Toronto's condo crisis deepens while Montreal maintains historic momentum amid national market divergence.
The late summer market delivered a striking tale of regional extremes: Toronto's condominium sector experienced its most severe correction in decades with unprecedented inventory levels, while Montreal posted its strongest August in four years despite national economic uncertainty. After months of Bank of Canada rate stability at 2.75%, the expected recovery remains elusive in Canada's largest centers, creating the widest geographic performance gap since the pandemic's early stages.
Toronto's Greater Toronto Area benchmark home price fell to $969,700 in August 2025, down 5.2% year-over-year, marking the lowest levels since early 2021. Meanwhile, Montreal defied national trends with 3,330 residential sales in August, up 12% year-over-year, representing the 20th consecutive month of growth and the most active August since 2021.
For comprehensive coverage of previous market developments, see our May 2025 market analysis and detailed insights on Toronto's condo market crisis.
The August data reveals a market increasingly defined by local economic fundamentals rather than monetary policy alone. Despite lower borrowing costs providing affordability relief, structural imbalances, particularly in Toronto's oversupplied condo market, continue creating downward pressure. The national sales-to-new-listings ratio remained at 52% for July (latest national data), indicating balanced conditions, yet this masks extreme regional variations from Quebec's 75% seller's market to Ontario's newly balanced 40% ratio.
Trade uncertainty with the United States continues dampening buyer confidence in export-dependent regions, while Quebec's domestic focus and relative affordability maintain appeal for both local and interprovincial migrants. The market's next phase hinges on employment stability, with national unemployment hitting 7.1% in August, and whether inventory normalization can occur without triggering broader price corrections.
Toronto Condo Crisis Reaches Historic Proportions
Toronto's condominium market entered uncharted territory in August 2025, experiencing its most severe downturn since systematic record-keeping began. The Greater Toronto Area recorded 5,211 sales overall in August, with condo sales declining 3.4% year-over-year while all other housing types posted gains. Active condo listings reached 9,105 units across the GTA, with units spending an average of 40 days on market.
The crisis centers on oversupply: completed and unsold inventory reached 2,478 units in Q2-2025, a 102% increase from last year and more than five times the level from two years ago. More concerning for the market's stability, unsold inventory across all development stages totaled 24,045 units in Q2-2025, representing 60 months of supply based on current sales pace.
Condo apartment average prices fell 4.8% year-over-year to $642,000 across the GTA, with homes selling for 3% below asking price on average. In Toronto's city center, condo prices dropped 9.3% year-over-year, with year-to-date sales plunging 18%. The correction reflects multiple pressures: investor exodus as rental yields turn negative, assignment market collapse with buyers losing deposits, and quality concerns over sub-600-square-foot units priced above $760,000.
The Perfect Storm: Construction starts collapsed to just 1,276 units in Q2-2025, down 57% from last year and 84% compared to two years ago. Yet 17,117 condos are scheduled for completion in the second half of 2025, creating an unprecedented supply wave. Many buyers face negative equity situations, with resale prices in new buildings averaging $903 per square foot compared to $1,187 per square foot for pre-sold units.
For buyers, this represents the most favorable condo market conditions in over a decade. For sellers, particularly investors, strategic pricing and realistic timelines become essential as the correction shows no signs of stabilizing.
Source: Toronto Real Estate Board (TRREB), Urbanation Condo Market Survey, and Canadian Mortgage Professional. For detailed analysis, see our Toronto condo market update.
Montreal Maintains Unprecedented Growth Streak
Montreal's real estate market continued its remarkable run in August 2025, defying national cooling trends and economic uncertainty. The Montreal Census Metropolitan Area recorded 3,330 residential sales, up 12% year-over-year, marking the 20th consecutive month of annual increases and the busiest August since 2021. All major sectors posted year-over-year increases, with the plex market particularly active at 365 sales, up 23% from August 2024.
Montreal's average home price reached a new all-time high in July at $658,679, up 7.8% year-over-year. The median price for single-family homes in August rose 7% year-over-year, with half selling above $633,250, while the Island of Montreal and Vaudreuil-Soulanges sectors each posted 10% increases.
Market Dynamics: The sales-to-new-listings ratio remained at 72% in July, indicating strong seller's market conditions. Supply increased modestly by 4% compared to August 2024, with 17,515 properties listed for sale, though most growth came from condominiums, which rose 12%. About 11% of homes sold in July experienced overbidding (sold for 5% above asking), similar to 2024 levels.
Economic Resilience: The market's strength persists despite Quebec's GDP declining since April and confirmed national economic contraction in Q2-2025. Montreal benefits from relative affordability compared to Toronto and Vancouver, francophone immigration preferences, and reduced exposure to U.S. trade disruption. Repeat buyers leveraging existing real estate assets remain the most active segment, with central Montreal neighborhoods and affluent peripheral areas posting the strongest growth.
For Montreal buyers, competitive conditions require pre-approvals and quick decision-making. Sellers continue benefiting from pricing power and accelerated transactions, though Charles Brant of QPAREB noted that first-time buyers face challenges as price increases have ranged between 6% and 9% since early 2025.
Source: Quebec Professional Association of Real Estate Brokers (QPAREB) and Canadian Mortgage Trends.
