From Bidding Wars to Breathing Room: Ontario Real Estate in 2025

If there’s one word that keeps coming up in conversations about Ontario real estate in 2025, it’s balance. After years of frantic bidding wars, overnight price jumps, and buyers feeling like they had no chance, the market has finally slowed down enough to breathe.

Buyers are no longer rushing into offers after just one viewing. Sellers are adjusting their expectations, and conversations that used to start with “How much over asking do we go?” now begin with “How much lower can we go?”

Interest Rates: No Longer the Wild Card

When the Bank of Canada started lowering rates in mid-2024, it brought some relief. By mid-2025, the benchmark rate had settled around 2.75%, and for the first time in a while, buyers could breathe a little easier.

Most economists now believe the Bank of Canada has finished cutting rates for the foreseeable future, possibly until 2026. While rates aren’t expected to rise sharply again, they also aren’t dropping quickly enough to significantly improve affordability.

I often hear buyers say, “Rates are better, but homes still feel expensive.” Lower borrowing costs help, but they haven’t eliminated the fact that owning a home still takes up a large part of household income in much of Ontario.

Affordability: Some Relief, Lots of Reality

Even with lower prices and interest rates, affordability remains one of the province’s biggest challenges. Inventory has increased, competition has cooled, and genuine negotiations are resuming. For many first-time buyers—especially those looking for freehold homes—the financial aspect remains difficult. Detached, semi-detached, and townhomes continue to carry high price tags.

Freeholds are still selling faster than condos, even in this slower market. Although there are more listings than a few years ago, supply remains relatively balanced. Families and move-up buyers continue to compete for these properties, helping their values remain more resilient than those of other segments.

Condos: A Very Different Story

If freeholds are holding their ground, condos are experiencing pressure. In the GTA, condo listings have risen, leading to months of inventory exceeding historical averages. I’ve noticed condo buildings where several units are for sale on the same floor—something quite rare a few years ago.

A significant part of this change is due to investors pulling back. Restrictions on foreign buyers, higher financing costs, and softer rents have reduced the appeal of pre-construction and investment condos. As a result, resale units are taking longer to sell, and prices have declined. Condos—once highly competitive—are now some of the most accessible options for homeownership.

Regional Differences Still Matter

Ontario, of course, isn’t a single market. The GTA and Central Ontario remain pricey despite modest price declines. Eastern and Northern Ontario, including areas like Ottawa and Sudbury, have shown more stability, with some regions even posting year-over-year gains driven by local demand. Western Ontario continues to be relatively affordable, with smaller fluctuations than the GTA.

Looking Ahead to 2026

As we look toward 2026, expectations remain cautious. Most indicators point to continued moderation rather than a sharp rebound. If interest rates stay steady, affordability won’t improve much unless incomes rise—and that is a slow process.

Prices are expected to remain stable or rise slightly, with condos likely continuing to lag behind freehold homes. For buyers, this creates opportunities. For sellers, it emphasizes the importance of strategy and fair pricing more than ever.

A Market That Rewards Patience and Knowledge

Ontario’s 2025 real estate market isn’t booming, and it isn’t crashing. It’s adjusting. Inventory is higher, prices are softer, and the gap between freeholds and condos has never been more evident.

As 2026 approaches, the market appears set for cautious, steady growth rather than fireworks. In this environment, the winners won’t be those who rush, but those who understand the market, time their moves carefully, and make informed choices.