As we approach December 2025, the Greater Toronto Area housing market is entering a unique phase. The "paradox" we identified last month—excellent buying conditions today versus a catastrophic supply shortage tomorrow—is about to be amplified by the seasonal holiday freeze.

While the December market typically sleeps, the economic undercurrents are churning. On one hand, we are predicting the quietest month for sales in over a decade, solidifying a buyer's advantage. On the other, the stall in new construction is deepening, ensuring that when the market wakes up in 2026, it will wake up to a severe inventory deficit.

Here is our prediction for the December 2025 market, broken down by the short-term freeze and the long-term shock.

 

Part 1: The December Freeze (A Buyer's "Final" Window)

 

If November was a buyer's market, December is predicted to be a buyer's playground—for those brave enough to act while others are holiday shopping.

The "Hold" Prediction: All eyes are on the Bank of Canada’s next announcement scheduled for December 10, 2025. Following the cut to 2.25% in late October, analysts are largely pricing in a rate hold to end the year. The Bank has signaled that the current policy rate is doing its job to support the economy without overheating it.

  • Prediction: A rate hold will bring stability. Buyers won't be rushing to beat a hike, nor waiting for a cut. This removes urgency, contributing to a quieter market.
  • The Seasonal Dip: We expect active inventory to drop slightly as sellers take homes off the market for the holidays. However, sales are expected to drop even harder.
  • Leverage: With many buyers distracted by the season, the few remaining active buyers will face almost no competition.
  • Pricing: Expect resale prices to remain flat or soften slightly further from the $1.05M average seen in the fall. The deep discounts in the condo sector (down 7.4% YoY in Q3) will likely persist through the end of the year.

The Verdict: December will offer the peak of leverage. Sellers remaining on the market in December are typically highly motivated. Combine this with the lowest borrowing costs of the year (2.25%), and you have a rare window of affordability before the psychological reset of the New Year.

 

Part 2: The 2026 Supply Shock (The Crisis Deepens)

 

While the resale market naps, the new construction sector is effectively in a coma—and that is the real story.

The data from November remains the most alarming leading indicator for 2026:

  • Stalled Projects: The number of fully approved but "on hold" projects remains near record highs (over 2,200 projects).
  • The Price Gap: The 38% price gap between pre-construction ($1,199 psf) and resale ($867 psf) has not closed. This means developers cannot launch new projects, as buyers refuse to pay the premium.

The "Pipeline" Problem: Construction starts in Q4 2025 have been abysmal. Because high-rise buildings take 3-5 years to build, the lack of starts today guarantees a supply vacuum in 2029. However, the immediate impact will be felt in 2026 as the flow of newly completed units begins to dry up, pushing demand back into the resale market.

The Verdict: The "future supply crisis" is no longer theoretical; it is mathematically locked in. The excess inventory we see today is a temporary mirage caused by stalled demand, not over-building.

 

What This Means For You (December 2025)

 

The advice remains consistent but more urgent as the year closes.

For Buyers: This is likely your final moment of "peak apathy" from competitors. Come January/February 2026, psychology often shifts, and new buyers enter the market with New Year resolutions.

  • Strategy: Look for listings that have been sitting for 60+ days. Sellers dragging unsold inventory into the holidays are often willing to negotiate aggressively to close the book on 2025.

For Sellers: If you haven't sold by December 1st, you face a choice.

  1. The "Serious" Price: Drop your price to undercut the competition and attract the few serious December buyers.
  2. The "Spring" Wait: Terminate the listing and re-launch in February 2026. The risk? Inventory might still be high, but at least the buyer pool will be deeper.

For Investors: The math is screaming "Buy Resale Condos." You can currently buy a resale unit for ~$860 psf—a price that is far below the replacement cost of building it new ($1,200+ psf). You are effectively buying assets for less than the cost of construction. When the supply crunch hits and rents rise in 2026/2027, this entry point will look like a steal.

Summary: December 2025 will be quiet, cold, and slow. But beneath the surface, the fuse for the next cycle is burning. Use the silence to your advantage.