Greater Toronto Area home prices increased by 436%! Why now is the best time to buy?

A recent analysis delves into the factors behind the dramatic surge in average residential property values over the past three decades within the Greater Toronto Area and across Canada.

In its “Housing Market Drivers Report,” the real estate franchise Re/Mex examined nine major Canadian urban centers over a 30-year span. It concluded that population growth, combined with policy interventions and market events, has long been a fundamental driver of the Canadian housing market, creating extended cycles of expansion and contraction in the nation’s largest cities.

“The findings confirm that homeownership remains a critical source of wealth accumulation, particularly for the middle class,” stated Don Cottick, President of Re/Mex Canada. “Each generation of Canadian homeowners—from Baby Boomers to Generation Z—has faced its own unique set of challenges and obstacles. The current headwinds of trade barriers, elevated borrowing costs, and stringent credit conditions can be daunting, but this phase, too, shall pass.”

In the near term, housing prices have experienced a correction. According to the Toronto Regional Real Estate Board, the average selling price in September was $1,059,377, reflecting a 4.7% decrease from the same period last year.

However, the Re/Mex report also provided a long-term perspective, analyzing price changes from 1994 to 2024.

Since 1994, the benchmark home price in the GTA has appreciated by 436.2%. This translates to a compound annual growth rate (CAGR) of 5.76% over the 30-year period, ranking it as the second-best performing urban market in the country.

This dramatic price appreciation has significantly outpaced income growth. Over the same period, median household incomes rose by only 34.6%, from $97,300 in 1994 to $131,000 in 2023, based on Statistics Canada data.

The population within the Toronto Census Metropolitan Area surpassed 7.1 million in 2024, a figure nearly 70% higher than the 4.226 million recorded in 1994. Between 2022 and 2024 alone, the region welcomed over 500,000 new residents.

Despite this demographic surge, the report highlights a persistent deficit in housing supply relative to demand. According to a May 2021 Scotia Global Economics “Housing Note,” Canada has the lowest number of housing units per 1,000 residents among all G7 nations.

The report further indicated that the number of residential units per 1,000 Canadians has been declining since 2016 due to rapid population growth. To simply maintain the housing unit-to-population ratio stable since 2016, an additional 100,000 homes would have been required—and the supply would still lag significantly behind the G7 average.

Unsurprisingly, homeownership rates in Toronto have been trending downward since peaking at 68.3% in 2011. The report notes that the ownership rate stood at 65.1% in 2021.

Re/Mex reports observing early indicators of market stabilization, with a recovery anticipated after a downturn in 2025. Investor activity is gradually returning, particularly to capitalize on lower-priced downtown condominium units. The market for single-family homes is recovering at a more measured pace.

“A cautious recovery is underway, with a more definitive rebound anticipated for 2026,” the Re/Mex report states. “The path forward is complex, but through concerted efforts, the GTA is positioned to navigate these challenges and achieve a healthier, more balanced real estate market.”

The present market conditions present a highly advantageous window of opportunity for property acquisition. Prices have corrected from their peaks and have not yet commenced a robust recovery phase, resulting in ample inventory and increased negotiating leverage for buyers. Furthermore, we are now seeing exceptionally competitive mortgage interest rates, a financing environment not witnessed in the past four years.

We are also assisting a growing number of clients with the refinancing of high-cost mortgages originated two to three years ago. In many instances, it is financially beneficial to break the existing mortgage contract and incur the associated prepayment penalty, given the substantial savings offered by current, lower-rate products.