Vancouver Continues Historic Correction
Metro Vancouver's challenging market conditions persisted through August 2025, with the region experiencing its most sustained correction in over a decade. The benchmark price fell to $1,150,400, representing a 3.8% year-over-year decrease and remaining 8.7% below the April 2022 peak of $1,259,900. Detached homes led the decline with average prices falling 7.9% annually to $1,927,418, while condo apartments dropped 3.5% to an average of $812,607.
The sales-to-active-listings ratio remains well below balanced market thresholds, creating continued downward pricing pressure. Despite Bank of Canada rate cuts totaling 2.25% over 15 months, monetary policy's influence appears to be waning as the market focuses on housing's intrinsic value rather than speculative sentiment.
Vancouver buyers benefit from expanded choice and negotiating leverage, particularly in the detached segment where inventory accumulation provides time for thorough property evaluation. Sellers must adjust to longer marketing periods and competitive pricing strategies, especially for properties above $2 million where luxury inventory continues building.
Looking Forward: The Vancouver market's trajectory depends heavily on employment stability in the technology and natural resources sectors, along with immigration policy implementation affecting demand from international buyers.
Source: Greater Vancouver REALTORS® and WOWA Vancouver Market Analysis.
Calgary Transitions to Buyer-Friendly Conditions
Calgary's real estate market completed its transition from the intense seller's market of 2022-2024 to more balanced conditions. While specific August data isn't yet available, recent trends show the market moving toward buyer-favorable conditions as oil price volatility and trade uncertainty continue influencing psychology despite Alberta's record production exceeding 4 million barrels daily.
The shift reflects reduced migration pressure from other provinces as housing costs in Toronto and Vancouver, while still elevated, no longer drive the same level of exodus to Alberta. Calgary buyers now benefit from increased inventory and reduced competition, while sellers must adapt to longer marketing periods and strategic pricing.
Energy Sector Impact: Despite strong production numbers, uncertainty around U.S. energy trade relationships continues affecting long-term buyer confidence. The market's performance through fall 2025 depends largely on trade resolution and whether economic growth can overcome political uncertainty.
For Calgary market analysis, see our previous market coverage.
National Economic Context Shapes Regional Performance
The Bank of Canada maintained its overnight rate at 2.75% through its most recent meetings, pausing after seven consecutive cuts that reduced rates from their 5% peak. Canada's national average home price was $672,784 in July 2025, reflecting a 2.7% monthly decline but a modest 0.8% increase from July 2024.
Regional Divergence: The national benchmark home price of $693,300 showed a 3.4% year-over-year decrease, heavily influenced by Ontario and British Columbia's declines despite positive growth in all other provinces. Quebec's benchmark home price increased 9.5% to a record-breaking $531,100, while Newfoundland and Labrador rose 11% to $330,500.
Economic Headwinds: National unemployment reached 7.1% in August, with the economy losing 66,000 jobs. RBC Economics projects the unemployment rate will peak at 7.1% in late 2025 before easing next year. Trade uncertainty with the United States continues creating economic disruption fears, with businesses delaying expansion and hiring decisions.
Immigration Impact: Reduced immigration targets are beginning to affect demand patterns, particularly in rental markets that traditionally support condo investment strategies. Immigration cuts have led to slower population growth and fewer international students, normally key drivers of Toronto's rental market demand.
Source: Bank of Canada, Statistics Canada, and RBC Economics.
Autumn Market Expectations
RBC Economics expects Canada's economy to gain momentum in late 2025 and accelerate further in 2026, though additional stimulus from rate cuts is unlikely with forecasts anticipating the Bank of Canada holding at 2.75% through 2026. Nationally, prices are expected to decline by 0.7% in 2026, reversing 2025's modest increase.
Market-Specific Outlook: Ontario and British Columbia are expected to experience the steepest price drops due to high inventory levels and strong competition among sellers, while balanced supply-demand conditions in the Prairies, Quebec, and Atlantic Canada should support modest price gains.
The autumn market faces several crosscurrents: traditional seasonal strength, potential policy responses to housing affordability concerns, and ongoing trade uncertainty. Success requires understanding local economic factors rather than relying on national trends, as regional divergence appears likely to persist through 2026.
A Real Estate Market of Extremes
August 2025 reinforced Canada's transformation into distinct regional housing markets, with performance increasingly driven by local economic fundamentals rather than national monetary policy. The Toronto condo crisis represents the most significant sectoral correction since the early 1990s, creating unprecedented opportunities for buyers while challenging investors and developers. Montreal's continued strength demonstrates the power of relative affordability and economic diversification.
For Buyers: Current conditions in Toronto and Vancouver provide the best opportunities in years, with expanded inventory, reduced competition, and meaningful negotiating power. However, employment stability and regional economic factors require careful consideration.
For Sellers: Success demands strategic pricing aligned with current market realities. Properties priced competitively for local conditions continue attracting offers, while aspirational pricing results in extended marketing periods and ultimately lower sale prices.
The market's trajectory through late 2025 depends on trade resolution with the United States, employment trends, and whether interest rate stability can overcome economic uncertainty. Regional understanding becomes essential as national averages increasingly mask local market dynamics.
For additional market insights, explore our coverage of rental market trends, political impacts on housing policy, and U.S. election effects.
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