response to economic conditions, the Bank of Canada reduced its key interest rate to 2.75% in April 2025, marking a series of cuts totaling 2.25 percentage points over several months. 

4. Labour Market

  • Unemployment Rate: As of April 2025, Canada’s unemployment rate increased to 6.9%, the highest since November 2023, with over 1.6 million people unemployed.
  • Employment Trends: Employment remained largely unchanged in April, with a net gain of 7,400 jobs. However, employment among core-aged women (25 to 54 years old) declined by 60,000, while increases were observed among older workers and core-aged men. 

5. Productivity and Structural Concerns

  • Labour Productivity: Canadian labour productivity improved by 0.47% year-over-year in December 2024, following a period of stagnation. Despite this uptick, productivity growth remains below historical averages, raising concerns about long-term economic competitiveness. 
  • Structural Challenges: Canada’s economy faces structural issues, including low investment in machinery and equipment and a reliance on consumption and real estate sectors. These factors contribute to the country’s lagging productivity compared to other advanced economies. 

Conclusion

Canada’s fiscal prudence, evidenced by its low net debt-to-GDP ratio, positions it favorably within the G7. However, challenges such as modest economic growth, rising unemployment, and persistent productivity issues underscore the need for strategic policy interventions. Addressing these structural concerns is crucial to ensuring sustainable growth and maintaining Canada’s economic standing among its G7 peers.

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A Slow May in Toronto Real Estate

May home sales continued at low levels, especially in comparison to last spring’s short-lived pick-up in market activity. Home buyers are still waiting for relief on the mortgage rate front.

Existing homeowners are anticipating an uptick in demand, as evidenced by a year-over-year increase in new listings. With more choice compared to a year ago, buyers benefited from more negotiating room on prices.

Recent polling from Ipsos indicates that home buyers are waiting for clear signs of declining mortgage rates. As borrowing costs decrease over the next 18 months, more buyers are expected to enter the market, including many first-time buyers. This will open up much needed space in a relatively tight rental market.

TOTAL RESIDENTIAL TRANSACTIONS

In the Greater Toronto Area, 7,013 home sales were reported through TRREB’s MLS System in May 2024 – a 21.7 per cent decline compared to 8,960 sales reported in May 2023. New listings entered into the MLS System amounted to 18,612 – up by 21.1 per cent year-over-year.

AVERAGE SELLING PRICE

The MLS® Home Price Index Composite benchmark was down by 3.5 per cent on a year-over-year basis in May 2024. The average selling price of $1,165,691 was down by 2.5 per cent over the May 2023 result of $1,195,409. On a seasonally adjusted monthly basis, the average selling price edged up slightly compared to April 2024.

TOTAL NEW LISTINGS

AVERAGE DAYS ON MARKET

SALES & AVERAGE PRICE BY MAJOR HOME TYPE

Final Thoughts:

While interest rates remained high in May, home buyers did continue to benefit from slightly lower selling prices compared to last year. We have seen selling prices adjust to mitigate the impact of higher mortgage rates. Affordability is expected to improve further as borrowing costs trend lower. However, as demand picks up, we will likely see renewed upward pressure on home prices as competition between buyers increases.

In order to have an affordable and livable region over the long term, we need to see a coordinated effort from all levels of government to alleviate our current housing deficit and to provide housing for new population moving forward.

On top of this, governments need to ensure the delivery of infrastructure to support our growing population. The economic health and livability of our region depends on the timely completion of public transit projects including better transparency and clear timelines on the completion of the Eglinton Crosstown LRT.

Distinctive Real Estate Advisors Inc., Brokerage is pleased to present a recap of the latest market forecast release and May highlights from the Toronto Regional Real Estate Board (TRREB).

We’d welcome an opportunity to discuss A Slow May in Toronto Real Estate more. If you have any questions about our services, please contact our team.

Modest Gains Across Ottawa’s MLS in April

The number of homes sold through the MLS® System of the Ottawa Real Estate Board (OREB) totaled 1,456 units in April 2024. This was an increase of 8.9% from April 2023.

Home sales were 2% below the five-year average and 6.9% below the 10-year average for the month of April.

On a year-to-date basis, home sales totaled 4,132 units over the first four months of the year — an increase of 11.5% from the same period in 2023.

“It’s a typical spring in Ottawa’s real estate market,” says OREB President Curtis Fillier. “What sets it apart from recent springs is a restored mutual confidence among both buyers and sellers. Buoyed by recent sales activity, sellers are more confident that they can move their property as evidenced by the uptick in listings. For buyers, the pressure of the pandemic market has eased and they’re comfortable taking the time to find the property that best suits their needs. The pace is still conservative while the economy is holding some back, but overall Ottawa’s market is strong and stable, and that’s a win-win.”

“The real story is in the details,” says Fillier. “Looking more closely at what’s selling and for how much suggests the demographic of buyer is changing. While most of Ottawa’s market is in balanced territory, townhomes have shifted to the seller’s market side as supply shrinks. Single-family homes are the most active market, which is inflating the average sale price. The next few months will be both telling and interesting as people continue to redefine their post-pandemic normal amid an upcoming federal election and back-to-work mandate for government workers. The detailed insights and data that REALTORS® have unique access to will be invaluable in helping buyers fine-tune their strategy for their specific neighbourhood and property type.”

By the Numbers – Prices:

The MLS® Home Price Index (HPI) tracks price trends far more accurately than is possible using average or median price measures.

  • The overall MLS® HPI composite benchmark price was $643,700 in April 2024, a marginal gain of 1.6% from April 2023.
    • The benchmark price for single-family homes was $727,700, up 1.6% on a year-over-year basis in April.
    • By comparison, the benchmark price for a townhouse/row unit was $500,800, up slightly at 1% compared to a year earlier.
    • The benchmark apartment price was $423,100, up 2.1% from year-ago levels.
  • The average price of homes sold in April 2024 was $705,117 increasing 1.2% from April 2023. The more comprehensive year-to-date average price was $675,817, increasing by 2.4% from the first four months of 2023.
  • The dollar volume of all home sales in April 2024 was $1.02 billion, up 10.2% from the same month in 2023.

OREB cautions that the average sale price can be useful in establishing trends over time but should not be used as an indicator that specific properties have increased or decreased in value. The calculation of the average sale price is based on the total dollar volume of all properties sold. Prices will vary from neighbourhood to neighbourhood.

By the Numbers – Inventory and New Listings:

The number of new listings saw an increase of 40.5% from April 2023. There were 2,597 new residential listings in April 2024. New listings were 19.7% above the five-year average and 4.6% above the 10-year average for the month of April.

Active residential listings numbered 2,966 units on the market at the end of April 2024, a gain of 36.6% from April 2023. Active listings were 62.6% above the five-year average and 13.7% below the 10-year average for the month of April.

Months of inventory numbered 2 at the end of April 2024, up only slightly from 1.6 in April 2023. The number of months of inventory is the number of months it would take to sell current inventories at the current rate of sales activity.

In conjunction with the Ottawa Real Estate Board (OREB), historical data may be subject to revision moving forward. This could temporarily impact per cent change comparisons to data from previous years.

Distinctive Real Estate Advisors Inc., Brokerage is pleased to present a recap of the latest market forecast release and April highlights from the Ottawa Real Estate Board (OREB).

We’d welcome an opportunity to discuss the Modest Gains Across Ottawa’s MLS Market a Sign of Shared Confidence. If you have any questions about our services, please contact our team.

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