I have been thinking long and hard about lessons learned in trading in real estate in 2025. For many seasoned agents, this has been a year unlike many have seen since the late 1980's where things were the same but different.
Admittedly, things have been different since the pandemic...where primarily normal patterns (seasonality) and reliable metrics (number of showings until you get an offer; using a recent comparable as a tool) seem to have flown out the window. 2025 was definitely not a linear market.
But what did I specifically learn from 2025?
At the risk of sounding like a recipe blog (or for that matter a Toronto Realty Blog) where the stories start from the dawn of time and take a hot minute before the point is reached, here's what happened in 2025:
- number of sales were lowest in decades
- inventory built in many segments - particularly what I'll call "commodity properties" - condos under 600 sq. ft. & 3 bedroom bungalows, in particular
- sellers who bought at the peak were pinched as interest rates rose - trying to sell at unrealistic prices
- our market was (and continues to be) affected by things beyond a realtors control including political, cultural, economic, environmental and social factors – both nationally and globally. Despite facebook opinion of how 'realtors control house prices'
To recap the year, I did:
- 7 purchases for clients
- sold 6 properties for clients
- did 7 leases (the paperwork and work involved in those is double the sale or purchase transactions, BTW)
So overall, pretty good considering most realtors only do about 2 transactions a year. And in those I had 2 properties that didn't sell, one has now gone onto a distress sale with the bank's recommended realtor. They haven't sold it yet either. And one small condo that we ended up leasing.
Think about this - for the 2 properties that didn't sell, I put up at least $10,000 of my own money to prep, stage, do some renovations when my client didn't have the money to front it themselves. They are supposed to pay me back, but they haven't sold their house yet, so....
Predictions are that the market this year will be similar to last year.
Here's what I learned & the stories behind the learning.
1. Relationships/networking with other agents is more important are important than ever.
- One specific sale would NOT have happened without networking with another realtor - the property wasn't even on their clients radar without coming to a realtor Open House I hosted. I would say this is one of the most collaborative and smoothest transactions this year. Similar condos in this building are still on the market (for months) for less than what we sold for
2. Buyers won’t pay extra for larger property
- larger properties should command a higher price, right? After all they're not making land anymore, as the saying goes. Well not in this market. Buyers care about interior features, condition and value for their money. You don't get more for the extra 50' of back yard - regardless of how much extra other similar size lots have gotten extra in the past. And when I say condition of a property - the expectation is recent renovations.
3. This year, more than in any other year, a properties condition matters first & foremost to buyers.
- Buyers are picky. Recent renovations matter. Generally a buyer will double the cost of a repair or update. This year in particular with a glut of inventory they just wait until something better comes along.
4. Buyers don’t pay for potential - this has ‘doubled down’ in my opinion
- This is a hard one for me to explain to a seller - buyers SUBTRACT money for potential, not pay extra for it. Because after all, all they see is cost and work.
- In particular, many sellers I work with love their homes & neighbourhoods. They often attribute a dollar value to that - and there's a name for this phenonmenon. This is called the "Endowment Effect". When I hear "but my street is the best", "the neighbours are amazing", "there's so much potential only if the buyers.....(insert renovation/updates here) It's hard for a seller to hear, but buyers don't pay extra, they just see dollar signs. And they won't just 'try an offer' in this market they move on to something that represents better value.
5. Even in very desirable neighborhoods with a gorgeous home there are very few buyers who will pay a premium.
- Yes, even in the Beach, for a gorgeous house. No fancy marketing campaign will compensate for a house that's priced at a premium,
6. AVM & HPI are not accurate indicators of what a house will sell for (don't get me started on HouseSigma)
- Both of these are automated tools - AVM stands for Automated Valuation Model; lenders use these for virual appraisals. In the city they have a higher accuracy; less so for small markets or rural properties. I have tried 2 of these reports this year and both indicated the subject properties were worth higher than the listed, not the sale price
- HPI is the Home Price Index tool provided by our real estate board. There is a price estimate feature where you plug in the most recent date of purchase, purchase price, property type & area and it will estimate todays selling price. Mostly way off the mark in 2025
7. Buyers are slow to make decisions; they have embraced that the prices have dropped. You may see offers that are basically “I want it free” especially on commodity housing stock.
- this has happened twice - buyers submitting incredible lowball offers, unsupported by any rudimentary facts. With a well supported & documented counter offer, the response is crickets....
