Condo prices keep sliding even as sales jump — but the correction may finally be opening a door for first-time buyers
On the face of it, a big year-over-year jump in sales activity in Toronto’s condo market last month might suggest reason for optimism in the sector. But condo prices are continuing to plummet across the city – and that trend could still have some way to run.
In the city centre, average condo prices slipped by 9% while they dropped by 10.6% across the wider 905 region in June, moving the overall Greater Toronto Area (GTA) average to $630,688 – a precipitous slide from their pandemic-era highs.
Toronto-area broker Micky Khaneka (pictured top) of MKG Mortgages said while he’s confident homebuying appetite will continue to improve in Toronto during the final six months of 2026, he’s not so sure about an uptick in condo purchase activity.
That’s because the familiar challenges facing the sector – excessive supply, appraisal problems and lack of demand – are still a big factor weighing against the market’s performance, even years after those hurdles first emerged.
“The condo market is its own little beast,” Khaneka told Canadian Mortgage Professional. “The number of units still available on the market is so [high]. I think it might be a little bit longer before that starts to be absorbed with the amount of interest we have in that sector.”
Perhaps the biggest conundrum facing the condo market is the glut of so-called “dog crate” units across the city. Those properties, built specifically to be rented out, are often sub-500-square-foot apartments whose popularity soared over the past two decades before plunging in recent years as rental demand nosedived, interest rates climbed, and immigration levels dropped.
But Khaneka highlighted a rare silver lining in the current market: the fact that young professionals whose chances of buying a condo disappeared amid rampant price appreciation are suddenly facing a much-improved environment.
A window for first-time buyers
A new Royal Bank of Canada (RBC) report highlighted that affordability in the sector has improved sharply over the past two years, with the banking giant’s affordability index for condos now just slightly higher than its pre-pandemic level.
“The price correction, alongside steadily rising incomes, has helped roll back the pandemic-era affordability deterioration entirely,” the RBC Economics analysis said.
That’s a positive development for first-time buyers, Khaneka said, even if plenty of potential buyers are also holding out and waiting for prices to fall further. “I’m hopeful to see that prices coming down is creating opportunities,” he said.
“Are these first-time homebuyers and young professionals going to capitalize at this ideal entry point? I do see them doing so. I just don’t know how close we are to it or how long it might still take, given there are a lot of units out there.”
For renters hoping to buy a condo, the current market might offer their best chance in years. “It’s a perfect opportunity for people to get their foot in the market, build some equity, and then as they go into the next phase of life… they can always add on to that equity and ultimately use it as a stepping stone for the next purchase,” he said.
“Prices are back to pre-pandemic levels, and there are a lot of units still left, which puts the ball right back in the buyer’s court.”
Appraisal risks linger amid thin equity
But the falling values are also continuing to pose appraisal challenges, for homeowners looking to refinance or consolidate debt as well as for hopeful buyers.
That “ongoing issue” is still going strong – and many buyers who purchased between 2020 and now put down less than 20%, leaving thin equity cushions even as debt loads climb.
While the condo market’s well-documented struggles might be set to continue, Khaneka stressed that the overall picture for the Toronto market is more positive, and that the condo sector could remain an outlier as other segments improve.
“I’m more positive for the remainder of the year than the last six months,” he said. “I’m hoping not to be wrong, and this is just the start of something special.”
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