A Look at the Toronto Condo Market

Whether you’re buying, selling, or investing, understanding the current state of the condo market in Toronto is key to making the right financial decisions. Construction seems to be everywhere, and interest rates are declining, but what does all that mean for the condo industry, and how will that affect your options in 2026?

The Toronto Condo Market Today

Toronto’s condo market is experiencing unprecedented challenges. Whereas sales and prices soared in the early 2020s, they’ve since dropped precipitously. New condominium sales have effectively stalled, with just 1807 units sold in 2025, as of the end of October, down 56% from the same period in 2024, according to data compiled by the Building Industry and Land Development Association.

Since major Canadian banks require pre-sale commitments of 70% of the units in a new development, low sales have made it difficult for builders to get financing. In an interview with Global News, Dave Wilkes, president and CEO of BILD, stated that “From a builder’s point of view, projects aren’t proceeding; they’re not getting off the ground.”

While new condos aren’t selling well, the resale market for condos is seeing a mix of activity. Some segments, such as 1- and 2-bedroom units, are selling, but at lower prices than a year ago. According to the Toronto Regional Board of Trade, the average resale price in the third quarter of 2025 was 6.4% lower year-over-year from the same period in 2024. Some analysts are projecting a further drop before the year is over.

Inventory Levels in the Toronto Condo Market

Condo supply is outpacing demand in Toronto. According to the Canada Mortgage and Housing Corporation (CMHC), inventory levels have reached 58 months’ worth of supply, meaning that at the current average rate of sales, it would take over 4 years to sell the units currently on the market. For 10 to 12 months is the norm when the market is balanced between supply and demand.

Factors Driving the Decline

There are a few reasons for the decline in sales and prices in the Toronto condo market.

• Interest rates, which peaked in 2023, have declined slightly but remain high. This has made it more difficult for potential buyers to afford a home, leaving properties sitting on the market.
• Investors, who account for the bulk of condo purchasers, are backing off from the condo market in Toronto. Low interest rates, high rents, and a rising resale market made it attractive and profitable to invest in condominiums from 2008 to about 2022, which led to a surge in sales. However, current conditions no longer favour investors.
• Many of the condo units that were scheduled to close in 2025 were purchased years ago, when conditions were very different. These buyers were forced to make difficult decisions at closing, when their properties had declined in value to much less than the contracted price. This problem will continue in the coming years, leading to further excess inventory and a downward trend in both condo prices and rents. The downward pressure on rents is a further issue for investors, who rely on higher rents for positive cash flow.

In combination, all of these factors will mean further imbalance between supply and demand in Toronto’s condo market.

Will the Toronto Condo Market Crash?

Some real estate observers are concerned that the condo market might crash, leading to plummeting prices and catastrophic financial losses. This happened in the early 1990s, when speculative condo construction in Toronto was rampant. The 1980s building boom was followed by a rise in interest rates, a recession, high unemployment, and a rapid fall in consumer confidence. At that time, home sales and prices dropped dramatically, creating a real estate market crash.

The CMHC has directly addressed this concern, pointing out that despite the parallels, there are important differences between the current situation and the real estate slump of the early 1990s.

• The recession in the 1990s was severe and long-lasting. The current economy may slide into recession, but it’s unlikely to be as serious, given that employment levels remain high, incomes are continuing to rise, and people are able to service their debt.
• Lending policies have tightened up, restricting speculative investing in Toronto’s condo market. In the 1980s, developers only had to sell 50% of the units in a new building to qualify for a construction loan; that’s since increased to 70%.
• Although there is a current oversupply of condominium units, the city’s population continues to grow. With the slowdown of new construction starts, the units currently sitting on the market will eventually be sold.

In the short term, experts expect the market to move slowly, but by 2027, the predictions are that the glut of units on the Toronto condo market will be absorbed.

Will the Toronto Condo Market Recover?

The big question on everyone’s minds is whether the market will recover, and how long it will take. Although industry experts seem optimistic (or at least, not pessimistic), their opinions on timelines vary. Most experts expect that a recovery will start in 2026, driven by interest rate cuts, which will make borrowing more affordable, but there’s disagreement as to how quickly conditions will improve.

So, what does this mean for buyers and sellers in the Toronto condo market?

For prospective buyers, increased inventory and lower prices put them in a strong bargaining position. People who have previously been priced out of the market may find that it’s a good time to jump in. However, it’s crucial to approach the market strategically, and with the guidance of an experienced real estate agent who can structure offers that are truly advantageous to buyers. The assignment market, where buyers of pre-construction units sell their purchase contracts before the units are completed, may be particularly attractive to new buyers.

Current owners may need to wait it out if they don’t want to take losses. Market conditions are expected to improve, but it may be a year or more before they can break even or sell at a profit.

Investors face difficult choices. Those who are holding properties are finding that they’re losing money in the rental market and that they’ll incur capital losses if they sell. Investors hoping to buy need to carefully evaluate the market outlook as well as rent and occupancy projections.