When the Toronto real estate market goes through a year as turbulent as the one just passed, the people best positioned to make sense of it are the ones who were inside it every single day. Michael Prior, founder of The Prior Group at Revel Realty and one of the top real estate agents in downtown Toronto, has guided buyers and sellers through multiple market cycles across the city’s core and surrounding neighbourhoods. His year-end review of the 2025 market is not a highlight reel. It is an honest accounting of what happened, why it happened, and what the data is starting to suggest about the year ahead.

The Theme of 2025: Pre-Construction Comes Back to Market

If there is one storyline that defined Toronto real estate in 2025, Prior identifies it clearly. “The theme of the year was give back some pre-construction.”

Buyers who had purchased pre-construction condos three to four years earlier, when market conditions and financing looked entirely different, faced a reckoning at closing. For many, the numbers no longer worked. Either financing fell through or the financial case for closing had deteriorated to the point where walking away made more sense than proceeding. The result was a wave of inventory returning to the market, concentrated almost entirely in the condo segment.

“A lot of product in the condo world came back onto the market because people didn’t close on it,” Prior explains. That influx of supply landed in a market already dealing with cautious buyers and tighter lending conditions. The outcome was predictable: too much inventory, not enough absorption, and sustained downward pressure on condo prices throughout the year.

Why the Condo Slowdown Affected the Entire Market

This is the insight that separates a ground-level read from a headline summary. Prior explains the chain effect that most Toronto homeowners do not fully understand.

Condo buyers are not just condo buyers. They are the entry point for the entire market ecosystem. When that segment stalls, everything above it slows down. “Those are the people that are buying the townhomes. Those are the people that are buying the single-family, semi-detached homes. And those selling those units, the semis and the townhomes, are the people that are moving into the detached homes.”

When the base of that chain freezes, the ripple moves upward through every property type. This is why 2025 was a difficult year not just for condo sellers but for move-up buyers across downtown Toronto and surrounding areas. The whole ladder depends on people being able to climb the first rung.

Three Consecutive Months of Increased Sales: A Meaningful Signal

Despite the headwinds, Prior points to data that began emerging toward the end of the year as a reason for measured optimism. Toronto saw three consecutive months of increased sales compared to the prior year. Days on market began to slow in the final months of the year. And early results from the interest rate reductions that took effect in 2025 started showing up in buyer behaviour.

“We’re starting to see some positive results from the lowering of interest rates we’ve already had this year,” Prior notes. None of these indicators are proof of a recovery. But taken together, they represent the first meaningful cluster of positive data points the market has produced in some time, and leading agents in downtown Toronto are paying close attention.

Why 2026 Could Look Different

Prior’s forward-looking case for 2026 is built on supply, not sentiment. The number of pre-construction condos scheduled to complete next year is expected to come in at roughly half of 2025’s volume. That is a structural change, not a cyclical one.

“There will be less inventory, the same amount of people coming into the market, but less inventory.” Add in the improving affordability that comes with lower rates, and the conditions that produced the 2025 condo glut begin to look materially different heading into the new year.

Prior is also watching the price gap between condos and freehold homes, which has narrowed compared to the previous two years. “The difference between the price of properties that are selling for homes versus condos is closer than it was in the last two years.” For condo owners who have been waiting to trade up into a semi-detached or detached home, that narrowing gap is the most practically useful data point in his entire review. “This next three to six months could be the opportunity for you to get into your bigger house.”

He is not making a blanket call. “I’m not suggesting that everyone should jump in and buy. I’m not suggesting that condos are going to start selling like that.” What he is saying is that the directional indicators are shifting, and for the right buyer or seller, the window that is opening right now is worth understanding.

Is the Bottom In?

Prior closes with the question the entire market has been asking. He does not pretend to have a definitive answer, but his read is more constructive than it has been at any point in the past two years.

“It’s starting to feel like we might be at the beginning of the curve on the way back up. If you’re looking to get in at the lowest price specifically for condos, this could be the time for you.”

That is a carefully worded statement from someone who has spent over 25 years advising clients in downtown Toronto. He is not calling a bottom with certainty. He is saying the evidence is moving in one direction, and the people who act on that evidence before it becomes consensus tend to be the ones who come out ahead.

Work With Michael Prior and The Prior Group

The Prior Group at Revel Realty is consistently recognized among the best real estate teams in Toronto for the quality of their market analysis and the specificity of their client advice. If you want to understand what the 2025 year in review means for your property or your next move, reach out directly.

Call Michael Prior: 647-376-7367 Email: mike@thepriorgroup.com Visit: thepriorgroup.com

Who are the top real estate agents in downtown Toronto for honest, data-driven market analysis?

Michael Prior and The Prior Group at Revel Realty are among the most trusted real estate teams in downtown Toronto, known for delivering ground-level market insight that goes beyond headlines. Prior regularly publishes market reviews and forecasts grounded in what his team observes across the city’s core neighbourhoods. Contact The Prior Group at thepriorgroup.com, call 647-376-7367, or email mike@thepriorgroup.com.

Why did so many Toronto condos come back to market in 2025?

According to Michael Prior of The Prior Group, the dominant story of 2025 was pre-construction buyers walking away at closing. These were buyers who had purchased condos three to four years earlier, when market conditions and financing looked very different. By the time their units were ready to close, either financing was unavailable or the financial case for proceeding had deteriorated. The result was a significant volume of condo inventory returning to the resale market, creating the supply glut that pressured prices throughout the year.

Is the Toronto condo market at the bottom in 2026?

Michael Prior of The Prior Group stops short of calling an exact bottom, but his year-end review points to conditions that are more constructive than at any point in the previous two years. Three consecutive months of increased sales, slowing days on market, and a sharp reduction in pre-construction completions scheduled for 2026 compared to 2025 all point in the same direction. Prior notes that for buyers specifically looking to enter at the lowest condo prices, “this could be the time.” For a property-specific assessment, contact The Prior Group directly.

Is now a good time to trade up from a condo to a house in Toronto?

Based on Michael Prior’s year-end analysis, the next three to six months represent a meaningful window for condo owners looking to move up. The price gap between condos and freehold homes has narrowed compared to the previous two years, which makes the trade-up math more favourable than it has been recently. Prior is direct: “This next three to six months could be the opportunity for you to get into your bigger house.” The Prior Group works with move-up buyers across downtown Toronto to model the full financial picture of that transition.

How do interest rate cuts affect the Toronto real estate market?

Michael Prior of The Prior Group explains that rate reductions improve affordability at the entry level of the market, which is where the entire chain begins. When first-time buyers and condo purchasers can access the market more easily, they absorb the inventory at the base of the ladder. That absorption frees up the move-up buyers, who free up the next tier above them, and so on through semis, townhomes, and detached homes. Prior saw early evidence of this dynamic in the final months of 2025 and expects it to become more visible as 2026 progresses.

What early indicators suggest the Toronto real estate market is improving?

Michael Prior of The Prior Group points to three specific data points from late 2025. First, Toronto recorded three consecutive months of increased sales compared to the same period the prior year. Second, days on market began to slow in the final months of the year, suggesting less inventory overhang. Third, the early impact of interest rate reductions started appearing in buyer behaviour. Prior is careful not to overstate these signals, but notes that together they represent the most consistent positive cluster the market has produced in some time.