Sales are on the up, but homebuyers and owners are still confronting a familiar obstacle
Sales continued to bounce back in Toronto’s housing market last month, but prices are still on the wane – and that means the appraisal challenges facing many homebuyers and refinancers in the city aren’t fading.
A 9.4% year-over-year jump in homebuying activity extended a run of gains that has now stretched across three consecutive months, the Toronto Regional Real Estate Board (TRREB) said last week, but average prices were down once more in every property type across the Greater Toronto Area (GTA).
In the detached space, prices edged 2% lower. Semi-detached prices fell by 4.6%, while townhouses posted a 3.1% decline and the beleaguered condo sector saw a 9.5% slump.
Drew Donaldson (pictured top), founder and chief executive officer of Toronto-based mortgage brokerage Donaldson Capital, told Canadian Mortgage Professional brokers and borrowers are still facing plenty of challenges getting lenders to agree on what a property is actually worth at refinance.
“We’re having a little bit of a challenge with the appraisers. A lot of the appraisers are starting to come in low, and we’re having to navigate that – whether it’s multiple appraisals or just having to provide comps up front to try to support the value,” he said.
What's causing the Toronto appraisal gap in 2026?
While homeowners might have purchased their property at a high price during the COVID-19-era housing boom, the market downturn and falling values since then mean the equity they hoped to have in their home by refinance time hasn’t emerged.
The gap is also showing up on the purchase side. Donaldson said it’s not uncommon to see formal appraisals come in hundreds of thousands of dollars below the agreed sale price, particularly when similar properties in the same area have sold for much lower.
There are no easy solutions for brokers in such a situation. Donaldson said common steps might include changing lenders, ordering a new appraisal, and showing them a comparison with reasons why the broker believes the value is there.
That can mean the broker’s role might more closely resemble project management than sales. “As a mortgage broker, you’re basically a quarterback,” Donaldson said. “You’re quarterbacking the appraisal, the legals, working with the lender.
“There are a lot of moving parts you can’t fully control, but you can support the value as best you can.”
What's the outlook for Toronto home prices in the second half of 2026?
Despite those challenges, TRREB sees green shoots emerging in the Toronto market. Chief information officer Jason Mercer noted that the annual rate of decline in prices has fallen in the past several months, a trend that’s likely to continue.
“If market conditions continue to tighten in the second half of 2026, selling prices could move in line with 2025 and eventually post some increases,” he said in remarks accompanying the board’s latest release. “This would give an increasing number of households the confidence to move back into the marketplace.”
Donaldson doesn’t see a dramatic recovery on the way anytime soon, but told CMP there are enough positive signs to suggest the second half of the year will be busier than its first six months.
“I think there’s going to be enough activity out there for the good brokers and lenders to get their business,” he said. “I would say steady – not [resembling] the boom days by any means.
“A challenging market can sometimes work to our advantage. As mortgage brokers, we can really provide value during these challenging times.”
Could further regulatory reform help spur a quicker rebound in activity? Donaldson doesn’t see the need for any immediate changes, and said resolution to the Canada-US trade dispute would be a more welcome development.
“Overall, I actually like the state of the market,” he said. “Some of the rules implemented over the last three or four years have kind of worked their way through the system and seem to be relaxing. If rates stay low and things get worked out with the States, I think we’re in for a steady market over the next few years.”
For borrowers coming up for renewal, Donaldson said now is the time to reassess rather than default into the same terms. "That's the time they can rejig and restructure their mortgage to make sure the payment's lower, get some cash out, or invest some money,” he said. “There's still tons of opportunities."
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