This is for educational purposes only; it does not guarantee future performance or serve as financial or tax advice.
Predicting where Toronto’s real estate market is going is harder than ever. Even CMHC’s latest forecast for 2025 to 2027 is all over the place, highlighting just how uncertain things are.
But here’s the thing—uncertainty doesn’t mean there’s no opportunity. In fact, it’s the opposite.
The key is understanding the trends, spotting the best opportunities, and making data-driven moves. So, let’s break it all down.
Interest Rates: What’s Actually Happening?
If you’re only looking at the headlines, you might think inflation is creeping back up. In January, it ticked up slightly from 1.8% to 1.9%. But if you remove shelter costs, inflation is actually just 0.9%!
The bigger concern right now? Economic uncertainty. The Bank of Canada is focusing on broader risks—like tariffs and overall market conditions—rather than inflation alone. Rate cuts are expected this year, but the timing is still up in the air.
Right now, there’s about a 33% chance of a 25bps rate cut in March. CIBC thinks it’ll happen but warns that tariffs could change things. BMO, on the other hand, doesn’t see a cut happening unless something major shifts.
What Does This Mean for Toronto Real Estate?
Rate cuts will help, but don’t expect home prices to skyrocket overnight. The economy is still weak, and buyers are more hesitant than before.
In the short term, expect a slow market. CMHC’s forecast suggests we won’t see a major price surge anytime soon. But here’s where things get interesting:
- Low-rise homes are gaining traction. Both end users and investors are gravitating toward them because they offer better cash flow and long-term appreciation potential.
- Condos are struggling. There’s a flood of new supply, cash flow is weak, and demand just isn’t strong enough to absorb it. If you’re an investor, condos aren’t your best bet right now.
- Rents may dip further. With so many new condos hitting the market, rental prices could soften. But if you have a variable-rate mortgage, upcoming rate cuts might help offset this.
Looking beyond the next few months, things start to shift. Housing starts are low, and demand for low-rise homes remains steady. As supply tightens, we’ll likely see prices for houses rise again. So, while the near term might be slow, long-term prospects for low-rise homes are much more promising.
Where Are the Best Investment Opportunities Right Now?
If you’re investing in Toronto real estate, focus on cash flow and value-add opportunities.
- Skip condos. Too much inventory, weak cash flow, and low appreciation potential.
- Freeholds are better bets. If you can get a home with a basement unit, that’s a safer play compared to single family homes. More units mean stronger rental income. While triplexes may not appreciate as quickly as duplexes in a hot market, they generate more consistent returns.
- Laneway houses are a game changer. Adding one can boost cash flow and significantly increase property value.
The Power of Value-Add Opportunities
If you can convert a single-family home into a multi-unit property, you’re looking at a $100K+ value lift. Adding a laneway house costs about $400K, but it could add $200K in value and significantly increase rental income.
Plus, the government is actively encouraging this type of low-rise “missing middle” development with:
- HST rebates for new rental units
- Waived development charges for up to 4 units in Toronto and deferred development charges for garden suites and laneway suites
- Improved insured mortgage terms for purchases up to $1.5M and improved construction financing programs for adding secondary suites and additional rental units
How We Can Help
Need help finding the right property? That’s where we come in. We specialize in helping investors secure multiplex properties in Toronto, backed by solid data—not speculation. Whether you want a turnkey property or a value-add project, we’ll guide you through every step, from finding the right property to managing renovations and beyond.
Here’s what it’s like to start as a client with us:
- Initial Consultation: We’ll talk with you to understand your needs and teach you how to invest wisely in Toronto real estate.
- Market Search & Purchase: We’ll search the market to find the perfect property for you.
- Renovation Support: If the property needs renovations, our trusted contractors are ready to help, and we’ll coach you as you manage the project.
- Leasing and Management: If you need help renting out and managing your property, our leasing and management team is here for you.
Ready to get started? Click on the link below, and let’s start working together!
What Toronto Real Estate Investment Is Right For You?
Check out our complete Toronto real estate investment guide for all the details and real-life examples. If you’re ready to dive in, just book a call with us!
