Will Toronto become Canada's most expensive housing market in 2025?

Real estate sale signage is shown on a street in Oakville, Ont., west of Toronto, on November 7, 2024. THE CANADIAN PRESS/Richard Buchan

This year could be the year Toronto takes the crown for the most expensive real estate market in the country.

Royal LePage President Phil Soper said while home prices in the two cities are “very close today,” that could soon change.

The average price of a Vancouver home across all property types in November was $1,172,100, which was down 0.9 per cent year-over-year.

The average price of a Toronto home across all property types reached $1,106,050 in November after a modest 2.6 per cent increase year-over-year.

“There’s a number of economic variables that are moving things ahead in Ontario and that’s translating into a strength in the housing market,” Soper told CP24.com.

“As we look ahead to 2025, we do see home prices in Toronto rising at about double the rate of Vancouver.”

Soper said 2025 will see an increase in sales volumes across all segments of Toronto’s housing market, including condos, townhouses, semi-detached homes, and detached residences.

Toronto’s condo market is the one property type that the real estate brokerage says will not see a recovery in prices this year.

“There’s still softness in the condo market,” Soper said.

“By the end of the year, prices will be essentially the same. We’re saying they’ll be one per cent lower than they were in 2024.”

Detached homes, he said, will be most in demand in 2025, and will likely see price growth of about six per cent.

Not all experts agree that Toronto will overtake Vancouver as the priciest housing market in Canada.

Cameron Forbes, the general manager and Chief Operating Officer of REMAX Realtron Reality Inc., said he believes Vancouver will reign supreme in the foreseeable future.

“Land is becoming more expensive and that’s fundamentally one of the major costs to new construction and adding supply to the market. Vancouver is more restrained,” he said.

“They’ve got the ocean, they’ve got the mountains, they’ve got the Fraser. So they’re even more restrained. I think their prices, generally speaking, will be higher than Toronto prices, all things being equal.”

Across all property types, REMAX is forecasting that Toronto will see the average price of a home in the city increase by about one per cent.

“Hopefully, as we go through 2025 as rates continue to come down, the first time buyer will be able to return,” Forbes added.

“As (interest) rates come down, there will be opportunities for investors to come back into the market.”

New mortgage rules introduced by the federal government are expected to spark more demand in the housing market. The changes, which came into effect in mid-December, include a higher price cap for insured mortgages. The price cap moved to $1.5 million from $1 million, allowing buyers to qualify for a higher mortgage with less than a 20 per cent down payment.

The government is also now permitting a 30-year mortgage amortization for all first-time homebuyers.

Condo prices will be slow to recover

Both Forbes and Soper agree that the condo market will be the slowest to recover in 2025.

“The reality for the condo market is there is even more supply in that market and there are a lot of new condos coming online that have been newly constructed,” Forbes said.

“Truly, the price is not moving anywhere in that market.”

Soper said he suspects transactions will begin to pick up in late January and February ahead of what is typically a busy spring market.

“Typically it’s not until March that we see things really up in the condominium market, I would expect that’s pushed out to at least the normal spring time frame, maybe even a little later.

Soper said those looking to sell in the New Year should be a little more patient.

“We’ve been trained to think that large assets like a home that cost half a million dollars or a million dollars should sell in a week… If you go back in time before we had a housing supply crisis in Canada, there was an approximately an equal number of buyers and sellers in market so when you put your home up for sale, you could expect it to take three months,” Soper said.

“Don’t get too worried if you don’t have a firm offer in a month or even two months. It takes time in normal economic times to sell a big asset like a home.”

The average price of a home across all property types in Toronto peaked at $1,334,062 in February 2022 but the market softened significantly amid the Bank of Canada’s interest rate hiking campaign.

With files from The Canadian Press