The downtown Toronto housing market enters 2026 in a state of recalibration. After years of volatility, current data points to a market that favours patient buyers while presenting strategic opportunities for motivated sellers. Here's what the numbers tell us.
The Big Picture: GTA Market Statistics
According to the Toronto Regional Real Estate Board (TRREB), 2025 ended with these benchmark figures:
- Total GTA home sales: 62,433 (down 11.2% from 2024)
- Average selling price: ,067,968 (down 4.7% year-over-year)
- Active listings: 17,005 (up 10.5% from previous year)
- Months of inventory: 4.6 months
December 2025 specifically saw 3,697 sales at an average price of ,006,735—the first time the GTA monthly average dipped below million since early 2024.
Price Performance by Property Type
The correction has not been uniform. Different property types show varying degrees of adjustment:
| Property Type | December 2025 Avg | YoY Change |
|---|---|---|
| Detached homes | ,302,980 | -6.9% |
| Semi-detached | ,357 | -12.1% |
| Freehold townhouses | ,000 | -4.2% |
| Condo apartments | ,000 | -7.9% |
The semi-detached segment has experienced the steepest correction, presenting potential value for buyers seeking middle-ground between condos and detached homes.
Downtown Core: Condo Market Specifics
For downtown buyers, the condo market tells a nuanced story:
- Average price per square foot: (down 7.5% year-over-year)
- City of Toronto condo average: ,095 (Q3 2025)
- Days on market: 34 days for condos (up from 28 days in 2024)
- Months of inventory for condo townhouses: 5.6 months—the highest Q3 level ever recorded
The elevated inventory means buyers have negotiating power that hasn't existed in downtown Toronto for years. Well-priced units still move, but overpriced listings face extended market times.
Interest Rate Environment
The Bank of Canada held its policy rate at 2.25% on January 28, 2026—the second consecutive hold after the rate-cutting cycle of late 2025. This stability provides important predictability for buyers.
Current mortgage rates reflect this environment:
- 5-year fixed: 3.89% - 4.49% (best rates)
- 5-year variable: 3.35% - 3.55%
- Prime rate: 4.45%
Most analysts expect the Bank of Canada to maintain rates through 2026, with potential for modest adjustment either direction depending on economic conditions. The next announcement is scheduled for March 18, 2026.
What's Driving the Current Market
Immigration Policy Shift
Canada's reduced immigration targets—now 380,000 permanent residents annually—have meaningfully impacted demand. TD Economics notes this dial-back is hitting urban condo markets hardest, with investor-landlords seeing their tenant pool shrink as international student and temporary worker numbers decline.
Employment Landscape
Toronto's unemployment rate sits at 8.2% as of January 2026—elevated compared to the national average of 6.8%. While employment increased 1.5% year-over-year (59,600 jobs), the jobless rate weighs on buyer confidence, particularly for first-time purchasers.
Supply Pipeline
Pre-construction condo sales have plummeted to levels not seen since 2008. While this creates near-term softness, RBC Economics notes that extremely weak new starts combined with declining completions could see inventory begin tightening by late 2026.
Expert Forecasts for 2026
RE/MAX projects the GTA average price will fall another 3.5% in 2026 to approximately ,037,354, while sales volume increases 5% as improved affordability brings sidelined buyers back.
TD Economics forecasts a 4.5% year-over-year price decrease for Greater Toronto, with the condo market facing continued challenges before potential stabilization.
TRREB President Daniel Steinfeld summarized the outlook: "The GTA housing market became more affordable in 2025 as selling prices and mortgage rates trended lower, setting the market up for recovery."
What This Means for Buyers
For those considering a purchase in downtown Toronto, the current environment offers:
- Negotiating leverage that hasn't existed since 2018-2019
- Rate stability allowing confident budget planning
- Selection across most price points and neighbourhoods
- Time to conduct thorough due diligence without frantic bidding wars
The risk? Waiting too long. When sentiment shifts, it typically happens quickly, and well-located downtown properties will be first to see renewed competition.
What This Means for Sellers
Sellers face a more challenging environment but can still achieve results with proper strategy:
- Price accurately from day one—overpricing leads to stale listings
- Invest in presentation—staged, well-photographed homes outperform
- Consider timing—spring 2026 activity should improve over 2025
- Be realistic about competition—buyers have choices today
The Bottom Line
Downtown Toronto's housing market in early 2026 sits in balanced-to-buyer territory for the first time in years. Prices have adjusted 5-12% depending on property type, inventory is elevated, and the economic backdrop—while stable—isn't fuelling aggressive demand.
For qualified buyers ready to move, this represents a window of opportunity. For sellers, success requires adapting to a market that no longer forgives overpricing or under-preparation.
The data suggests 2026 will be a year of transition—not dramatic decline, not rapid recovery—but gradual movement toward equilibrium. Those who understand this reality will be best positioned to make informed decisions.
Sources: Toronto Regional Real Estate Board (TRREB), Bank of Canada, TD Economics, RE/MAX, RBC Economics, WOWA.ca, Zolo.ca. Data current as of January 30, 2026.
