Home prices drop below $1M in T.O. in slowest January since 2009

There has been a lot of talk about a housing rebound in Toronto. Industry forecasts point to stabilization later in 2026. Some expect sales to recover as rates normalize and affordability slowly improves. But January’s data tell a much darker story—one that should concern anyone tied to housing, construction, development or the broader real estate ecosystem.

Sales in January fell nearly 20 per cent year over year. That alone would be alarming in a healthy market. In today’s context, it is far worse. 2025 was already one of the weakest years on record for Toronto real estate. Activity collapsed, prices drifted lower month after month, and buyers never meaningfully returned. January did not show the first signs of healing. It showed further deterioration.

This is the slowest January in at least 16 years, per PropTX data from TheHabistat.com.

This was not a soft start to the year. It was one of the slowest January’s in decades, including periods that covered the global financial crisis and multiple pandemic lockdowns.

Demand continues to evaporate

The most important takeaway from the latest Market Watch report is simple: demand is still weakening.

Sales were down 19.3 per cent year over year. Average prices fell 6.5 per cent. The MLS House Price Index dropped roughly 8 per cent. New listings also declined, down about 13 per cent—but not nearly enough to change market conditions.

Sales are falling faster than listings. That matters. It tells us buyers are retreating faster than sellers are withdrawing supply. The result is rising inventory, growing imbalance and a market that remains firmly tilted against sellers.

Active listings are now up more than 8 per cent year over year, even with fewer new listings coming to market. That is not what stabilization looks like.



Source: TRREB

A confidence collapse is holding the market down

Rates have stabilized. Mortgage costs are no longer rising sharply. Yet activity continues to slide.

Households are deeply uncertain. Job security is increasingly fragile. Layoffs are becoming more visible. Construction employment is weakening. Trade uncertainty and economic stagnation are feeding hesitation. Many buyers believe prices could continue falling and see little urgency to step in.

That hesitation is powerful. When buyers stop participating, the entire system slows. Transactions dry up. Builders pause projects. Developers shelve land. Real estate employment contracts quietly before layoffs make headlines.

This kind of slowdown does not create dramatic crashes. It creates long periods of grinding weakness that are harder to fix.

The market is fracturing by product type

The stress in the market is not evenly distributed. We keep hearing about pain in the pre-construction condo sector, but the resale market seems to be feeling it, too.

Lower-density freehold homes are holding up slightly better, particularly in Toronto. Even there, prices are falling and sales remain weak. In the 905, detached prices are down close to 9 per cent year over year.

The condo market is in far worse shape. Prices are down roughly 13 per cent year over year in the 905. Sales volumes are down close to 30 per cent.

Source: TRREB

That collapse in condo liquidity is critical. Condos are the entry point for many first-time buyers. They are also a major source of demand for preconstruction projects that support construction jobs, trades, consultants and municipal revenues. When condos stall, the damage spreads well beyond resale listings.

Inventory in the condo market continues to build. Months of inventory have reached levels that would normally only appear during severe downturns.

Prices falling below one million dollars carry weight

January posted just over 3,000 sales against roughly 10,000 new listings. Average prices fell sharply, breaking decisively below the $1-million threshold to roughly $973,000.

That line matters psychologically. It reinforces the perception that prices are still moving lower and that waiting carries little risk.

Both the average price and the MLS House Price Index declined month over month. When those measures fall together, it signals real downward pressure rather than changes in what types of homes are selling.

Price discovery is happening slowly and painfully through negotiation and time on market. Sellers are reducing expectations. Buyers are taking their time.

Inventory, cancellations and a market losing momentum

Months of inventory continue to rise. Seasonal factors do not explain the trend. The direction has been clear for months.

Transaction volumes show January 2026 as the weakest January in decades. At the same time, new listings remain historically elevated for this point in the year.

Cancellations add another troubling layer. Last year set records for terminated listings. January 2026 has already exceeded those levels. More sellers are listing, failing to attract buyers at acceptable prices, and choosing to step back rather than transact.

That behaviour reflects exhaustion and uncertainty. It also delays clearing, keeping supply overhangs intact.

The sales-to-new-listings ratio remains deep in buyer’s market territory, sitting in the low 30-per-cent range. Historically, price recovery struggles to begin until that ratio moves meaningfully higher.

Condos are carrying the weight of the downturn

When inventory is broken down by property type, condos stand apart. They carry far more inventory relative to sales than freehold homes. That imbalance explains much of the price weakness across the GTA.

Condo months of inventory across PropTX boards continue to hit record highs. TheHabistat.com data.

Time on market is rising quietly. Homes are selling, but slowly. That slow bleed erodes confidence further and discourages new construction commitments.

This weakness is not isolated. Toronto, Peel, York, Durham and Halton all show year-over-year price declines. The slowdown is systemic and rooted in affordability constraints that have not been resolved.

What January 2026 actually told us

January delivered a stark message.

The market is not stabilizing yet. It is still deteriorating.

Prices are adjusting gradually, not violently, which often makes the damage easier to ignore. Condos remain the weakest segment and the clearest leading indicator. As long as that segment struggles, broader recovery remains difficult.

This environment is brutal for the real estate industry and deeply concerning for construction. Fewer transactions mean fewer projects, fewer jobs and slower economic activity. Housing has historically been a major engine of growth in the GTA. Right now, that engine is barely idling.

For buyers with capital and patience, these periods can eventually create opportunity. For the industry as a whole, they represent prolonged strain.

The question now is whether confidence can return in 2026, or whether this grind continues into 2027. The answer will shape not just housing, but employment, investment and economic momentum across the region.