Toronto housing price trend forecast: Re/Max and Royal LePage now diverge

Recently, the Toronto real estate market has become a focus of attention from all walks of life, as two well-known real estate companies, Re/Max and Royal LePage, have made vastly different predictions about the city's housing price trends, sparking widespread discussions.

Re/Max stated in its 2025 housing outlook report that Toronto housing prices are expected to remain stable in 2025, with only a slight increase of 0.1%. The company believes that the current situation of excess inventory in Toronto, coupled with reduced demand from first-time homebuyers and investors, is the main factor constraining a significant increase in housing prices. Although sales are expected to increase by 12.5%, the main driving force will come from upgrading homebuyers, who are buyers of larger homes rather than first-time buyers. This indicates that although market activity has increased, the excess supply is difficult to effectively digest in the short term due to increased demand.

On the contrary, Royal LePage holds a more optimistic attitude, predicting that the Toronto market will usher in a prosperous situation with declining interest rates, increasing immigration numbers, and higher income levels of residents, and the housing market is expected to be booming in the spring.

Further analysis by Re/Max indicates that the group of first-time homebuyers is almost absent in the current market. Cameron Forbes, the agent of Re/Max Realtron Realty, stated that first-time homebuyers typically make up 30% to 40% of the Toronto buyer population, but now this proportion is only 10% and is difficult to change in the short term. He explained, "The burden of down payment and mortgage costs, coupled with the current stress test interest rate of about 6%, makes it difficult for many potential first-time homebuyers to pass the eligibility review. The minimum qualifying interest rate for uninsured mortgage loans (i.e. stress test) is currently 5.25%, or two percentage points higher than the actual mortgage interest rate (whichever is higher), which means that most people actually need to obtain mortgage eligibility at a standard higher than the market interest rate, unless they can obtain significant financial support from their parents, otherwise it is difficult to pass the review."

From the current situation of the real estate market and national expectations, the average selling price of all types of properties in most regions (GTA) has decreased by 15% since its peak in February 2022, but is still 38% higher than the level in 2019. Re/Max stated that many residents across Canada are optimistic about the real estate market in 2025, thanks to a series of interest rate cuts in late 2024. Since June, the Bank of Canada has cut interest rates four times in a row, with the benchmark rate dropping from 5% to 3.75%, and it is expected to drop another 0.25 or 0.5 percentage points in December. Re/Max Canada expects a more active national market next year, with average residential prices expected to rise by 5% and sales volumes expected to increase in 33 out of 33 surveyed regions. However, the Toronto market is still in the recovery stage, with a relatively sluggish performance in the past two years. Compared to the first half of 2023, housing prices only increased by 1% in the first half of 2024, while sales decreased by 1.4%. Cameron Forbes believes that investors flooded into the market during the peak of the pandemic in 2021 and 2022 due to historically low interest rates, but now the market needs benchmark interest rates to drop to 2% to attract investors back, and the likelihood of this happening is low. During the pandemic, investors were the main buyers, but now there has been a change. It is expected that next year, there will be more people in the market who already own properties and are relatively less affected by high interest rates upgrading their purchases

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Reference link:

https://www.thestar.com/real-estate/toronto-home-prices-will-be-flat-in-2025-predicts-re-max-contrary-to-other-predictions/article_4f92ea76-ab3e-11ef-85e3-9b8a68d342e6.html