Is a condo crash coming to Toronto?

Demand and sales are plummeting. Is the city’s condo market in trouble?

Is a condo crash coming to Toronto?

The woes of Toronto’s condo market show little sign of easing in 2025, with plunging demand and a flood of available inventory suggesting a crisis could be imminent.

The figures tell their own story: newly-built condo sales in Toronto saw their biggest slump in the first half of last year since 1997, while active listings jumped by over 10% in the third quarter of last year and have shot through the roof since 2022, according to the Toronto Regional Real Estate Board (TRREB).  

In September, TD highlighted risks to the near-term outlook for condo prices – but stopped well short of labelling the current lay of the land a crisis, with economist Rishi Sondhi describing it as “likely only a matter of time” before sales growth in the resale condo market rebounds.

Still, short-term prospects for the city’s condo market appear bleak, with a muted pace of purchasing extending into the opening month of 2025. What’s more, the volatile sales landscape is also impacting the value of those condos and contributing to a mounting number of appraisal issues.

“We’ve definitely noticed a cool-off,” Toronto broker Taz Zaide (pictured top) of 6ix Mortgage Group told Canadian Mortgage Professional. “We’ve noticed with quiet a few of our clients that have either bought resale condos or even newbuild condos, appraisals are coming in much lower than expected and I’d say by at least 3% or 4%. So it’s been a substantial decrease over the last two, three years.

“There’s definitely been a big downtrend on the condo prices and I don’t expect things to pick up for that anytime soon.”

Buyers left in a bind by low condo appraisals

There’s no easy fix for those buyers who are seeing their appraisals come in much lower than the agreed sale price, unless they’re able to rely on the Bank of Mom and Dad to make up the difference.

Zaide said many have had to turn to secondary financing or a line of credit to bridge the gap – but he hasn’t yet noticed a trend of newbuild buyers leaving their deposit and walking away from the purchase.

“So far, people have been pretty resourceful in being able to come up with the difference,” he said. “The good thing is that sometimes builders will tell our clients, ‘Hey, this is what we’ve noticed – do an appraisal as soon as possible,’ so they give them a bit of a heads up, and the clients know what to expect.”

But the condo downturn has spooked many investors – and even those who go through with their purchase often look to get it off their hands as soon as they can, according to Zaide.

“I’ve found that in some markets, some of these clients that are buying the condos are also trying to offload them as soon as possible, especially if they’re newbuild condos that they bought for investment purposes,” he said.

“As soon as a couple of months later, they just want to sell the thing and not hold on to it – just mainly because of the rent and the mortgage payments that are there now.”

Cooler market also expected to weigh against condo completions

The slower pace of sales could also have a knock-on effect on the number of condo units completed in the years ahead.

With pre-construction sales “falling off a cliff,” starts are also likely to slide, Realosophy Realty president John Pasalis told BNN Bloomberg in August – and that spells bad news for the federal government’s plan to turbocharge the number of new units added to the market in the years ahead.

While plunging condo prices and surging availability has helped provide some welcome relief to Toronto renters in the near term, the gloomy outlook for starts means that improvement is likely to be short-lived.

Royal LePage president Phil Soper said he expects condo prices to see little change throughout 2025 – but TD’s Sondhi emphasized that after a possible mid-to-high single-digit decline in prices into early this year, they’ll probably return to eking out “below average gains” after that.

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