Housing supply in Toronto is starting to tighten up as discouraged sellers pull their listings, said John Lusink, vice-chair at RealServus.Graeme Roy/The Canadian Press
The Ontario real estate market is sputtering into the final stretch of the fall season with bursts of activity and periods of stagnation.
“Some of them move immediately and others just seem to be stuck,” says John Lusink, vice-chair at RealServus, of properties he sees in the central Toronto 416 area code and the suburban 905.
“It really is hyperlocal. If you’re in Moore Park on a great street, you’re going to get those 12 offers. In the 905, you’re going to struggle to get activity.”
The firm has branches in 15 markets in Ontario under banners that include Right at Home Realty, Property.ca and StreetCity. Beyond the Greater Toronto Area, the company also operates in cities such as Ottawa, London, Thunder Bay, Barrie and Sarnia.
“This is the highest inventory we’ve seen in a long time,” says Mr. Lusink, adding that price reductions have also become more common.
Sellers and buyers in Toronto area navigate a frustrating housing market
Supply has tightened up slightly in recent weeks – partly because discouraged sellers have pulled their listings, he adds.
“There absolutely was some tightening of inventory in the last little bit.”
He adds that lofty asking prices account for properties that have not moved in many cases.
The most active price range in Ontario is the bracket between $800,000 and $1-million, according to his numbers.
With so much information available today, Mr. Lusink says, house hunters pore over data and crunch the numbers on each property they see. In some cases, they are willing to pay the full asking price for a house on one street but demand a discount for a comparable house on a street nearby.
“People have gotten very, very analytical in the most micro way.”
Buyers in many parts of the province are worried about jobs and the overall economy.
“The big issue is confidence,” says Mr. Lusink.
Data shows that business confidence has also been sinking, he adds.
Mr. Lusink, who has been worried about the job market for some time, continues to closely track those numbers.
Economic data shows job losses have continued to mount in manufacturing, but they are also hitting financial services and information technology.
Young Canadians face anxiety and burnout in a tough job market
Mr. Lusink has noticed the shift in his own firm’s tech group, where attracting new workers has become much easier than it was during previous years, when employers had to compete for talent. The firm, which has about 7,000 agents under its various umbrellas, has been forced to lay off some workers during the downturn in transactions, he says.
Agent numbers across the industry are also sliding as some of the people who used downtime during the pandemic to take courses toward a real estate license have now left the business. Others decided to retire, he says, and some have “parked” their license until the market picks up again.
In many Ontario cities, potential buyers who are nervous about the job market and the overall economy are holding back from purchasing a first home or trading up.
A severe drop in immigration is also creating some headwinds in the real estate market, Mr. Lusink points out.
At Toronto-Dominion Bank, chief economist Beata Caranci and economist Marc Ercolao have studied the impact of this country’s dial-back of immigration on housing, unemployment and household spending.
Their research shows that Canada’s rapidly decelerating population growth has put downward pressure on the housing market across the country.
Housing affordability was being pushed to its limits by the time policy-makers acknowledged in 2024 that immigration rates were straining social and economic infrastructure, they say, and the unemployment rate had jumped.
The federal government’s new policy led to a tapering in Canada’s population growth from a multi-decade high of 3.2 per cent in the second quarter of 2024 to just 0.9 per cent, they note.
The effects of the plan to “rightsize” the volume of immigration, aimed at allowing some catch-up in infrastructure, are particularly evident in the easing of prices in the rental market, the economists say.
Ms. Caranci and Mr. Ercolao add that the most drastic impact on demand in the housing market can be seen in the segment for purpose-built rental apartments.
While fewer newcomers are looking for apartments, lower interest rates also tend to shift more renters toward home ownership. Meanwhile, lowering the cap on newcomers has also lessened demand for buying and renting condo units.
The consequences of less immigration are harder to calculate in the single-family home segment, say Ms. Caranci and Mr. Ercolao, because new arrivals tend to be less active in that portion of the market in any case.
While we fret over a stock bubble, the one in housing has already burst
As for the jobs market, the unemployment rate would be higher without tighter immigration, the economists say. While newcomers helped to fill labour shortages in key sectors of the economy during the pandemic, employer demand for workers has now reversed course.
Ms. Caranci and Mr. Ercolao are surprised that the pullback in immigration has not had a greater effect on household spending.
Consumers are more resilient than expected, they say, but the economists caution that these are early days.
Against that backdrop, uncertainty is permeating the real estate market as trade talks between Canada and the United States have faltered.
Looking ahead, Mr. Lusink expects the market to putter along to the end of 2025 at about the same level.
The real estate veteran is more optimistic for 2026. Mortgage applications have ticked up, he says, but many of those buyers have not yet followed through.
He believes some house hunters are waiting for prices and mortgage rates to drop further.
Surveys are forecasting a wave of homeowners will bring new listings to the market, and some of the failed sellers from this fall will likely return.
He is also hopeful that some of the gloom clouding the economic picture will clear, and buyers currently glued to the sidelines will be willing to move by the middle of next year.
“You do get a sense of this pent-up demand.”