Toronto may be on the brink of becoming Canada’s most expensive real estate market, with experts forecasting significant price growth in 2025. Royal LePage President Phil Soper believes Toronto’s housing prices, currently close to those in Vancouver, could rise at twice the rate of Vancouver’s this year.
Toronto’s Rising Market
In November 2024, the average price of a home in Toronto across all property types reached $1,106,050, reflecting a 2.6% year-over-year increase. In contrast, Vancouver’s average home price was $1,172,100, down 0.9% over the same period. Soper attributes Toronto’s strength to favorable economic variables driving the market. Detached homes are expected to see the strongest demand in 2025, with prices predicted to rise by about 6%. Other segments, including townhouses and semi-detached homes, are also expected to experience increased sales volumes.
However, the condo market remains soft, with prices projected to dip by 1% due to an oversupply of new constructions. Soper expects condo transactions to pick up by spring but warns sellers to exercise patience, as longer sales cycles are becoming the norm.
Vancouver’s Persistent Advantage
Cameron Forbes, COO of REMAX Realtron Realty Inc., is skeptical that Toronto will overtake Vancouver. He highlights Vancouver’s unique geographic constraints—bounded by the ocean, mountains, and the Fraser River—which limit land availability and drive higher construction costs. Forbes believes these factors will keep Vancouver’s prices higher than Toronto’s for the foreseeable future. REMAX forecasts only a modest 1% increase in Toronto’s average home prices in 2025.
Federal Policies and Market Trends
Recent federal mortgage rule changes are expected to spur more housing demand. These include raising the price cap for insured mortgages to $1.5 million and introducing 30-year mortgage amortizations for first-time buyers. As interest rates continue to decline, both Soper and Forbes anticipate a gradual return of first-time buyers and investors, boosting market activity.
Patience Required in a Shifting Market
Soper advises sellers to adjust expectations in the current economic climate. Unlike the rapid turnover seen during the housing supply crisis, homes may take several months to sell in 2025. This aligns with pre-crisis norms, where equal numbers of buyers and sellers created more balanced market conditions.
Outlook for 2025
While Toronto’s housing market is expected to see notable growth, particularly in detached homes, whether it surpasses Vancouver depends on a range of factors, including economic trends, supply dynamics, and regional constraints. For now, the competition between the two cities remains close, with Toronto making a strong push to claim the top spot.