The condo market is still reeling as prices and activity took another dive last month
The condo market crisis gripping Toronto is still showing no sign of easing, with average prices and total sales sliding yet again in September to extend their years-long correction.
New data from the Toronto Regional Real Estate Board (TRREB) showed sales slumped by 5.5% in the city centre and 12.4% across the wider 905 region in September, while average city centre prices moved 6.1% lower. In the 905, average prices were down 12%.
That means the overall average price of a condo in the Greater Toronto Area (GTA) is now $605,257, a drop of 24.3% compared with February 2022 – just before interest rates started to rise and the city’s once-booming condo market began to cool.
Smaller condos ‘not just dead – they’re buried’
For hopeful buyers, interest rate relief doesn’t seem to be on the way anytime soon. Fixed rates have crept up in recent weeks amid growing bond market concern over the inflation outlook, while expectations of Bank of Canada rate hikes – which would raise variable rates – have also grown.
Butler Mortgage founder Ron Butler (pictured below) was unsparing in his analysis of the condo market outlook at MortgageFest Canada in late September, particularly for sub-500-square-foot units.
“Dog-crate condos are still doomed. They’re not just dead – they’re buried. Then somebody dug them up, put a stake through their heart, and then buried them again,” he told Canadian Mortgage Professional. “That’s how dead high-rise condos are.”
And while Canada Mortgage and Housing Corporation (CMHC) deputy chief economist Aled ab Iorwerth (pictured below) said there seem to be some buyers finding opportunity in a deeply discounted market, a wider recovery for the sector is a long way off.
“I do get these anecdotes of people nibbling, and even some corporations nibbling, in the condo market,” he said. “We’re in a bottoming process. In 2028, assuming the economy is recovering, I think we would be past it.”
TD Economics has already slashed its forecast for national home sales in 2026, citing a weakening economy and continuing interest rate uncertainty as key reasons for its revision.
Why the condo slump is bad news for long-term affordability
Condo construction has essentially screeched to a halt in Toronto because of dramatically lower investor and buyer appetite compared with the boom years, when soaring rental demand turned condo ownership into a lucrative cash cow for secondary owners.
Higher interest rates and lower rental demand mean many of those condos have become a cashflow-negative headache for owners, while scores of buyers who purchased years ago when values were higher are now facing huge appraisal challenges
CMHC has flagged that plunge in condo starts as one of the main reasons the housing crisis is likely to remain a hot-button issue in the coming years, even despite a flurry of measures by the provincial and federal governments aimed at spurring homebuilding.
“We’re seeing a very sharp fall in starts of new condos, particularly in Toronto,” ab Iorwerth said. “And so I’m a little bit concerned about what’s going to happen in three or four years.
“With no shovels being put in the ground in the ownership market right now, it does make me wonder if there’s a strong rebound in the economy at some point in a few years, where is all the housing going to be that we’re not building right now?”
Some larger investors have moved to scoop up Toronto condos in bulk deals this year, purchasing at fire-sale prices with an eye on a possible market recovery over a much longer term.
But they could be waiting for a long time before those properties eventually become profitable again, according to Butler.
“They’ll just hold on to them for four years, five years, six years, seven years,” he said. “And eventually there’ll be some recovery because there’s no building. So eventually, some prices will come back.”
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