Ontario Housing Market Forecast: Will it Crash in 2025?

If you're like most people in Ontario, you've probably spent countless hours scrolling through real estate listings, dreaming about your next home – or maybe just trying to understand if you can even afford to stay in the one you have. The question that's been keeping many of us up at night is a big one: will the Ontario housing market crash in 2025?

Let's cut right to the chase: a dramatic crash like we saw in the US in 2008 is unlikely, but don't expect the wild price surges of the past few years to return anytime soon.

We're looking at a market that's finding its footing, leaning towards a correction and price stabilization, with regional nuances playing a significant role. Buckle up, because we're going to dive deep into what's happening and what you can expect in the Ontario housing market as we head into 2025.

Ontario Housing Market Forecast: Will it Crash in 2025?

A Look Back at January 2025: Where Are We Now?

To understand where we're going, we need to know where we are. Let's take a snapshot of the Ontario housing market as of January 2025, based on the latest data. Frankly, the numbers paint a picture that's a bit of a mixed bag, depending on where you look in the province.

• Average Prices Province-Wide: Across Ontario, the average home price in January 2025 hovered around $834,050. That's pretty much unchanged from December 2024, and only up about 2% compared to January 2024. So, while prices haven't plummeted, they're certainly not skyrocketing like they were a few years back. In fact, we're seeing quarterly price decreases of about 5%, suggesting a gradual cooling.
• Sales Slowdown: It's not just prices that are telling a story. Home sales in Ontario during January 2025 were down a significant 10% compared to the same time last year. And if you look at the bigger picture, sales are a whopping 18% below the 10-year average for January. This tells me people are being more cautious, maybe waiting to see what happens, or simply finding it harder to jump into the market.
• Inventory Surge: Here's a key point: we're seeing a lot more homes on the market. Both new listings and active listings are at 10-year highs for January. Specifically, active listings were up almost 36% year-over-year, and new listings were up 26%. This is a big shift! For years, we've been talking about a housing shortage in Ontario, but suddenly, buyers have way more choices.
• Buyer's Market Emerging: The sales-to-new-listings ratio (SNLR) is a crucial indicator of market balance. In January 2025, Ontario's SNLR was just 34%, which firmly puts us in buyer's market territory (anything below 40%). Basically, there are more homes for sale than buyers actively snapping them up. This gives buyers more negotiating power, and it puts downward pressure on prices. And get this – most major cities in Ontario, except for Ottawa, Oshawa, and Hamilton, are now in a buyer's market. That's a significant change from the seller's frenzy we’ve been experiencing.

Let's break down how this looks across some key Ontario cities:

City	Average Home Price (Jan 2025)	Year-over-Year Price Change	Monthly Price Change	Market Type (Jan 2025)
Greater Toronto Area	$1,040,994	+1.4%	-2.5%	Buyer's Market
Toronto	$985,653	+2.7%	-4.7%	Buyer's Market
Ottawa	$670,258	+6.1%	N/A	Balanced Market
Mississauga	$1,047,025	0%	+7.1%	Buyer's Market
Brampton	$985,321	0%	+3.9%	Buyer's Market
Hamilton	$757,071	-4.8%	N/A	Balanced Market
London	$639,486	+5.6%	N/A	Buyer's Market
Kitchener-Waterloo	$755,859	-0.8%	N/A	Buyer's Market

Data Source: WOWA Market Report, January 2025

Looking at this table, you can see the variation across the province. Places like Ottawa and London are still seeing decent year-over-year price growth and are in balanced markets. However, the GTA, including Toronto, Mississauga, and Brampton, is firmly in buyer's market territory, with prices either stagnant or even slightly decreasing in some areas. Hamilton is interesting – experiencing a price decrease year-over-year and sitting in a balanced market.

Why Isn't the Sky Falling? Key Factors at Play

So, if the market is cooling, why am I saying a crash is unlikely? It boils down to several key factors that are acting as buffers against a dramatic downturn.

• Interest Rates: A Double-Edged Sword: Interest rates have been the big story in the housing market recently. The Bank of Canada aggressively raised rates to combat inflation, and this definitely put a chill on the housing market throughout 2023 and early 2024. However, by mid-2024, the Bank started cutting rates, and continued those cuts into early 2025. Lower rates make mortgages more affordable, which can bring buyers back into the market. While rates are still higher than the rock-bottom lows we saw during the pandemic, the trend is now downwards, which is a positive sign for housing demand. Currently, you can find 3-year fixed mortgage rates in Ontario as low as 3.87% (as of March 10, 2025). Further rate cuts throughout 2025 are anticipated, which could provide additional support to the market.
• Immigration: A Constant Demand Driver: Ontario continues to be a highly desirable destination for immigrants. Canada's immigration targets remain ambitious, and many newcomers settle in Ontario, particularly in the GTA and surrounding areas. This influx of new residents creates a continuous underlying demand for housing, which helps to prevent prices from collapsing. Simply put, more people need places to live, even if affordability is stretched.
• Housing Supply Still Constrained in the Long Run: While inventory has increased in the short term, the long-term structural issue of housing supply in Ontario hasn't magically disappeared. Building new homes takes time, and we're still not building enough to keep up with population growth and historical demand. Zoning restrictions, development hurdles, and labour shortages all contribute to this ongoing challenge. This underlying supply issue provides a floor under prices in the long run.
• Strong Economic Fundamentals (Mostly): While there are always economic uncertainties, Ontario's economy has shown resilience. Employment rates are generally healthy, and while inflation has been a concern, it is showing signs of moderating. A strong economy supports housing demand, as people are more confident about their jobs and finances. However, we need to keep a close eye on potential economic slowdowns, as this could impact the housing market.

