There's a version of this story that's comforting. Interest rates came down, the market found a floor, spring is coming, and once the trade uncertainty clears, buyers will come rushing back. Prices will recover. It'll be fine.

That version might be right. But the last time Toronto's housing market fell this far, the bottom wasn't a floor. It was a trapdoor, and the recovery took longer than almost anyone expected.

Understanding that history isn't about fear. It's about making better decisions with clearer eyes.

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Where Things Stand Right Now

TRREB data show the average GTA home price fell from $1,334,544 in February 2022 to $1,008,968 in February 2026, a 24.4% decline over four years. That's not a blip. That's the largest correction the GTA has experienced since the 1990s crash, and it's still unfolding.

The February numbers have one mildly encouraging signal: new listings dropped 17.7% year-over-year, while sales fell only 6.3%, so the market is technically tightening because sellers are retreating faster than buyers. TRREB CIO Jason Mercer noted in the February 2026 Market Watch release that more than 100,000 buyers are currently holding off on purchases, waiting for prices to level off and for positive news on the trade front. When those buyers move, they'll likely find less inventory than they expect.

But that monthly uptick is easy to misread. Raw prices rose slightly month-over-month in February, which is normal seasonal improvement from January. After seasonal adjustment, though, both the MLS Home Price Index and the average selling price were still down from January, suggesting the market hasn't yet found a floor. TRREB itself is forecasting year-over-year price declines in the mid-to-high single digits will be "the norm" for the first half of 2026, with potential stabilization in the second half only if economic confidence improves. That's a cautious outlook from the organization with the most to gain from optimism.

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What the 1990s Actually Looked Like

The comparison to the early '90s comes up constantly right now, and for good reason. The setup was similar: a speculative boom, prices that raced well ahead of fundamentals, then a sharp correction triggered by rising interest rates.

Here's what the history actually shows. GTA home prices peaked in 1989 at around $273,698 and fell to a low of $198,150 in 1996, a decline of roughly 27.6% over seven years. Not four years. Seven. The first few years of falling prices were obvious enough. But what caught most people off guard was the long flat period that followed. Prices didn't crater and then bounce. They just... stayed low. Buyers waited for further declines. Sellers held on hoping for a recovery. The market sat in a kind of suspended animation.

It took until 2002, thirteen years, for GTA prices to nominally recover to their 1989 levels. Adjusted for inflation, the same recovery took until approximately 2011, twenty-two years. People who bought at the 1989 peak and held didn't lose money in a dramatic sense. They just watched their net worth stay flat for two decades while the rest of the economy moved forward around them.

The current correction, at 24.4% over four years, is already deeper than where the 1990s cycle stood at the same point in time. By year four of the 1990s downturn, prices were down just over 20%, and that wasn't close to being over.

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Why Confidence Is the Real Variable

The mechanics of a market recovery are simpler than people think. Prices don't recover because the fundamentals suddenly change. They recover because enough buyers believe prices have stopped falling and decide to act. Confidence is the catalyst.

The problem is that confidence is slow to rebuild once it's been broken. People remember buying at the wrong time. They remember friends who got stuck underwater. And even when prices stabilize, it takes a sustained period of stability, not just a few good months, before the psychology shifts.

This is what TRREB's own data is reflecting right now. Despite meaningful improvements in affordability, with rates down significantly from their peaks and prices fallen, GTA homebuying intentions dropped five percentage points year-over-year in 2026, to just 22% of respondents. People can afford more than they could in 2023. They're still not buying. The hesitation isn't financial anymore. It's psychological and economic. Tariff uncertainty, a cooling labour market, and the residual weight of watching prices fall for four years have made potential buyers cautious in a way that rate cuts alone can't fix.

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The Condo Market Is a Different Story Entirely

Within the broader correction, Toronto condos deserve their own paragraph because what's happened there is more severe than the headline numbers suggest.

GTA condo prices fell from an average of $799,966 in February 2022 to $626,650 in February 2026, a decline of roughly 22%, according to nesto's analysis of TRREB data. Sales volumes tell an even starker story: only 1,088 condos sold across all TRREB regions in February 2026, a 12% drop from the prior year and the steepest decline of any home type, compared to more than 2,700 in the same month four years earlier. In the City of Toronto specifically, condo prices have fallen 24.5% year-over-year to $452,200, a number that reflects how concentrated the pain has been in the urban core where investor activity was most intense.

