Market Insight for June 27

Toronto’s condominium apartment sector is currently experiencing a market adjustment. As outlined in a June 2025 report from the Canada Mortgage and Housing Corporation (CMHC), the city is facing a downturn in sales, elevated inventory, falling prices, and mounting financial pressure on investors. On the upside, these trends are temporarily improving affordability for both buyers and renters. However, the report flags a major risk: a shrinking future housing supply, which could fuel renewed demand in the longer run.

From 2022 through the first quarter of 2025, total condo apartment sales across the Toronto Census Metropolitan Area declined by 75%. This figure includes transactions involving resale, new-build, and pre-construction units. The pullback is largely attributed to higher interest rates, which have eroded buyer affordability and weakened the investment appeal of condos.

Simultaneously, a record-breaking 25,572 new condo units were completed in Toronto in 2024. This jump in completions occurred just as demand softened, creating a notable increase in supply. In Q1 2025, the months of inventory for pre- construction condos reached 57.4—a level not observed in over 20 years. To contrast, this figure was only 1.9 months in Q1 2022.

With declining sales and swelling inventory, prices have adjusted downward. The average resale condo price in Toronto dropped 13.4% between Q1 2022 and Q1 2025, falling from a peak of $1,045 per square foot to $812. This marks a significant correction following rapid appreciation of more than 19% from 2020 to 2022, when low interest rates and strong investor demand were the norm.

This recent price dip is particularly impactful for investors who bought pre- construction during the final phase of the last market boom. CMHC estimates that some may now face capital losses of up to 6% at closing, based on comparable resale values.

Short-term investor returns have been hit by both falling property values and rising ownership expenses. Since 2022, average monthly carrying costs in Toronto—including mortgage interest and maintenance fees—have jumped by 24%. In comparison, average rents have only increased by 15%, compressing returns on newly acquired rental units. In addition to cash flow pressure, lower unit valuations are complicating mortgage approvals. Some investors may fall short of full financing at closing if appraisals come in under the original pre-sale price.

With sluggish sales, developers are encountering new financing challenges. In Q1 2025, 55% of pre-construction condo inventory remained unsold—just below the 56% peak recorded in late 2024. This falls short of the 70% pre-sale benchmark that many lenders require to release construction loans.

As a result, project cancellations have surged. CMHC data shows that the number of cancelled condo units in Toronto in 2024 was five times higher than in 2022. While some developers have pivoted to purpose-built rental buildings using alternate financing structures, many planned condo projects have been scrapped altogether.

For buyers who were previously priced out, these current conditions may open a window. With lower resale values, more listings, and less competition, access to homeownership may be more feasible.

Nonetheless, CMHC warns that these affordability benefits could be temporary. A drop in new project launches and sluggish pre-construction sales may constrain future supply. Although the current inventory glut is easing short-term pressure, this comes at a cost. As the report notes, “the condominium projects cancelled today mean fewer housing completions in the future.” Today’s affordability may obscure deeper supply risks, especially if market sentiment deters developers from starting new projects. If demand rebounds before construction activity recovers, prices and rents could quickly climb again.

CMHC anticipates the Toronto condo market will stay cool in the near term. Completion levels are likely to stay elevated through 2025, while buyer and investor demand remains tempered by high borrowing costs and weak price growth. Further project cancellations and reduced construction starts are anticipated.