Shifting values and eye-watering monthly costs mean a starter-home purchase no longer makes sense for many buyers
Prices may be on the wane in Toronto’s condo market, but affordability challenges in the sector mean a property purchase is still out of reach for many renters in the city – and that’s leading some to re-evaluate their immediate housing priorities.
Even with average values having declined over the past couple of years amid a deep freeze in the Toronto condo market, added fees and the hefty monthly cost of owning a condo are leading some renters to question whether they even want to buy a small apartment imminently, according to Toronto-based Rates.ca mortgage and housing expert Victor Tran (pictured top).
“I think a lot of people are just looking for financial freedom and flexibility generally, and they’re OK to rent,” he told Canadian Mortgage Professional. “It’s not the end of the world.”
For the first time in at least 30 years, no new projects launched during the first quarter of 2026, according to Urbanation, with a record-high 4,295 new condos completed and unsold by the end of Q1.
That was more than double the level from a year ago and nearly five times higher than in the same period in 2024. Average condo prices, meanwhile, have continued to slide even with activity in the sector picking back up slightly in recent months.
And Tran said there’s no sign yet that many potential first-time homebuyers are ready to take the plunge into the market. “There was definitely an increase in sales. Inventory is piling up a little bit, but it’s more or less the same as what happened in the last spring market,” he said. “But I’m not optimistic that things will improve.”
‘Not much interest’ in condos among younger cohort
Younger demographics have historically been the main audience for entry-level condos, with that cohort once viewing condo ownership as a first step on the property ladder before gravitating into a larger, detached or semi-detached home.
Tran said many are now concluding that renting and investing elsewhere makes more financial sense, especially with no guarantee that buying a Toronto condo – once a lucrative short-term investment – will ultimately prove financially beneficial.
“The demographic that are looking at condos is usually younger and there’s not much interest there at the moment,” he said. “I feel like there’s been a shift in values, and not as much value put into homeownership.”
The pattern Tran described might feel like a familiar one to many younger Canadians: crunching the numbers, factoring in maintenance fees, property taxes, utilities, and mortgage payments, and finally deciding that the math doesn’t work.
What’s more, rents have declined in recent months, meaning many renters are feeling their pressure to buy easing and instead redirecting the funds for a potential downpayment into the stock market or other investments.
“If they invest their downpayment into the market instead, their rate of return is still decent, and it’s more liquid,” Tran said. “If you need the money, you can just sell your ETFs or mutual funds or whatever it is and get the money within 24 hours, as opposed to housing – it’s all locked in. It’s very expensive to transact in real estate.”
The trend of younger Canadians turning their back on homeownership has also gathered pace because of the eyewatering runup in national home prices over the past decade.
In 2023 – shortly after the COVID-19 pandemic spurred a big spike in average prices – an Ipsos/Global News poll showed 63% of Canadians who don’t own a home say they have given up on ever owning one, with 69% of Canadians agreeing that homeownership is now only for the rich.
Supply pipeline adding to pressure
New construction may have completely dried up in the condo sector, but there’s still a glut of unfinished units scheduled to come onstream – a trend Tran described as “a bit alarming.”
And with buyer negotiating power also remaining substantial across the condo segment thanks to high standing inventory suppressing prices, Tran doesn’t see the conditions for a pickup in market activity anytime soon.
“There’s really no positive signs that we’re getting close to a recovery in terms of pricing,” he said.
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