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Toronto Housing Market: Prices at 2021 Levels, So Where Are the Buyers?
Here is the strangest stat in the Toronto housing market right now. Prices are sitting at roughly the same level they were in 2021, and sales are running at about half the pace they were back then. Same prices, half the buyers.
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If affordability were the whole story, that math would not work. Which is exactly the point Gary McGowan and mortgage broker Dion Beg dug into on this month's RealtyChatter market update: this is a confidence crisis, not an affordability crisis. The numbers below come from Edge Analytics reports covered in the episode.
Same prices as 2021, half the sales. What changed?
The buyer did. Dion's read is that it comes down to what people believe they are buying. When someone takes on hundreds of thousands of dollars of debt, they want to believe the asset will go up in value. In 2021, that belief was everywhere. Buyers were watching homes gain $10,000, $20,000, even $30,000 a month, and FOMO did the rest.
Today's buyer has lived through something the 2021 buyer never had: rates that ran from around 2 percent up to 6 percent and back down to around 4. Before 2021, Canada had gone about 15 years without a major rate increase. Five bumpy years changes how people feel about signing a mortgage, even when the sticker price looks familiar.
The sentiment data backs it up. The Nanos consumer confidence index slipped to 51.72 from 52.81, and trade tension with the United States is sitting on top of everything, from job security to grocery bills. People do not buy houses when they feel shaky about their paycheque.
Toronto's weakest August since the 1990s, in context
The headline is dramatic: Toronto just posted its weakest August since the 1990s. Before anyone declares the sky is falling, a few of the underlying numbers deserve a closer look.
Power of sale listings are up 36 percent, with roughly 500 new listings mentioning the term. That sounds alarming until you do the division: it works out to just over 4 percent of current Toronto listings, and the Toronto market is a very big area. Worth watching, not worth panicking over.
Meanwhile, sales of $2 million plus homes are up 13 percent. And 416 condo inventory is down 15 percent year over year, but that comparison is against last year's record-high condo inventory. There are still plenty of condos to choose from, with well over four weeks of supply. The condo market is balancing out, not drying up.
For reference, the average detached home in Toronto is sitting around $1.3 million, with the average across all home types near the $1 million mark.
The K-shaped market: why luxury is up while everything else is flat
How do $2 million sales climb 13 percent in the weakest August in three decades? Dion calls it the K-shaped economy. Picture the letter K: one line going up, one going down. Households with a strong asset base keep doing well, sometimes better, while everyone else tightens up.
Dion's friend who runs a BMW dealership says the same thing: when the economy goes flat, his business does not. Calgary is showing the identical pattern, where million-dollar home sales grew in volume while the broader market pulled back. The Calgary million is the Toronto two million.
Rates and renewals: the 30 percent payment shock, and how to shrink it
The five-year bond yield, the number banks use to set fixed mortgage rates, is at its highest point since June or July of 2024, which was around peak rates. Some lenders are already nudging fixed rates up. The Bank of Canada held its rate last week but paired the hold with a hawkish tone, essentially telling Canadians the door is open to a move. Some economists think a variable-rate increase could land by December.
Nobody has a crystal ball.
So fixed or variable? Dion says his clients are still split about 50/50, but the fence-sitters are leaning fixed for peace of mind. The catch is that fixed is harder to qualify for because it carries the higher rate. Here is the strategy piece most borrowers miss: you can close on a variable and convert it to a fixed after closing, without penalty. That one move solves the qualification problem without locking you out of stability later.
On renewals, homeowners coming off their 2021 all-time-low rates are facing a payment jump of about 30 percent if they simply roll into a new term. Dion is not losing sleep over it, because in practice that jump rarely stays at 30. Through restructuring debts and adjusting amortization, he is regularly getting that increase managed down to around 10 percent. The difference between those two numbers is a conversation, not a miracle.
Vancouver and Calgary are feeling it too
This is not just a Toronto story. Vancouver, perennially the most expensive market in the country, recorded its lowest August sales since 2012. Calgary sales are down more than 16 percent year over year, with condo sales off 26 percent. National markets are all sending the same message, and the message is about confidence, not collapse.
The move-up math almost nobody runs
The best part of the episode is a real client story that cuts through all the gloom. A school teacher and a firefighter came to Dion with a growing family and a downtown Toronto home worth about $1.4 million. They wanted to move up to a $1.7 million property but were convinced they could not afford the payment.
Then Dion looked under the hood. Their car payment was eating about $1,000 a month. They were also paying more on their mortgage than they needed to. All in, they were spending about $6,000 a month servicing debt.
The plan: keep the current home as a rental, with the basement and upstairs both tenanted. That property will more than carry itself, throwing off an extra $2,000 a month beyond its costs. The new home's payment comes in around $6,000, and with the $2,000 rental surplus applied, their real monthly outlay lands near $4,000.
Read that again. They are moving up to a bigger, better home and their monthly payment is dropping by roughly $2,000. Their reaction says it all: nobody at their bank had ever shown them the numbers this way. Their only regret was not knowing five years earlier.
Watch confidence, not prices
The takeaway from this month's episode is simple. The market has room to rebound, and buyers have not figured that out yet. Before Toronto sees a truly balanced market, which typically means about three months of inventory, people need to feel secure about their jobs and the economy. August is also reliably one of the slowest months of the year, so do not be surprised when October headlines trumpet rising sales. That is seasonality doing what seasonality does.
The jobs data will not settle anyone's nerves either. August showed a loss of 42,000 jobs, just weeks after a surprisingly strong report. Dion trusts those numbers least of all the government stats, and his advice is refreshingly practical: skip the headlines and talk to the people around you. That is the real confidence index.
Watch the full episode
Gary and Dion go deeper on every one of these numbers, including the full breakdown of the move-up strategy, in the video above. If you scrolled past it, go back and hit play. It is the plainest 27 minutes of market talk you will find this month.
Thinking about a move this fall?
If the confidence question is the only thing holding you back, get the actual numbers before you decide anything. Reach Gary at homes@garyamcgowan.com for the real estate side, and connect with Dion Beg's team at kangamortgage.ca or on Instagram at @thedionBeg for the mortgage math. You might be one conversation away from a move you assumed you could not afford.
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