The home at 105 Cluny Dr., in Toronto. The five-bedroom house was listed in the fall of 2024 with an asking price of $5.995-million. The property eventually sold for $4.9-million in February after a couple price cuts.The Real Estate Media Co.
Many people with an interest in the vicissitudes of the Toronto-area real estate market are relieved that the March break for the public and private schools is under way. It gives everyone a chance to recalibrate.
After an optimistic start to 2025, buyers retrenched in early February and sellers soon followed.
National Bank of Canada economist Daren King points out that sales in the Greater Toronto Area slid a seasonally adjusted 28.5 per cent last month from January.
In a note to clients titled, “Home sales collapse in February with fear of tariffs”, Mr. King points out that the tally erased all of the gains made since June, when the Bank of Canada cut its benchmark rate for the first time in four years.
Sales in the GTA reached their lowest level since the 2008 financial crisis (excluding the early days of the COVID-19 pandemic).
The trade war between the United States and Canada and the threats to Canada’s sovereignty coming from U.S. President Donald Trump have flummoxed everyone.
Mr. King says the threat of American tariffs has weighed on the housing market in Canada. Lower interest rates and recent changes to mortgage rules may bolster sales, but the deterioration of the labour market will limit the extent of a potential recovery.
Sellers have also been in retreat: New listings decreased by 24.3 per cent in February from January after surging by 34.7 per cent the previous month.
Active listings were at their highest level since 2008.
At Sotheby’s International Realty Canada, real estate agents Christian Vermast and Paul Maranger say they typically advise sellers against listing a family home during the annual one-week break for the public system and the two-week sojourn for private schools.
This year, they say, March Break comes at an opportune time as buyers and sellers grapple with political and economic uncertainty.
“People will have two months of being shell-shocked,” Mr. Vermast says of the turmoil.
By late April or early May, buyers and sellers may have more clarity – or adjust to the variability – and the traditional spring market will pick up, they predict.
It’s impossible to know how long the threat of tariffs will last or how long those levied will stay in place.
“Right now, it’s all psychological,” says Mr. Vermast. “Psychological headwinds are the worst enemy of the luxury segment.”
Mr. Maranger says people still need to buy and sell for the usual reasons, but, for now, they have hit pause during a precarious phase south of the border.
“A number of buyers are frozen. Do they ‘wait and see’ for the next four years?”
He notes that interest rate cuts by the Bank of Canada and a decrease in the rate of inflation boosted buyer and seller optimism at the beginning of 2025.
“Houses that were sitting before sold in February,” says Mr. Vermast.
In Rosedale, the agents relisted a circa-1911 Edwardian home that had been on the market for a three-month stretch. The five-bedroom house at 105 Cluny Dr. was listed in the fall of 2024 with an asking price of $5.995-million.
In January, Mr. Maranger and Mr. Vermast set the asking price at $5.395-million, then reduced the price to $4.995-million.
The price cut generated bids from three buyers and the property sold for $4.9-million in February.
As a result of the recent loss of confidence, Mr. Maranger and Mr. Vermast are advising jittery clients to sell an existing home before buying the next one.
“There’s greater security in selling first,” Mr. Maranger says.
If the sellers had been contemplating a strategy to generate multiple offers, it may be time to put that aside in a more cautious market, he adds.
At the higher end, some buyers appear to be taking advantage of the current loosening of market conditions to negotiate a deal.
In Toronto between Jan. 1 and March 4, Mr. Vermast notes, 30 properties changed hands at prices of $4-million and up on the Multiple Listing Service of the Toronto Regional Real Estate Board.
That’s identical to last year’s tally for the same period in that price bracket.
On a year-over basis, sales in the GTA tumbled 27.4 per cent last month compared with February, 2024, according to TRREB. New listings rose 5.4 per cent in February from a year earlier while active listings swelled 76 per cent.
Mr. King at National Bank notes that is the lowest level of activity for the month of February since 1995.
The average price in February dipped 2.2 per cent from a year earlier to stand at $1,084,547.
TRREB president Elechia Barry-Sproule says affordability remains a challenge for the many people who aspire to buy in the GTA.
Current mortgage rates make it difficult for the average household income to comfortably cover monthly payments on a typical property, she points out.
Another unknown is the amount of inventory that will land on the market this year.
Many market watchers are expecting a significant influx of listings.
Five-year mortgages that were taken out at rock-bottom rates will be up for renewal this summer, and some homeowners won’t be able to hold on.
“The pressure to sell may increase as the year goes on,” says Mr. Vermast.
Job losses may also mount up if the trade war continues and the economy enters a recession.
Mr. Maranger has one more prediction for 2025: He expects buyers to become much more attentive to the “made in Canada” components of a renovated home.
“Were the windows made in Canada?” is the type of question he expects to hear.
People who are renovating may find that Canadian materials and craft will appeal to future buyers if the homeowners ever decide to sell.
