August Housing Market Update:

Why Falling Prices Could Be Good News for Buyers and Sellers

The Greater Toronto Area (GTA) housing market is in an unusual but surprisingly healthy position right now. While sales have ticked upward and affordability has begun to improve, prices remain soft — and that combination is creating a market where buyers and sellers can operate with a little less stress than in recent years.

Recent reports have suggested that for the housing industry to see more sales, prices have to continue softening. And while that may sound like bad news on the surface, it’s actually a sign of a more balanced, sustainable housing market across the GTA.

Sales Are Rising, But Prices Are Holding Steady

According to the Toronto Regional Real Estate Board (TRREB), home sales rose 3.8% in July compared to June, and were up 10.9% compared with July 2024. In fact, GTA experienced the best home sales result for the month of July since 2021. Sales were also up relative to listings, suggesting a modest tightening in the market compared to last year.

These increases are happening largely because home prices are lower than they were a year ago.

• The MLS® Home Price Index (HPI), which tracks benchmark home values, is down about 3% year-over-year.

• Since June, however, prices have remained relatively flat — suggesting that after the spring slowdown, the market may be finding its footing.

For buyers, this translates into renewed affordability. For sellers, it means more activity, more viewings, and ultimately, more completed transactions.

A Balanced Market: Neither Buyer Nor Seller Dominates

The GTA housing market is now sitting at roughly 4.4 months of inventory — higher than the 5-month mark that tends to signal a buyer’s market, but still well within what CREA and TRREB define as balanced conditions.

What does a balanced market mean?

• Buyers have the time to make informed decisions, include financing and inspection conditions in their offers, and negotiate without feeling rushed
  
  
• Sellers benefit from a steady stream of qualified buyers, without the frenzy of multiple offers that can complicate transactions.

In short, it’s a healthy environment. After years of extreme swings — from bidding wars during the pandemic boom to hesitation during rate hikes — the GTA housing market is catching its breath.

Affordability: Prices vs. Interest Rates

Falling prices are one of the most powerful drivers of affordability, sometimes even more impactful than interest rate cuts. Here’s why:

• If home prices continue to drop at this rate, the amount you borrow shrinks significantly, cutting monthly payments
  
  
• By contrast, as an example, a 25-basis-point rate cut (0.25%) only marginally reduces interest costs, with less impact on your actual monthly payment

This is why falling prices have brought buyers back more effectively in 2025 than the modest rate cuts introduced by the Bank of Canada. Looking ahead, most economists — including RBC and TD — are calling for further rate easing into 2026, with the potential for an additional 100 basis points (1%) of cuts over the next year.

Already, we are seeing strong showings and offers over the past few months, with showings surpassing last year in July by approximately 22%, and offers surpassing July of 2024 by approximately 15%. 

That said, CREA is still projecting GTA home prices to dip by another 1.7% in the second half of 2025 before stabilizing. This suggests the incoming affordability improvements aren’t finished yet.

What This Means for Different Types of Buyers and Sellers

• First-Time Buyers: Lower prices mean an easier entry point. Many who stepped aside during high rate years are now re-engaging, especially as fixed mortgage rates slowly trend downward.

• Upsizers: Moving to a larger property is more attainable, since the gap between selling and buying is smaller than in peak years. Families looking for more space may find this is the right environment to explore.

• Downsizers: While homes are selling at somewhat lower values than in recent years, downsizers are benefiting too: the home they purchase will also be more affordable, making the trade financially balanced.

• Investors: Softer prices combined with stabilized rents mean stronger yields are possible. With talk of interest rate cuts ahead, investor confidence is quietly building.

Market Outlook for Fall 2025

Historically, the fall market brings a surge of activity — and CREA expects this year will be no different. Many sellers who delayed listing over the summer are expected to return, and new buyers entering the market could add another wave of momentum.

With prices expected to dip slightly more, then flatten, this fall could strike a rare balance between value and opportunity. If affordability continues to improve, the GTA could experience a busier-than-usual autumn season.

Why This Market is Better Than It Looks

From the outside, the current GTA housing market can look “slow” compared with the frenzied pandemic years. But the truth is, today’s balanced market is a very good one. Instead of rushed bidding wars and emotional purchases, buyers and sellers can:

• Include financing and inspection conditions
  
  
• Take the time to properly appraise properties
  
  
• Negotiate fairly on both sides
  
  
• Complete transactions with greater peace of mind

For real estate professionals, this creates the ideal environment to help clients make confident, well-informed decisions. For buyers and sellers, it brings less stress and more balance to what is often the largest financial decision of their lives.

The Bottom Line

The GTA housing market is healthier than it may appear. Yes, prices have eased — but that affordability is fueling more buyer activity, and ultimately, more sales. With another potential 1% in rate cuts ahead of us, paired with slightly softer prices, this Fall may represent one of the best opportunities in recent years for Canadians to make their move.

How We Can Help

At The Sharda Group, we believe today’s balanced market is one of the healthiest we’ve seen in years. Whether you’re a first-time buyer, an upsizer, a downsizer, or an investor, our team is here to guide you through the process — with data-driven insights, careful due diligence, and a commitment to helping you make the right move at the right time.

Thinking about buying or selling this Fall? Connect with us today to start a conversation.