The Greater Toronto Area housing market in late 2025 is offering opportunities for buyers willing to take measured risks. After years of explosive growth, the market has entered a correction phase. Some of the long-standing drivers of price appreciation have reversed: Population growth has slowed, sales have stalled and even the rental market has cooled. Yet beneath these short-term adjustments, the same fundamentals remain: Limited land, strong long-term demand and a diverse population that still needs housing. For many, today’s lull may represent a brief pause before the next climb.

For the first time in years, Ontario’s population contracted in the second quarter of 2025, marking a rare pause after a decade of record immigration. The province had been adding roughly 185,000 people annually since the mid-2000s, but the economic slowdown and tighter immigration policies have softened that pace. At the same time, the unemployment rate has risen to 7.8 per cent, compared with a multi-decade low of 5.0 per cent in early 2023.

Temporary headwinds

For homebuyers, these shifts have created a short-lived breather. Fewer new households mean slightly less competition for both rentals and ownership housing. However, because the GTA’s housing shortage stems from years of underbuilding, these temporary headwinds are unlikely to alter the long-term imbalance between supply and demand.

The rental market, which saw years of rapid rent increases, is finally catching its breath. More than 200,000 condominium apartments across the region are now rented by individual owners, four times as many as in 2009. Developers have also added thousands of purpose-built rental units, leading to a brief period of oversupply in some neighbourhoods. Rents have edged down on a monthly basis, largely due to smaller average unit sizes and reduced parking availability in new buildings.

Vacancy rates, which had hovered near record lows, have begun to rise. Average rents in new rental buildings are down about five per cent year-over-year, and condo rents have dipped by roughly one per cent after climbing more than 25 per cent between 2021 and 2023. The slowdown is most visible downtown, where smaller suites are leasing more slowly, while areas such as North York, Etobicoke and Scarborough remain relatively stable.

Focused on the long term

For renters considering ownership, this softening offers a narrow window of opportunity: Rents may not fall much further, but for now, they’ve stopped climbing.

Episode 92 of the Toronto Under Construction podcast provides an inside look at how developers and investors are navigating this reset. Guest speakers Geoff Matthews (senior vice-president, Capital Development) and Kathy Black (vice-president of development, Fiera Real Estate) explained that while short-term challenges are real, most seasoned players remain focused on the long term.

Black described how her firm continues to prepare large mixed-use projects for the next cycle, even if construction is years away. She noted that patient capital is key since income-generating properties allow developers to wait for the right combination of policy, demand and financing conditions. That perspective should reassure buyers that, despite today’s uncertainty, confidence in the GTA’s fundamentals remains high.

Matthews echoed that sentiment but noted that every project now gets tested as both a condo and rental opportunity. While condos can appear profitable on paper, high borrowing costs and slower absorption often tilt the balance toward rental. Developers are adapting by prioritising flexibility, phasing construction and reducing reliance on pre-sales.

The conversation also highlighted the complexity of the development process. Black explained that securing zoning and approvals is a time-consuming and high-risk effort that adds genuine value to the market. Rather than waiting for prices to rise, many firms are working to advance sites through planning, so they are ready when economic conditions improve. This is a reminder that the groundwork for tomorrow’s housing is often laid in the quiet periods between cycles.

Industry recalibrating

Both guests expressed frustration with municipal processes and the gap between development charges collected and infrastructure delivered. Matthews called for greater transparency, while Black contrasted Toronto’s lengthy approvals with more collaborative cities such as Vancouver and Calgary, where purpose-built rentals can move from application to approval in months rather than years.

For buyers, these insights underline a critical truth: Even though projects may take time to reach market, developers continue to invest heavily in future supply. Today’s slowdown does not mean the industry has stopped; it means it is recalibrating.

Pre-construction sales have fallen to their lowest levels in decades. Developers sold nearly 30,000 units in 2021 but fewer than 5,000 last year, and activity is expected to remain subdued through 2026. Despite this, pricing has held remarkably firm. After a 30-per-cent jump between 2019 and 2022, average condo prices have eased only about four per cent since then.

The reason is simple: It remains difficult to build at lower costs. Construction expenses are still high, financing remains expensive and resale prices sit well below replacement value. Buyers shopping for new homes today may find modest incentives or upgrades but not deep discounts.

Strong in the years ahead

The GTA housing market is experiencing a rare reset. Over the next one to two years, affordability may improve slightly as developers compete for fewer buyers and rental growth stabilises. But this calm period is temporary. With construction starts falling sharply and demand expected to recover later in the decade, the region could face another shortage by the late 2020s.

For homebuyers, that means today’s stability may be an opportunity to plan ahead, whether buying a first home, upgrading or investing for the long term. Developers and capital partners remain confident that Toronto’s fundamentals (limited land, population growth and global appeal) will keep the region’s housing market strong in the years ahead.

The GTA housing market has paused, not collapsed. Do your own research, surround yourself with an experienced team, and buy what you can afford. Good luck.