8. Other agents are describing the market as 'brutal', even seasoned ones.
- Imagine going into a listing presentation where you're competing and being upbeat, confident yet realistic in this market!
9. Following up with interested buyers is like pushing a boulder uphill.
- this all points to the buyers lack of urgency and belief that the market will drop further
Some hard truths overall. And, since we're anticipating a similar year in 2026 how can you navigate it with confidence?
Tips for sellers in 2026
- work with an agent that has their pulse on the market & has weathered some ups and downs
- make sure the agent you're working with is not 'buying the listing'
- examine not only the agent's production level, but skill set & tool chest. This market takes grit, patience, determination & collaboration to get a house sold. Sellers don't hold the cards.
- price it right
- put major effort into preparation. Expect a realtor to want to recoup costs by having the staging etc. reimbursed if the home fails to sell because of the market. Or, expect you to pay up front and then get reimbursed when it sells. In a professional agent's eyes this is a big difference between a motivated seller a person testing the market
- don't go for the cheapest agent. You need skill, training and experience to sell a house in this market.
Predictions for the Toronto real estate market for 2026
For the second half of this blog post - these happened after I wrote the section above we can get into industry predictions for 2026. To be clear, these are not my predictions (I prefer to watch, learn & adapt accordingly) but from 3 sources:
1. Toronto Star "We're going back in Time" article from January 3rd. This essentially says we're in a recession period in real estate and the gains made during the covid boom will be lost due to economic uncertainty. Here's a link to the pressreader version:
Why is this important? Whether it's true or not remains to be seen. But this was the most recent, mass article that's been published recently. The recomendation is that sellers sell early because prices will slide. But if I were a buyer, wouldn't I interpret that as "wait to buy because prices are sliding?"
2. Suze Cummings - The nature of Real Estate. Suze is a former realtor, and real estate coach and negotiation guru who has taught the art of real estate negotiation to Realtors for years. I have her Masters in Real Estate Negotiation training, and she's now teaching about Pricing Intellegence. I have always found her to be thoughtful, intellegent and wise in all matters when I've taken her training. Here are her thoughts:
"The market will remain uncertain and uneven across the country. Our market is affected by things beyond our control including political, cultural, economic, environmental and social factors – both nationally and globally.
Most organizations and individuals making actual market predictions are persuaded by interests and biases. They might be right; they might be wrong. The good news is, we don’t get paid because prices go up. We get paid when people use our expertise to help them trade in real estate.
My prediction is that a steady or slightly increasing number of people will need to transact in real estate in 2026. And further, that highly skilled real estate professionals will continue to increase their market share.
As consumers become more discerning, more cautious, and more aware of what’s at stake, a growing share of business will consolidate around agents who can demonstrate real Negotiation Intelligence; the ability to stay regulated, read people, frame strategic options, and design outcomes under pressure.
This is already happening quietly. The agents who can do this work well are being referred more often, trusted more deeply, and kept closer.
Uncertainty will remain. Skill will matter more"
If you're a realtor reading this and are interested in her courses, you can find them here:
3. The Toronto Realty Blog. Written by David Fleming, this OG real estate blog is how he built his business. Trigger warning: his writing reads like those annoying recipe blogs, the posts are story heavy, start at the dawn of time and take a while to get to the point. Oh, and he's kinda snobby. But if you can get over those things, there are some nuggets and he does some pretty deep dives into the data. A summary of his 2026 predictions (you can thank me now) are:
Alright, so we know that we saw “market corrections” in each of 2008, 2017, and 2022.
But what’s fascinating about this chart is that the sales data has been taking longer and longer to correct.
The 2008 price correction corresponded with the low point of sales in 2008.
The 2017 price correction led to a low point of sales one year later in 2018.
And the 2022 price correction led to a low point of sales three years later in 2025.
Folks, if you’re looking to me to explain why this happened, then I’m sorry to disappoint.
But in my humble opinion, and in my unscientific estimation, I believe this confirms that sales have absolutely, positively, bottomed out.
Sales will be up in 2026. No question about it.
Maybe I don’t deserve a trophy for predicting, “Sales will be higher than the all-time low record,” but it needs to be said regardless.
The “Trump Factor” has been normalized.
The Bank of Canada policy rate has been cut in half.
January sales are going to be 10-20% higher than last year. So that’s my prediction…
Here's a link to the blog:
Toronto Realty Blog 2026 Predictions
My predictions? I'll be analyzing data, building skills to have these discussions with clients in a clear and straightforward way to help my clients navigate whatever market we're in.
