In a market where everyone (myself included) expected more listings, something unusual just happened: they didn’t show up.

I’m not quick to call it a trend yet because we’re still above every year except 2025, and active listings usually peak in May.

But in March, both new listings and active listings in the Greater Toronto Area came in below last year’s levels, breaking a trend that has defined the past two years. For roughly 24 months, inventory had been building steadily as more homeowners tested the market and year-over-year active and new listings continued to grow.

The prevailing narrative was simple. Supply was rising, and eventually it would weigh on prices, and it did. That logic made sense. But now, for the first time in a while, that supply story has stalled, even if just for a moment.

The question is why.

A Shift in Seller Behaviour

A 16.7% year-over-year drop in new listings is not a rounding error. It is a behavioural shift worth looking into. Sellers are making a different decision than they were even a few months ago. Some likely tried the market and didn’t achieve their target price. Others may simply be unwilling to accept today’s valuations. And increasingly, there is a third option that did not exist at the same scale in previous cycles: hold the property and rent it out.

None of these behaviours point to panic. If anything, they suggest the opposite. Sellers are not being forced into the market. They are choosing not to participate in it. Your average Canadian homeowner is pretty well protected from the downturn we’re seeing and they have the luxury of choice. There are hundreds of thousands of individuals who do not have that luxury, but they are at the margins, not the majority. Housing markets do not correct just because buyers hesitate. They correct when sellers are compelled to sell regardless of price. And so far, that forced selling still is not showing up in meaningful volume one would expect as we push through the dreaded “renewal wall.”

The distress That Hasn’t Materialized

This is what makes the current moment so interesting. On one hand, there is a widely discussed wave of potential distress. Estimates suggest that roughly 150,000 Canadians could face difficulty meeting mortgage payments this year. Unemployment is at recession levels and still rising. Artificial intelligence is leading to layoffs. Delinquencies are rising, and the lagged impact of higher interest rates is still working its way through the system. On paper, this should be the environment where listings surge as financial pressure builds.

But the data is not yet reflecting that outcome. Instead, many households appear to be adapting. Some are extending amortizations. Others are cutting spending, increasing income, or bringing in tenants. There is strain in the system, but there is also resilience. Distress may still emerge more visibly over time, but markets move on realized conditions, not anticipated ones. And today, the supply that was expected to materialize has not.

Prices Down, But Supply Tightening

At the same time, prices continue to tell a different story. The average selling price in March was down 6.7% year-over-year, and the benchmark price declined by 7.4%. These are meaningful drops, and they reinforce the perception that the market remains weak. However, that view becomes less convincing when you look at what is happening beneath the surface.

Sales have begun to stabilize and even tick higher. Listings are falling. Inventory is being absorbed. In other words, the underlying balance of supply and demand is tightening (albeit from a very large spread) even while prices are still reflecting past declines. This divergence is typical in transitional phases. Prices are backward-looking, while supply dynamics are forward-looking. When those signals move in opposite directions, it usually does not last long. The question is whether or not this is a delayed spring market on the supply side, or if sellers are really just done trying. Only time will tell.

Policy Distortions : New Homes vs. Resale

Adding another layer to this dynamic is policy. Recent efforts to remove or reduce GST and HST on new housing are intended to revive construction activity and improve affordability. In the long run, that is a necessary step to address structural supply shortages. In the short run, however, it introduces a new distortion.

By lowering the effective cost of new homes, these policies may pull demand away from the resale market. Buyers who might have otherwise purchased existing homes could shift toward pre-construction instead. That creates a scenario where resale prices face additional downward pressure, even as overall supply conditions tighten. It is an unusual overlap of forces: policy support boosting one segment of the market while indirectly softening another.

Not One Market, But Several

This ties into a broader trend that is becoming harder to ignore. The GTA is no longer one housing market. It is several.

Low-rise housing, particularly detached homes, had shown more stability, but still doesn’t appear immune to the aggressive price cuts we’re seeing in the market. These properties are primarily driven by end-user demand, which has proven more resilient, especially with a round of upzoning bringing the investor bid in that direction for multiplex development. Condominiums, by contrast, remain under pressure, reflecting weaker investor activity and shifting economics in the rental and financing landscape. More capital is going toward rental projects, and we still have record completions hitting the market this year. We’ll have a huge oversupply of condos for a while before we can think about recovery. With that being said, I have heard from a handful of developers that the new GST/HST incentives make it compelling for them to rent their inventory out (at a loss) rather than sell it (at a loss)… so perhaps that tightens supply a bit. Still sounds like a lose-lose scenario though.

Opting Out, Not Giving Up

So, are sellers giving up? The evidence suggests something more nuanced. They are not capitulating. They are opting out if they can afford to. They are choosing not to transact in a market that does not meet their expectations. That decision limits supply, and limited supply can change the direction of the market. Not immediately (certainly not this year… don’t get too excited) but eventually.

The path forward from here is not predetermined. If financial stress accelerates meaningfully (as evidenced by the 150,000 mortgagees on the rocks heading into 2026) more listings could emerge and prices could remain under pressure. But if current behaviour persists, with sellers holding firm and demand gradually improving, the tightening we are starting to see may translate into price stabilization and eventually growth.

For now, the most important takeaway is simple. The sellers everyone was waiting for have not shown up yet. And until they do, the downside risk in this year’s spring market may be more limited than many expect.

(Yes ..… I know ..… we’re early in the game for 2026’s spring market. I still find it interesting nonetheless.)

Foch : The Sellers Who Didn’t Show Up by Daniel Foch | REM Real Estate Magazine