First-Time Home Buyers Are Dominating the Market

The numbers are in for 2025, and Toronto recorded the lowest sales in 25 years. You need to go back to 2000 to find a year with fewer than 62,000 sales for the year - a time when the GTA population was a third smaller than it is today.

Buyer and consumer confidence were low last year. Fears about the Canadian economy, job security, and the threat of tariffs hampered buyers from entering the market. There are also segments of buyers locked into their current homes due to negative equity or an inability to absorb higher interest rates. So who was buying homes last year? Primarily first-time home buyers. Buyers who had been sitting on the sidelines for years took the plunge—not because they believed it was the bottom of the market or felt pressure to act before prices rebounded, but out of a genuine, intrinsic desire to own a home.

For the last decade and a half, many buyers we worked with felt external pressures to buy a home—whether a condo or single-family residence. These pressures came from parents, peers, and the fear of missing out (FOMO). With these external pressures removed, buying has returned to fundamentals. Renters are tired of evictions and the instability and lack of control that come with renting. Younger buyers are tired of living in basements or with their parents. Major life changes—such as separations or work-related relocations—are also driving purchases.

The buyers we worked with understood the uncertainty in the real estate market in 2025. They were not trying to time the market—they were looking for a place to call home. We saw this reflected in market activity. As slow as the real estate market was last year, with record levels of homes for sale, there were still properties that sold within days. The motto I shared with buyers was: “If it's a good property and priced right, it's going to sell fast.” These intrinsic motivations drove select buyers to act quickly on desirable properties, even competing with other buyers.

Unfortunately, on the flip side, if you were a seller whose property didn’t meet the requirements of the existing buyer pool, you were going to sit on the market for a while. Sellers and their agents tried all sorts of pricing tactics—multiple offer dates, listing high then low, secret bidding wars with no date. You could see the frustration as homes were listed, terminated, then relisted repeatedly throughout the year. The reality was simple: if there wasn’t a buyer in the pool for your property, you either had to wait for one to enter the market or make your price attractive enough to find a buyer at a lower price point.

This dynamic was also reflected in the types of properties that were selling. The condo market was challenging for sellers last year, but not equally challenging across the board. Condo owners with units that had good layouts, decent square footage, views, and finishes did reasonably well. There was a slight decline in value, but not as pronounced as the headlines indicated. However, owners of micro-condos (units under 500 square feet) fared substantially worse. These investor-type units saw a 20% decline in value.

We can likely expect more of the same heading into 2026. This year will likely continue to be dominated by first-time home buyers, situational buyers (separations and relocations), and the occasional move-up buyer. Properties that cater to these demographics will perform reasonably well, but everyone else can expect a challenging year ahead.