Plunging prices and demand are opening up doors for buyers previously frozen out in Toronto
A collapsing market, 30-year lows, and defaulting investors. These headlines point to an apocalyptic end for Toronto’s housing market – but there may be opportunity during this economic slowdown.
While a seller may be looking at a tough market, those looking to buy are in a unique position to benefit, James Harrison ([ictured above), broker and owner of Mortgages.ca, told Canadian Mortgage Professional
“It's a phenomenal opportunity right now,” he said. As prices lower and developers halt construction, buyers are looking at the best time to buy and profit from a condo.
Reduced demand and economic uncertainty have been the driving forces behind the condo market’s cooldown in Toronto. Harrison himself owns a condo, and saw first-hand the deteriorating market conditions when he attempted to rent it out for investment purposes. With many renters not being able to afford the initial listing price, Harrison eventually had no choice but to cut the price to a place where he was losing money every month.
Some of Harrison’s own clients, meanwhile, are trying to sell their properties but are having difficulties. “The problem is, they own a condo and they're either have to swallow that they're going to make less so take less money for the unit, or depending on what they bought they can't do anything. They’rekind of stuck.”
According to a report from Urbanation, Toronto sales in 2024 were down 71%annually from 2023, while new listings increased by 43%from the fourth quarter of 2023 to Q1 2024.
The increasing number of unsold units in the Toronto market has stoked speculation about a potential collapse. With investors facing financial difficulty, builders are slowing the construction of new units.
Harrison said this is where opportunity for clients lies – especially with no indication that the current slowdown will last forever
“If you're qualified and you can buy, you should be buying, because in the next two, three years, all the inventory is going to dry up,” he said.
Harrison predicts that condos purchased during the current condo slump could rebound in value by about 15-20% in the space of just a couple of years.
Furthermore, for first time homebuyers, he says that the condo represents a path to ownership of a larger home.
“It's also a great steppingstone. You buy that condo and maybe in three to five years from now, you can buy that house or that townhouse,” he said.
He recommends that his clients enter negotiations prepared with a preapproval and the right mindset. That way, clients are “ready to go when that opportunity comes. You can move on it. Or be aggressive with your negotiations, because you can walk away.”
He says that will help clients end up with the best possible outcome, by telling sellers “‘Okay, this is what I'm willing to pay.’ They don't want to, fine. Walk away. They might come knocking on your door.”
Finally, Harrison advises clients to focus on the property itself: location, size, layout. “You can buy a 550-square-foot unit that has a great layout. It doesn't feel like 550 square feet.”
For now Harrison says that brokers should look beyond the headlines of a collapsing market and instead focus on the opportunity, one that could already be slipping through our fingers. “It will be looked back on as ‘that was probably the best time ever to buy a condo’.”
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