The condo market ran on a specific flywheel during the boom years. Investors bought pre-construction units expecting steady appreciation. Those gains funded the down payments on larger homes. First-time buyers could enter at the bottom of the market and trade up. The whole ladder worked because everyone assumed prices moved in one direction.

That assumption is gone. Investors who bought at peak valuations are sitting on paper losses. Many pre-construction assignments aren't closing at profitable prices. And without the investor demand that drove supply and activity, the segment has lost a critical source of buyers that isn't coming back quickly.

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What This Means If You're Thinking About Selling

For most sellers, the honest advice is straightforward: if you don't need to sell, this isn't the moment to test the market. Expectations anchored to 2021 and 2022 aren't just inaccurate. They're actively harmful to the selling process. Homes that are overpriced sit. Property days on market in the GTA climbed to 54 days in February 2026, up from 42 days a year earlier, measuring the total time from when a property was first listed to when it sold, including any re-listings. Time on market becomes a stigma. Buyers assume something is wrong with a listing that's been sitting, and they negotiate harder.

There is one exception worth noting. Sellers who own a detached or semi-detached home and are looking to upsize may actually be in a reasonable position right now. The compression in higher-priced segments has been sharper than in entry-level properties, which means the gap between what you lose on your sale and what you gain on your purchase can work in your favour. That math doesn't hold for condo owners looking to trade up.

For anyone who does need to sell, condition and pricing matter more than they've mattered in a decade. Buyers have inventory. They're picky. A well-presented, accurately priced property in a desirable location still sells. An overpriced property that needs work doesn't.

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What This Means If You're Thinking About Buying

This one is genuinely complicated, and anyone who tells you it's simple isn't being straight with you.

The affordability picture is better than it was. Prices are down 24% from the peak, and the Bank of Canada's policy rate has come down to 2.25% from its highs. TRREB's Ipsos polling found that renters face a gap of roughly $600 per month between what they can afford and what it would cost to buy the type of home they want, meaning homeownership is closer for many people than it was in 2022, but still out of reach for a meaningful portion of would-be buyers.

For first-time buyers with stable employment and a long horizon, the current market offers real opportunities that didn't exist two or three years ago. Entry-level properties, particularly in the sub-$700,000 condo range, are accessible at prices that would have seemed unimaginable in 2022. Bill C-4, which received Royal Assent in March 2026, also introduced a new GST rebate of up to $50,000 for eligible first-time buyers of newly built homes, a material improvement over the previous cap of roughly $6,300.

The honest caveat is that buying now likely means accepting some near-term paper losses. If the 1990s precedent holds at all, there's a reasonable case that prices continue to drift lower or stay flat for a period after any nominal bottom. Buying a property you intend to hold for a decade can still make sense in that environment. Buying something you might need to sell in two or three years is a different calculation.

The key questions aren't about the market. They're about you. How stable is your income? How long can you commit to holding the property? What would happen to your financial situation if prices fell another 5% or 10% after you bought? If you can answer those questions clearly and still like the outcome, the math may work in your favour.

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The Longer View

Toronto has been through this before. The 1990s felt like the end of something, and it sort of was, for a while. But prices eventually recovered, and the long-term trajectory of GTA real estate remained intact. Housing starts have declined sharply recently, which means supply completions are expected to taper off after 2026, setting up a potential supply constraint later in the decade. Long-term population fundamentals remain strong.

None of that changes what the next two or three years might look like. Markets don't recover on fundamentals alone. They recover when enough people believe in the recovery and start acting on that belief. We may not be there yet.

What the history of every major real estate correction suggests, including the one we're living through now, is that the best decisions aren't the ones made in reaction to the market. They're the ones made in alignment with your own timeline, your financial position, and a realistic understanding of the risks involved.

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Coldwell Banker Horizon Realty helps buyers, sellers, and investors across the Okanagan navigate real estate decisions with current market knowledge and straightforward advice. Reach out to our team to talk through what today's market means for your specific situation.