Toronto Housing Market Bubble
Torontonians have that sinking feeling, with highly indebted home owners and credit leveraged consumers facing something truly unpleasant.
If the regular challenges of homeowners aren’t enough, the Trump tariffs starting today, deliver big implications for Toronto’s housing scene. Any retaliation from Premier Ford and Justin Trudeau, sends the damage into overdrive.
Is the much-rumoured Toronto housing market crash going to take place soon? The current economic issues with US President Trump are making many homeowners in the GTA wonder if the housing market from Mississauga to Richmond Hill to Oshawa is about to plummet.
“A trade war started by U.S. tariffs would really be an unfortunate and problematic thing for housing in Canada,” — Kevin Lee, CEO of the Canadian Home Builders’ Association (CHBA).
The bubbled-up T.O. marketplace has been a concern for sometime now, driven by massive waves of immigrants and anti-development and densification regulations imposed by the previous Liberal government. The pandemic era in particular with its massive stimulus spend and accelerating immigration numbers, combined with low housing supply made it a bubbled up market. What protected the Toronto residential real estate market was low supply with strong demand for houses and rental units.
Now in 2025, all those price-boosting factors are perhaps nearing a crescendo.
Toronto Home Prices: Primed for a Collapse?
Toronto housing sales have already suffered a steep decline to due to low supply from real estate regulations and unaffordable prices. With incomes plummeting, interest in homes will continue on downward trajectory.

Jobs, GDP, and Consumer Spending Hits the Skids
Trump has announced 25% tariffs on all exports from Toronto, Ontario and Canada. Experts forecast the loss of anywhere from 100,000 to 600,000 jobs in Ontario which would send the Ontario economy plummeting. It’s the regional variances that are important, because southwestern Ontario area is highly dependent on manufactured exports to the US.
Counter tariffs add a painful dimension causing price rises on materials and products coming from the US.
The Chart from Google Finance below shows investors don’t like the tariffs, and stock prices dropped. Yet, there is an air of denial about this actually happening. On Monday morning, the stark reality of it will hit.

When the business and political losses mount from these tariffs make their impact, Trump will likely be forced to adjust them downward to 10%, where Canada might find that palatable. Until then, Canada and Mexico are in significant peril.
The cascading loss of business is hard to visualize. Torontonians and Canadians too can’t see this train coming until it hits.
Prime Minister Trudeau said his government has a bailout package ready. In all seriousness, that cannot defect the full impact of a prolonged 25% tariff into the US. The Ontario economy is geared to the U.S. market and decoupling from it would take many years. Canada would need to develop new international trade deals to resume its economic health.
Ontario Already Had a Trade Deficit: Alberta Enjoyed a Surplus
What’s unfortunate is the dirty little secret got out that the US actually has a trade surplus with Ontario. The Trump treatment of Toronto and Canada is unjustified. His desire to have Trudeau and the Woke Liberals removed from office is likely the crux of the matter. With them gone, he might remove the tariffs. If not, the GTA job market and housing market will almost certainly crash. And it appears Torontonians aren’t prepared or willing to think about this massive threat.
The list of crash factors that could cause this price correction are listed below. Home sales have been significantly low for many years, but might a small uplift as home and condo prices drop and mortgage rates fall. Bankers of late says mortgage rates will rise even in the BoC interest rate falls. It’s because of a long-term concern over US inflation.
As we await the full reaction of TSX, and US stock market investors on Monday, enabled home buyers might begin to prepare their home search as homes are unloaded in the next 6 months. Canadian mortgage rates are still too high, and as thousands of locked-in homeowners have to refinance (especially without a job), many will have to sell quick.
Seasonally adjusted sales fell 18.7% in December from November to 5,359 units, marking the lowest sales level since July, Toronto Regional Real Estate Board data showed. Compared to December 2023, sales were down 6.8%. — Reuter’s report.
New Homes and Construction Sector
Ontario’s homebuilding sector is robust and fully employed, but the cost of homes make them a risky and impossible investment play. Investors will stay away, and demand will plummet. Employment and revenue loss could be meaningful.
Tyler Choi of Renxhomes.ca in a new report reveals that new home sales fell to their lowest level in almost 40 years during 204. And only 310 new homes were sold in December 2024, 80% below the region’s 10-year average. The benchmark price for new single-family home was $1.6 million in 2024 and $1 million for new condos.
