Foch: The GTA market is tightening —prices are still looking for a floor 

There is a subtle shift happening in the GTA resale market. Buyers who spent much of the last two years watching from the sidelines are showing up again. Sellers are starting to notice fewer competing signs on their street. Agents are hearing more serious questions at showings.

Then the offer comes in under ask.

That is the market right now. It is more active than it was. It is less loose than it looked earlier in the year. It is also still forcing sellers to meet buyers at a price that clears, rather than a price that feels fair against 2021 or 2022 memories.

The May numbers from the Toronto Regional Real Estate Board (TRREB) support the first half of that story. GTA agents reported 6,583 sales in May 2026, up 6.3 per cent from May 2025 — a gain that must be contextualized as coming off a very low base and a low bar for comparison. New listings fell to 17,698, down 18.9 per cent year over year. Active listings declined to 26,927, down 13.3 per cent.

That is tightening on both sides of supply. Fewer new properties are arriving, and standing inventory is being worked down. TRREB also reported that May sales were up 10 per cent month over month on a seasonally adjusted basis, while new listings were down 2.1 per cent. That gives the tightening argument more weight than a simple year-over-year comparison.

The harder question is price.

A tighter market can still clear at lower prices

The MLS HPI Composite benchmark was still down 6.7 per cent year over year. The average selling price was $1,069,700, down 4.6 per cent from last May. On a seasonally adjusted monthly basis, the average price rose slightly while the HPI edged slightly lower. That is a messy combination, and it is exactly why agents should be careful with clean recovery narratives.

The GTA is no longer frozen in the same way it was during the worst stretch of the rate shock. Demand is improving. Supply is shrinking. The imbalance is less extreme. Yet the sale-to-list price ratio remains below 100 per cent. Across all TRREB areas, the average was 98 per cent in May.

That is not a distressed number. It still says buyers have room. Sellers may have gained leverage from lower competition and more transactions, while buyers are still negotiating from a position of price discipline.

That is the field-level tension. A seller sees fewer listings nearby and expects firmer pricing. A buyer sees mortgage payments, property tax, condo fees, insurance, carrying risk and comparable sales, then writes the offer that fits their monthly reality.

The market is tightening. Pricing power has not fully shifted.

Spring strength needs to survive summer

Average prices are up from January to May, rising from $968,562 in January to $1,069,700 in May. That sounds powerful until you remember how seasonal the GTA can be.

Families buy more homes in the spring. Larger homes trade more often. Mix improves. Better product tends to list when the weather turns and school calendars start shaping decisions. A January-to-May price lift is normal enough that it should not be treated as proof of a durable turn by itself.

The better test comes after the spring market fades. If prices can hold through summer and fall with less listing pressure, that tells us something different. If May simply reflects normal seasonal strength after a weak start to the year, the market will show that too.

For now: activity has improved, inventory pressure has eased and price discovery is still underway. Buyers still hold the pricing power.

Weakness is broad, with townhouses worth watching

Price weakness remains broad across the major housing types. TRREB’s HPI benchmark was down 6.61 per cent year over year for single-family detached homes, 6.53 per cent for single-family attached homes, 8.45 per cent for townhouses and 9.12 per cent for apartments.

The worst pressure points are easy to identify. In the average price table, 416 detached homes were down 6.5 per cent year over year, 905 condo apartments were down 9.5 per cent, and 905 townhouses were down 6.6 per cent.

The 905 townhouse segment may be the most interesting example because it sits directly in the path of the substitution problem.

Recent “sold out” townhouse launches in markets like Caledon and Oakville have been treated by some observers as evidence that buyers are back and the old market is returning. That reading is too lazy. Many of those releases were small. More importantly, pricing was materially lower than the last pre-construction cycle. Lower price is demand creation. It is also a new comparable.

A resale townhouse seller is not competing with the neighbour who sold at the top of the market in 2021 or 2022. They are competing with the available substitute a buyer can purchase now. If a builder brings a new townhouse to market at a lower end-user price, that price becomes part of the buyer’s reference set. The resale market has to respond.

That is why the new-build market matters for resale agents. A successful launch at a lower price can be both a sign of demand and a source of local price pressure. The unit sold because the price cleared. Once it clears, it teaches the surrounding market where buyers are willing to transact.

Incentives can become deflationary

The same logic applies to rebates and incentives. If HST rebates or builder incentives allow new product to reach buyers at a lower effective price, the short-run impact can be deflationary for nearby resale values. That may sound counterintuitive because policy support is often discussed as a demand booster. In the field, the comparable is what matters.

A buyer comparing a resale townhouse with an available new-build alternative does not care how the lower price was achieved. They care about the net purchase price, deposit structure, closing costs, timing, risk and monthly payment. If the builder’s package creates a lower clearing price, the resale seller has to explain why their older product deserves more.

Sometimes it does. Better location, finished basement, no construction delay, mature neighbourhood, no development uncertainty and immediate occupancy all have value. But those advantages need to be priced and communicated. They cannot be assumed.

This is where good agents earn their fee. The job is not to recite the headline that sales are up. The job is to explain which comparable actually matters, where the buyer’s substitute sits, and how seasonality may be hiding or exaggerating the current price trend.

The agent takeaway: avoid lazy narratives

May was a better month for the GTA resale market. Sales improved from last year. New listings and active listings fell. Seasonally adjusted demand improved while new supply softened. Those are real developments. They do not automatically mean prices are rising.

A tightening market does not guarantee immediate appreciation. A sold-out launch does not prove broad strength. A below-100 per cent sale-to-list ratio still says buyers have negotiating room. A spring price lift does not settle the question of the fall market.

The industry should treat May as a market that is waking up, not one that has already healed. The clients who need the most help right now are the ones tempted by simple stories. Sellers want to believe less competition means they can price against the past. Buyers want to believe price declines will continue forever. Builders want launches to be read as confidence. Every side has an incentive to simplify the market in its own favour.

The better read is more measured. The GTA market is no longer frozen. Supply is tightening. Demand is improving. The price floor is being tested. The next several months will show whether May was the start of a durable turn or a normal spring bounce inside a market still repricing to today’s affordability limits.

The post Foch: The GTA market is tightening —prices are still looking for a floor  appeared first on REM.