Toronto's Housing Market Hits Five-Year Lows as Buyers Finally Get Breathing Room
For years, the refrain among Toronto homebuyers was simple: too expensive, too competitive, too fast. But the numbers coming out of January 2026 tell a different story — one where the balance of power in the GTA housing market is finally, cautiously, shifting.
The Greater Toronto Area recorded just 3,082 home sales in January, a staggering 20% decline from the same month a year earlier. Average prices have slid to $948,698, down 3.8% year-over-year, while the benchmark price — a more stable measure — fell 6.6% annually to $924,100. Both metrics are now sitting at five-year lows.
Every Segment Feeling the Chill
The cooling isn't limited to one corner of the market. Detached home sales dropped 14% year-over-year, semi-detached fell 20%, freehold townhomes slid 24%, and condos — the category most closely watched by first-time buyers and investors alike — declined 26%.
Properties are also taking longer to sell. The average days on market stretched to 67 in January, up from 55 a year ago. And sellers are getting less than they ask for: the average sale-to-list price ratio dipped to 97%, meaning homes are closing roughly 3% below asking.
What's Driving the Shift?
Despite multiple Bank of Canada rate cuts throughout 2024 and 2025, affordability remains a structural challenge. Incomes simply haven't kept pace with prices, and a cooling labour market has made some buyers cautious about taking on large mortgages.
At the same time, inventory has crept up, giving buyers more options and less urgency. The days of waiving conditions and bidding $200,000 over asking feel increasingly distant.
Silver Linings for Buyers
Real estate agents say the mood on the ground is markedly different from the frenzy of 2021 and 2022. Level-headed sellers are pricing their homes realistically, and buyers are responding. The lowball offers that defined 2025 are giving way to more good-faith negotiations.
For prospective first-time buyers, the message is cautiously optimistic: the market is more accessible than it has been in years, though affordability in Toronto remains challenging by any national standard.
Looking Ahead
Industry analysts expect the GTA to shift toward a balanced-to-buyer market through 2026. Lower interest rates and continued price adjustments could support renewed activity, particularly among move-up buyers and those who have been waiting on the sidelines.
Whether this represents a healthy correction or the start of a deeper downturn depends on who you ask. But for now, Toronto's housing market is giving buyers something they haven't had in a long time: time to think.