In the condo market, a glut of new microcondos (shoeboxes in the sky) that no one actually ever wanted, sit empty, putting owners sitting on a powder keg of debt with little hope of renting them out as rentals. And a disconnect with the US economy could send Toronto’s commercial and retail real estate sector, which hasn’t really recovered from the pandemic, into a slide.
Once the cascade begins, it may be difficult to slow or halt. The buyer market will disappear. So the question becomes “how far will Toronto and GTA home prices fall?”
The Heavy Weight of High-Rate Mortgages
Those overweight with debt and carrying ballooning mortgage payments are nervous. Some may be able to bail out now before the crash. That might save many foreclosures and bankruptcies (which are going to happen). The government has no handle on this crisis. Their latest ploy of preventing foreign investment and stopping buyers from owning second homes infringes on human rights so they’re sacrificing their future election for the sake of appearing to be doing something.
Trudeau set the immigration limit for 341,000 new immigrants in 2020. In the last two years, 1.7 million immigrants have been pulled in by the Prime Minister and his party, even though there is no jobs or accommodations readied for them.
“For the second time since its inception as a country in 1867, Canada has welcomed over 400,000 new inhabitants in 2021. The country has set a new all-time high for permanent residence landings in a single year. Canada’s immigration levels have been among the highest in the world for decades” — excerpt from a 2021 financialexpress.com post.
As the summer recovery hits, fewer buyers are active but they’re still able to big up home prices in the GTA. In Calgary especially, the booming energy industry will drive much higher prices. As Calgary draws more inbound residents, homes will be freed up in Ontario.
The End of Buyers
- excessive mortgage qualifying criteria
- severe changes in international trade and supply chains
- consumer’s savings is exhausted — spending will plummet
- inflation will rise, imported products will be expensive
- mortgage rates stay elevated due to Canadian Bank’s perception of risk
- stagflation makes buyers give up completely
- condo buyers can’t sell their units and the prices plummet or they face foreclosure
- new construction in the GTA comes to a standstill
- current new home/condo offerings sit empty
- muncipalities, dependent on real estate fees, face bankruptcy and major restructuring
I correctly predicted that a geo-political shock is the most likely source of the next stock market crash and housing market crash. However, I didn’t foresee that Trump would be the international agent of collapse.
However, the win for Trump and the Americans will be short-lived as the full impact of high tariffs hit the US economy. Their economy isn’t prepared for the destruction of the intertwined manufacturing process. They will have difficulty supplying the missing components, materials and specialized talent Canada provides. Trump doesn’t appear to believe this will have much impact. Experts on the Fox network believe the tariffs will have minimal effect on the US economy.
It’s likely we’ll see a stock market crash on Monday, Feb 3rd as investors bail out of a risky situation headed for disaster. This will create a buying opportunity for the prepared investor as stocks hit a buy the big dip moment.
Find out how the Toronto Real Estate market shaping up. Check out more detailed market updates and forecasts for of Mississauga, Vaughan, Richmond Hill, Aurora, Newmarket, and Bradford.
Toronto Housing Market Crash Factors
What are the economic and real estate market factors that affect your selling decision?
- mortgage rates rise too high to qualify
- refinancing of home debt plunges (already happening)
- US economy falters against global wartime conflict
- GTA economy and employment start to fall quickly — a crisis that brings further negative trends/events
- Canadian consumer debt reaching limits it can’t sustain
- NAFTA agreement conflicts and refusals
- add on taxation by Ontario, city and Toronto governments
- soaring home prices fall due to international conflicts
- moderate new home construction – abandoned security deposits
- government meddling with property use
- mortgage rates rising faster
- multifamily new construction creates too much supply
- number of millennials buying homes drops or house prices are out of reach (simply no way to qualify to buy)
- banks get skittish and refuse to lend in such an environment
- political pressure to keep home prices up to protect homeowner’s equity and credit situations
The final word about this impending housing market crisis is that distrust of Donald Trump is a factor. His bills and intentions are untrustworthy. He announced that the border and drug importation was the issue with Canada and hinted the tariffs would be avoided if Canada fixed those issues and fulfilled and military responsibilities were kept. Yesterday, he said none of that mattered, and the tariffes would not be lifted.
Business needs stability, certainty and freedom for trade, and that has been lost. Get more insights into the Toronto housing market, and condo market.
Homebuyers are still willing to look beyond the green spaces belt in Aurora, Bradford, Mississauga, and Newmarket first before heading north. Barrie and Innisfil have seen unbelievable rises.