GTA Late Summer Housing Market Update: BoC Rate Cut Looms as Inventory Surges

As we move into the final weeks of summer 2025, the GTA housing market is showing major shifts that buyers, sellers, and investors can’t ignore. From a looming Bank of Canada rate cut to a surge in inventory, today’s episode breaks down the numbers, trends, and opportunities shaping the late summer real estate landscape.

Ciao! Welcome to a new episode of Building Wealth Through Real Estate...Brick by Brick with me, Nico James-Bock, Founder of The CondoWiz™ Group and Broker at Keller Williams Co-Elevation Realty in Toronto.  

What you’ll learn in this episode:

• 📉 Rates & BoC Decision: Markets now pricing in a 2 out of 3 chance of a BoC rate cut on September 17th.
• 🏦 Mortgage Outlook: Fixed rates may dip below 4%, reshaping affordability and buyer psychology.
• 📊 Sales & Listings: New listings outpaced sales, pushing inventory up 22% YoY and shifting market dynamics.
• 🏘️ Buyer’s Advantage: Conditions, negotiations, and opportunities in condos, townhomes, and detached homes.
• 💼 Jobs & Economy: 66,000 jobs lost in August, unemployment at 7.1%, with Toronto topping the country at 8.9%.
• 🔮 Big Picture: Canada’s second-largest housing correction continues, but opportunities remain for strategic buyers.

The late summer numbers show a market in transition. Whether you’re a buyer waiting for rates to fall, a seller navigating higher inventory, or an investor eyeing opportunity, the coming months will be pivotal. Tune in, stay informed, and take advantage of the shifts ahead. 

How are you feeling about the current real estate markets?

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Ciao

Nico

Transcript

Welcome back to Building Wealth Through Real Estate, Brick by Brick. As we head into late summer 2025, there’s a lot happening in the housing market, both here in the GTA and across Canada. With the Bank of Canada’s September 17th rate decision approaching, buyers, sellers, and investors are all watching closely to see what happens next. Let’s break down the latest numbers and trends shaping the market right now.

The big story is that markets are pricing in about a two out of three chance of a Bank of Canada rate cut on September 17th. Inflation data arrives on the 16th and will be a major factor in that call. If we do see a cut, fixed mortgage rates are expected to dip into the high 3 percent range, with Citadel already publishing the lowest five-year fixed at 3.94 percent. Variable rates could soon align with the lowest three-year fixed if a cut comes through. After this September meeting, only one more drop in prime is expected before year’s end, but even small changes could shift affordability and market sentiment.

Looking at the GTA housing numbers, new listings continue to outpace sales, pushing inventory levels higher. The average price now sits at about $1,020,000 — down 5.2 percent from last August. Sales activity showed some mixed results: total transactions across the GTA came in at 5,211, which is up 2.3 percent year-over-year, but down 1.8 percent compared to July. While affordability remains a challenge for many buyers, a rate cut could help, not so much by drastically changing monthly payments, but by improving buyer mindset and confidence.

On the inventory side, new listings jumped 9.4 percent year-over-year to over 14,000, bringing total active listings up 22.4 percent to nearly 27,500. That’s a significant increase in choice for buyers. Consumer confidence is starting to recover, but the gap between what buyers are willing to pay and what sellers expect remains. Within Toronto, sales were up 3.5 percent year-over-year, while the broader GTA saw a 1.7 percent increase. Detached homes led the way with nearly a 6 percent gain, followed by semis and townhomes, while condo sales slipped almost 5 percent.

It’s important to put this into context. Yes, year-over-year increases are encouraging, but we’re still near historic lows in terms of the number of transactions. Prices across TRREB remain 24 percent below the February 2022 peak. On a month-over-month basis, GTA prices dropped just over 1 percent in August, the second-largest monthly decline in the past year. Even though sales volumes are improving slightly, we’d need a 57 percent increase in transactions to simply reach 2019 levels for August. And with inventory at its second-highest level since August 2020, buyers still hold a lot of leverage.

For buyers, this means opportunity. Conditions are returning to the table, negotiations are back, and bidding wars are far less common. Condos and townhomes currently make up about two-thirds of active Toronto inventory, putting downward pressure on smaller, cookie-cutter condo units, while larger or more unique condos are still attracting demand. Semi-detached homes are leaning toward a seller’s market, detached homes look balanced, and condos remain a buyer’s market. With detached average prices sitting at $1.31 million across the GTA and $1.52 million in Toronto, affordability is still a sticking point, but the power balance has shifted.

On the economic side, unemployment has risen to 7.1 percent nationally, the highest in nine years outside the pandemic. Canada shed 66,000 jobs in August, mostly in part-time positions, with the hardest hit in transportation, manufacturing, and professional services. This follows job losses in July, marking two consecutive months of declines. Toronto has the highest jobless rate in the country at 8.9 percent. The weakness in the labor market, combined with the earlier GDP report showing a 1.6 percent contraction in Q2, has bond yields dropping and markets leaning toward a Bank of Canada rate adjustment.

South of the border, U.S. job growth also came in weak, adding just 22,000 jobs against expectations of 80,000. U.S. unemployment has climbed to 4.3 percent, its highest since 2017, excluding COVID. Markets are fully pricing in a Fed cut on September 17th, with one 25-basis point move expected, followed by two more before year-end. With the Fed easing, and the Bank of Canada closely watching inflation and growth, the pressure for rate cuts here at home is building.

So where does this leave us? Canada is still working through its second-largest housing correction on record. Prices are lower, inventory is higher, and affordability challenges remain. But for buyers, the late summer market is presenting opportunities we haven’t seen in years — more choice, less competition, and the ability to negotiate on price and conditions. Sellers will need to be more realistic on pricing, and many may return to the market this fall if they sat out over the summer.

That’s the latest snapshot of where we stand as we approach the Bank of Canada’s September 17th decision. A rate cut isn’t guaranteed, but momentum is leaning that way, and the housing market is already adjusting. Stay tuned, because the next few weeks will be crucial in setting the tone for the rest of 2025.

Thanks for tuning in to Building Wealth Through Real Estate, Brick by Brick. If you found this episode helpful, don’t forget to subscribe, share, and leave a review. Until next time, I’m Nico James-Bock, helping YOU build wealth one brick at a time.

Nico

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