Regional Hotspots and Cool Spots: It's Not One Market

It's crucial to remember that the Ontario housing market isn't a single entity. Different regions and even different neighbourhoods within cities are behaving differently. Let's look a bit closer at some regional trends:

• Greater Toronto Area (GTA): As we saw in the data, the GTA is experiencing a significant shift towards a buyer's market. While average prices are still over $1 million, the pace of price growth has stalled, and in some segments, like condo apartments and townhouses, prices are even slightly down year-over-year in February 2025. Detached home prices in Toronto itself, however, are showing some increase, suggesting continued demand at the higher end of the market. Suburban areas like Mississauga and Brampton are also showing buyer's market conditions. The sheer volume of inventory in the GTA is giving buyers more power.
  • Detached Homes in GTA (Feb 2025): Avg. Price: $1,445,879 (+0.2% YoY)
  • Semi-Detached Homes in GTA (Feb 2025): Avg. Price: $1,079,996 (-4% YoY)
  • Townhouses in GTA (Feb 2025): Avg. Price: $991,066 (-4% YoY)
  • Condo Apartments in GTA (Feb 2025): Avg. Price: $688,055 (-1% YoY)
• Ottawa: Ottawa's market is standing out for its relative strength. Average prices are up over 6% year-over-year, and it's still considered a balanced market. Ottawa benefits from a stable job market, particularly in the public sector, and a good quality of life, making it attractive to both first-time buyers and those relocating within Ontario.
  • Single Family Homes in Ottawa (Jan 2025): Avg. Price: $821,202 (+7% YoY)
  • Townhouses in Ottawa (Jan 2025): Avg. Price: $555,873 (+3% YoY)
  • Apartments in Ottawa (Jan 2025): Avg. Price: $441,704 (+7% YoY)
• Hamilton and Niagara: This region presents a mixed picture. Hamilton itself is seeing price declines, down almost 5% year-over-year in January 2025. However, Niagara North and Burlington are showing significant price increases. This suggests that areas further outside of Toronto might be seeing stronger demand as people look for more affordable options or lifestyle changes.
• Kitchener-Waterloo and London: These tech-driven cities have seen rapid growth in recent years, but the pace has slowed. Kitchener-Waterloo is showing a slight price decrease year-over-year, while London is still experiencing growth. These regions are still considered attractive due to their growing economies and relative affordability compared to the GTA, making them appealing for first-time buyers and investors.

My Take: No Crash, But a Time for Realism

Based on the data and my understanding of the market, I don't foresee an Ontario housing market crash in 2025. Instead, I believe we are in a period of market correction and stabilization. The frenzy of bidding wars and runaway price growth we saw during the pandemic is over, and that's actually a good thing for the long-term health of the market.

Here's what I expect for the rest of 2025:

• Continued Price Moderation: I anticipate that average home prices across Ontario will likely remain relatively flat or see modest single-digit increases in 2025. Some regions, particularly in the GTA, may see continued price adjustments, especially in certain property types like condos and townhouses.
• Buyer's Market Conditions Persisting: The increased inventory and slower sales suggest that buyer's market conditions will likely continue, at least in many parts of Ontario. This means buyers will have more negotiating power and more choices.
• Regional Variations Will Continue: The performance of different regions will continue to diverge. Markets like Ottawa and potentially London may see stronger performance than the GTA in the short term.
• Interest Rates as a Key Driver: Interest rate movements will be a major factor influencing market activity. Further rate cuts by the Bank of Canada could provide a boost to the market, while any unexpected rate hikes could dampen activity.
• Focus on Affordability: Affordability will remain a major concern for many buyers. The dream of homeownership may still be out of reach for some, particularly in the most expensive markets. This will likely continue to push some buyers towards more affordable regions or different property types.

What does this mean for you if you're in the market?

• For Buyers: This is a better time to be a buyer than it has been in recent years. You have more choices, less competition, and potentially more room to negotiate on price. Take your time, do your research, and don't feel pressured to overpay. Get your financing in order and work with a good real estate agent who understands the nuances of your local market.
• For Sellers: It's important to be realistic about pricing. The days of simply listing your home and expecting multiple offers above asking price are largely gone (for now). Price your property competitively, make sure it's in top condition, and be prepared for the possibility that it might take longer to sell than it used to. A good real estate agent is essential to help you navigate this market and develop the right strategy.

In conclusion, the Ontario housing market in 2025 is shaping up to be a more balanced and, dare I say, normal market than we've seen in a long time. While a crash isn't on my radar, it's definitely not a market for complacency. Staying informed, understanding local market conditions, and making smart, data-driven decisions will be key to navigating the Ontario real estate landscape in the year ahead.