Should You Sell Your House First Before Buying Your Next Home?

Navigating Ontario’s real estate market in 2025 requires strategy, timing, and a solid understanding of current market dynamics. For homeowners planning to move, one crucial question stands out:
Should you sell your current home before buying your next one? The optimal strategy often depends on your local area market conditions (seller’s vs. buyer’s market) and individual financial circumstances.

Recent data from the Canadian Real Estate Association (CREA), paired with ongoing economic uncertainty, suggests that — for many — selling first is the more prudent approach in today’s environment. Here’s why.

Market Context: What CREA’s February 2025 Report Tells Us

The February 2025 CREA report outlines key trends that Ontario homeowners should carefully consider:

• A Jump in New Listings: January saw an 11% surge in newly listed homes — the largest monthly increase (seasonally adjusted) since the late 1980s, excluding pandemic-related swings. This introduces more competition for sellers.

• Slowing Sales Activity: National home sales declined at the end of January, likely driven by rising concerns over a potential trade war with the U.S. Despite still outpacing January 2024 levels, the slowdown indicates growing buyer caution.

• Rising Inventory: The number of months of inventory rose to 4.2 nationally — a shift away from seller’s market territory. More listings mean buyers have greater choice and less urgency.

• Softening in Ontario: CREA’s Senior Economist, Shaun Cathcart, flagged that markets like Ontario are now experiencing price softening due to increased supply and reduced urgency among buyers.

• Balanced Market Conditions Emerging: The national sales-to-new listings ratio dropped to 49.3% — squarely within balanced market territory (45–65%), suggesting a more level playing field between buyers and sellers.

Source: CREA February 2025 Housing Report

Why Selling First Makes Sense in 2025

Given this market backdrop, here’s why selling before buying may be the safer choice for Ontario homeowners in 2025:

Financial Clarity and Control

Selling your current home first gives you a clear picture of your proceeds, allowing you to:

• Set a realistic purchase budget

• Avoid the risk of carrying two mortgages

• Reduce surprises during financing

When the market tips toward balanced or buyer-favouring conditions — like we’re seeing now — selling first tends to be the more cautious and financially sound approach.

In previous tight markets, we often advised clients to negotiate conditional sales to seamlessly transition from one home to another. But with current conditions shifting, I now recommend clients sell first. During the selling phase, we also begin exploring potential areas and properties, helping to streamline the next step.

Stronger Buyer Position

Homeowners who’ve already sold are often viewed as more attractive buyers — they can act quickly, negotiate with confidence, and avoid the complexities and costs of bridge financing.

Risks to Consider When Selling First

No strategy is without risk. Selling first also comes with potential drawbacks:

• Higher Competition Among Sellers: With listings rising, sellers may face longer time on market and pricing pressure.

• Softer Prices in Some Areas: Ontario’s market is seeing some price pullback, meaning sellers today might not receive the same offers as they would have several months ago.

• Temporary Housing Needs: If you sell before securing your next home, you may need interim accommodations, which can add to your stress and expenses.

Local Market Conditions Still Matter

Ontario’s real estate market is not monolithic. Urban hubs like Toronto may continue to see steady demand, while smaller towns or suburbs may experience more sluggish activity. Your strategy should be tailored to the specific market you’re selling in — and the one you’re buying into.

Broader Economic Factors Add Complexity

Beyond housing, broader economic forces — like trade tensions, fluctuating interest rates, and consumer confidence — influence timing and demand. These uncertainties further support a conservative approach, where selling first limits exposure to overlapping risks.

Strategic Tips if You Choose to Sell First

• Partner with a Local REALTOR®: An experienced agent will help you price, time, and market your home effectively.

• Negotiate Flexible Closing Dates: A longer closing window buys you time to secure your next property.

• Line Up Temporary Housing Options: Even if you don’t use them, backup accommodations give you peace of mind.

• Consult a Mortgage Specialist Early: Understand your options and prequalify to act quickly when the right property arises.

Final Thoughts: Sell First, Buy Smart

Selling first isn’t the right answer for every homeowner — but in the current Ontario market, it offers more financial flexibility, less risk, and stronger negotiating power when you’re ready to buy.

This decision hinges on both external market conditions and your personal financial situation. That’s why working with a knowledgeable real estate professional is key.

If you’re preparing for a move in 2025, let’s talk strategy. I can help you put the right plan in place, you can sell smart — and buy with confidence.