Toronto's Buyer's Market: What to Expect in 2026
Significant price drops and low sales volumes define the current market.
Market Snapshot: By the Numbers
Prices Down 26-27%
A significant decline has occurred since the market peak in early 2022. This represents one of the most substantial corrections in Toronto real estate history, creating unprecedented opportunities for buyers who have been priced out of the market for years.
What This Means: A home that cost $1.2M at peak in 2022 now averages around $870,000-$900,000.
7% Year-Over-Year Price Drop
Prices have continued their gradual decline over the past year. Unlike sudden crashes, this steady downward trend indicates a fundamental market correction rather than panic selling.
Buyer Advantage: Sellers are increasingly motivated, leading to more negotiable prices and better terms.
Sales Volumes at Historic Lows
The market is currently defined by exceptionally soft buyer demand. Transaction volumes have fallen to their lowest levels in recent memory, with many sellers choosing to wait on the sidelines.
Market Reality: Fewer buyers means less competition and more leverage for those ready to purchase.
What's Driving the Slowdown?
Market Sentiment is the #1 Factor
Widespread uncertainty is the biggest factor keeping buyers on the sidelines. Unlike previous corrections driven primarily by interest rates or regulatory changes, this slowdown is heavily psychological.
Key Sentiment Drivers:
- •Fear of "catching a falling knife" - will prices drop further?
- •Concerns about overpaying in an uncertain market
- •Media narratives of continued decline affecting buyer confidence
- •Wait-and-see approach becoming self-fulfilling
Economic Worries Outweigh Interest Rates
Concerns about jobs and the economy prevent buyers from entering the market. While interest rates have stabilized, broader economic anxiety dominates buyer psychology.
Economic Worries
- • Job security concerns
- • Inflation impact on budgets
- • Recession fears
- • Income uncertainty
Interest Rate Reality
- • Rates stabilizing
- • Less of a factor than 2022-2023
- • Buyers adjusting to new normal
- • Economic fears dominate
Sluggish Market Expected for Early 2026
A shift in sentiment is needed before a market recovery can begin.
The first few months of 2026 will likely continue the current sluggish pattern. However, several potential catalysts could trigger a sentiment shift:
What This Means for Buyers
Buyer Advantages
- Lower Prices: 26-27% below peak means $200K-$400K savings on typical homes
- Less Competition: Multiple offers rare, giving buyers negotiating power
- More Inventory: Wider selection of properties to choose from
- Time to Decide: No pressure to rush into offers
Smart Buyer Strategies
- Don't Wait Forever: Timing the absolute bottom is impossible
- Focus on Value: Buy for your needs, not speculation
- Negotiate Hard: Sellers are motivated in this market
- Get Pre-Approved: Be ready to act when you find the right home
The Bottom Line for Buyers
2026 presents a generational buying opportunity in Toronto real estate. While uncertainty remains, buyers who act strategically can secure significant value in a low-competition environment. The key is balancing patience with readiness—don't rush, but don't wait for a "perfect" bottom that may never come.
What This Means for Sellers
Selling in a buyer's market requires strategic positioning and realistic expectations:
- 1.Price Aggressively: Overpricing guarantees extended days on market. Price competitively from day one to attract the limited pool of active buyers.
- 2.Present Perfectly: Professional photos, staging, and curb appeal are non-negotiable in a market with abundant choice.
- 3.Be Flexible: Offer incentives like covering closing costs, including appliances, or allowing flexible move-in dates.
- 4.Consider Timing: If you don't need to sell immediately, waiting for spring 2026 or a sentiment shift might yield better results.
Seller Reality Check
If you purchased at or near the 2022 peak, you may need to accept that your home's value has decreased. However, if you bought before 2020, you're likely still sitting on substantial gains despite the recent correction.
Expert Insight
"The 2026 Toronto market is defined by sentiment, not fundamentals. The area's long-term attractiveness—immigration, job market, global city status—remains intact. Buyers who can overcome the psychological barrier of uncertainty will look back at 2026 as a watershed moment."
— Market Analysis, December 2025
Key Takeaways
For Buyers: This is one of the best buying opportunities in over a decade. Less competition, lower prices, and negotiating power create optimal conditions.
For Sellers: Adjust expectations, price realistically, and present your home impeccably. Or consider waiting for market sentiment to improve.
Market Timing: Early 2026 will likely remain sluggish, but spring could bring renewed activity. No one can predict the exact bottom.