What Human Biases Are Driving the GTA Housing Market in 2025?

Here's what I feel is happening in the current market — not just from a numbers perspective, but through the lens of human psychology.

1. Sellers: Anchored to Yesterday’s Prices

We keep hearing it’s a buyer’s market, yet many sellers are unwilling to accept fair market value.

That’s the endowment effect at work — where homeowners overvalue their property simply because they own it.

A lot of this is simply anchoring bias — sellers are still mentally tied to the highs of 2022–2023, even though those prices were inflated and unsustainable.

2. Underpricing to Spark FOMO

Many listing agents intentionally price homes below expectations to generate curiosity and provoke bidding wars.

This tactic is designed to play on urgency and perceived scarcity — even when the market fundamentals don’t support it.

3. Buyers: Influenced by Recency Bias and FOMO

Some realtors reinforce buyer anxiety by recalling the intense bidding wars and price surges of 2021–2022.

This recency bias leads buyers to overestimate how competitive today’s market actually is.

The result: buyers feel pressured to rush in or overbid, fearing they’ll miss out or that prices will spike again soon.

So What’s the Solution?

Math and rational thinking.

• If you're a buyer:

  
  

  Make sure you have at least six months of emergency funds remaining after your down payment and closing costs.

  
  

  If you don’t, hit pause. The right home will come along — but your financial stability matters more.

• If you're a seller:

  
  

  Disregard 2022–2023 prices. That was a blip, a glitch in the matrix and nothing else.

  
  

  Set a realistic selling price and do the math on your net proceeds after commissions, legal fees, and other costs. You're now selling in a market that values reason over hype.

Real estate decisions should be driven by long-term planning, not short-term emotion.

If you want to run numbers or talk strategy based on where you are today — I’m happy to help book a meeting to get started - https://cal.com/jayantbahel/initial-discussion

Book Recommendation for July - Predictably Irrational by Dan Ariely, a wonderful read on how biases impact our decision making.