For the better part of two decades, the Toronto real estate narrative has been one of relentless, often exhausting growth. However, the January 2026 market figures from the Toronto Regional Real Estate Board (TRREB) have introduced a new chapter: the correction.
With the average selling price in the Greater Toronto Area (GTA) sliding to $973,289, a 6.5 per cent decrease from the $1,041,171 recorded just one year ago, investors and families alike are asking the same question: Have we reached the buying opportunity of the decade?
To answer that, one must look beyond the surface-level price drop and examine the mechanics of a market that has transitioned from a high-speed chase to a calculated standoff.
Breaking Down the 6.5% Slide
The decline in average prices is not a uniform “crash” but rather a strategic retreat influenced by borrowing costs. The MLS Home Price Index (HPI) Composite benchmark, which provides a more stable look at price trends by accounting for home features, was down even further, falling 8 per cent year-over-year.
The price slide is most visible in specific sectors and regions:
- Condo Apartments: The average price dropped to $604,759, a nearly 10 per cent decline year-over-year. In the “905” area specifically, condo prices fell by 13 per cent, making this the most aggressively corrected asset class in the GTA.
- Semi-Detached Homes: These saw a 9.7 per cent price drop to an average of $945,967.
- Detached Homes: While still the most expensive category, detached homes saw a 7.4 per cent price reduction, bringing the average to $1,277,915.
For a buyer who was active in 2022 or 2023, these numbers represent a significant “discount” on paper. But as any veteran of the finance world will tell you, a lower price is only half of the equation; the cost of the money used to buy that asset is the other.
The Interest Rate Barrier vs. Asset Value
The primary reason prices are sliding is the 6.09 per cent 5-year fixed mortgage rate. With the Prime Rate at 4.5 per cent and the Bank of Canada Overnight Rate at 2.3 per cent, the “carrying cost” of a home has skyrocketed even as the “sticker price” has come down.
However, for those with high liquid capital or those looking to port existing lower-rate mortgages, the 6.5 per cent price slide represents a rare moment where they are not competing in multiple-offer scenarios. The Average Sales-to-List Price (SP/LP) ratio is currently at 97 per cent. In plain English: homes are selling for 3 per cent less than what sellers are asking for, a complete reversal of the pandemic-era bidding wars.
Inventory: The Buyer’s New Best Friend
One of the hallmarks of a “buying opportunity” is choice. In a seller’s market, buyers take what they can get. In January 2026, the GTA saw active listings rise by 8.1 per cent to a total of 17,975 units.
Because sales fell by 19.3 per cent (only 3,082 transactions), the inventory is sitting longer. The Average Property Days on Market (PDOM) has stretched to 67 days. This “market lag” gives buyers something they haven’t had in years: time. Time to conduct home inspections, time to negotiate on price, and time to ensure their financing is airtight without the pressure of a 24-hour offer deadline.
Regional “Hot Spots” for Value
The data suggests that value is being found in the peripheries of the city.
- Durham Region: With an average price of $818,694, Durham remains one of the most accessible entry points for families.
- Toronto West (W01 & W02): While many areas saw price drops, these specific pockets maintained an average price over $1.09 million, indicating that high-demand urban neighborhoods are holding their value better than the suburban sprawl.
- Peel Region: Mississauga and Brampton saw average prices of $943,607 and $882,710 respectively, placing them firmly in the “under a million” category that many families are currently targeting.
The Economic Indicators: A Window of Opportunity?
Is this the opportunity of the decade? The economic indicators suggest a “wait and see” approach might be risky. Real GDP Growth hit 2.6 per cent in Q3 2025, and while unemployment in Toronto is at 8.1 per cent, inflation is stabilizing at 2.4 per cent.
If the Bank of Canada decides that inflation is sufficiently “tamed,” a rate cut in late 2026 could bring buyers back to the market in droves. History shows that once rates drop, prices tend to move in the opposite direction upward. Therefore, the current “lull”, defined by higher inventory and 6.5 per cent lower prices could very well be the floor of the current cycle.
The Verdict for Barhoot.com Readers
For the investor, the “opportunity of the decade” usually occurs when blood is in the streets and sentiment is at an all-time low. We are seeing the psychological shift now. Sellers are anxious, properties are sitting for two months, and the “million-dollar average” has been broken.
If you can manage the current 6 per cent interest rates, you are buying into a market with 8 per cent more choice and 6.5 per cent lower entry costs. For those with a 10-year horizon, January 2026 may indeed be remembered as the moment the Toronto market became “affordable” again, however briefly.
