The Greater Toronto Area (GTA) housing market is undergoing a significant shift, with the average home price falling below $1 million for the first time in five years. This decline, observed in both January and extending back to August 2025, signals a move towards a buyer’s market anticipated to persist throughout 2026.
Price Decline and Market Shift
Recent data indicates a clear downward trend in both home sales and prices across the GTA. The average home price dipped below the seven-figure mark, a milestone not seen since 2021. This follows a pattern of declining sales figures, as reported in January, suggesting increasing weakness in the market. While specific figures for February are not yet available, the trend established in late 2025 and early 2026 points to continued pressure on prices.
The Toronto Regional Real Estate Board (TRREB) has acknowledged the softening market conditions, forecasting further weakness ahead. This assessment aligns with broader economic trends and a shift in buyer sentiment. The combination of declining sales and falling prices is creating conditions favorable to prospective homebuyers, marking a distinct change from the highly competitive market experienced in recent years.
Economic Context and Contributing Factors
The shift in the GTA housing market is occurring within a broader economic context. TD Economics has released a provincial economic forecast, though specific details regarding its impact on the housing market were not provided in the available sources. However, the overall economic climate undoubtedly plays a role in influencing buyer behavior and market dynamics.
The decline in prices and sales volume suggests a cooling effect stemming from factors such as increased interest rates and broader economic uncertainty. Buyers appear to be adopting a more cautious approach, leading to a decrease in demand and, downward pressure on prices. The market is responding to these conditions, with a growing expectation of a sustained buyer’s market.
Impact on Buyers and Sellers
The current market conditions present a unique opportunity for prospective homebuyers. With prices below $1 million on average, and a growing inventory of available properties, buyers have increased negotiating power and a wider range of options. This represents a significant shift from the frenzied bidding wars that characterized the market in previous years.
However, the changing market also presents challenges for sellers. They are now facing a more competitive landscape and may need to adjust their expectations regarding sale prices. The need to attract buyers in a slower market may require sellers to be more flexible with their asking prices and potentially offer incentives to close deals.
Looking Ahead: 2026 and Beyond
Market analysts anticipate that the buyer’s market conditions will continue throughout 2026. This expectation is based on the observed trends in sales volume, price declines, and the overall economic outlook. TRREB’s assessment of “more weakness ahead” reinforces this forecast.
The Realtor.com August 2025 Monthly Housing Market Trends Report provides a historical benchmark, but specific details regarding its projections for the remainder of 2025 and into 2026 were not provided. However, the report serves as a reminder of the cyclical nature of the housing market and the importance of monitoring key indicators.
The Toronto housing market’s recent downturn is a notable development with implications for both buyers and sellers. The shift towards a buyer’s market, driven by declining prices and sales, is expected to persist throughout 2026, creating a new dynamic in one of Canada’s most competitive real estate markets. Continued monitoring of economic indicators and market data will be crucial for understanding the long-term trajectory of the GTA housing market.
On of this year, the market began to show signs of weakness, a trend that has continued into February. The TRREB Media Advisory highlighted a year-in-review event, suggesting a comprehensive analysis of the market’s performance and future outlook will be forthcoming, though details were not available at the time of publication.
