Mortgage Minute: August 22, 2025
The Greater Toronto Area’s real estate market is currently telling two different stories. On one hand, sales activity is showing a significant resurgence after a sluggish period. On the other, price forecasts are softening, and the market dynamics point towards continued pressure, particularly in the condo sector. For anyone looking to buy, sell, or refinance in Toronto, understanding this paradox is the first step toward building a sound financial strategy.
Here’s a deeper look at the conflicting signals from the week of August 22, 2025.
The Inflation Question Mark
Nationally, the economic backdrop is complicated. This week, Statistics Canada reported that the headline inflation rate cooled to 1.7% in July, largely thanks to a significant drop in gas prices. In theory, this is good news for borrowers, as it gives the Bank of Canada room to consider another interest rate cut at its next meeting in September. However, the Bank’s more closely watched “core” inflation metrics remain stubbornly high, hovering around the 3.0% to 3.1% mark. This tug-of-war has economists divided and creates significant uncertainty for the future of both fixed and variable mortgage rates.
A Surge in Sales Activity
Against that uncertain backdrop, the GTA housing market has been a bright spot for activity. After a prolonged freeze, buyers are returning. National home sales have now risen for four consecutive months, and the GTA has been a primary engine of that growth. Local real estate transactions have surged an impressive 35.5% since the market lows of March. However, this should not be mistaken for a return to the frenzied seller’s market of the past. As John Lusink of Right at Home Realty noted, active listings remain high, and conditions firmly favour the buyer.
Why Prices Aren’t Following Suit
The crucial takeaway is that this surge in sales is not lifting prices. In fact, the data points in the opposite direction. The average year-to-date sales price in Toronto is down approximately 4% from last year. The condo market, a critical component of the city’s housing stock, has been hit particularly hard, with prices falling a sharp 10% year-over-year.
Looking ahead, a new forecast from RBC Economics suggests this trend will continue, predicting that high inventory levels will cause Ontario home prices to decline by 1.0% in 2025 and another 1.4% in 2026. The affordability crisis remains the dominant theme; according to Ratehub.ca, despite a minor improvement in July, a household income of over $200,000 is still required to purchase an average home in Toronto.
My Take: Strategy Over Speculation
For professionals, upsizers, and high-net-worth individuals in Toronto, this is not a market for speculation—it’s a market for strategy. The conflicting data proves that you cannot rely on headlines alone. A rising sales trend does not guarantee price appreciation, and national inflation news doesn’t provide a clear roadmap for interest rates.
Navigating this environment requires a proactive approach. It means separating the signal from the noise and building a financial plan based on credible, practical advice. Getting your mortgage financing fully underwritten upfront provides the clarity and confidence needed to act decisively when the right opportunity arises, regardless of the confusing market crosscurrents.
If you want to build a strategy that makes sense of this Toronto market, let’s connect.
Sources:
- “A BoC cut in September after latest inflation data? Economists aren’t so sure,” Canadian Mortgage Professional, August 20, 2025
- “Bank of Canada likely unmoved by modest dip in inflation, economists say,” CMT News, August 19, 2025.
- “Canada inflation eases to 1.7%, driven by falling gas prices,” CMT News, August 19, 2025.
- “Canadian home prices flatten as condo slump continues,” Canadian Mortgage Professional, August 19, 2025.
- “Housing recovery on the horizon, but RBC warns of fresh price drops in 2026,” CMT News, August 21, 2025.
- “Is the deep freeze in Canada’s housing market finally thawing?,” Canadian Mortgage Professional, August 22, 2025