Toronto condo market crisis deepens as investors and landlords feel the burn

Toronto’s condo market lurched further into crisis last month, witnessing another huge drop-off in sales as fresh inventory continued to flood the city.

Sales of condo units in the city centre 416 region tumbled by 29.9% in April compared with the same time in 2024, according to the Toronto Regional Real Estate Board (TRREB), while the 905 region surrounding Toronto registered a 31.5% sales slide year over year.

Meanwhile, available condo supply ticked even closer towards a full year’s worth of inventory, deepening a fiasco that’s already seeing investors bleed money and landlords grapple with falling rents.

The origins of that nightmare lie in plummeting demand for sub-500-square-foot units in the city, once viewed as something of a cash cow for investors who could snap up an apartment, rent it out, and have the mortgage paid by someone else as the property’s value continued to climb.

But rising interest rates and much-publicized appraisal issues on those property types – particularly newbuilds – turned plenty of those units into cashflow-negative headaches for investors and have seen scores of buyers simply walk away from their deposit instead of trying to close on the purchase.

Cramped condos seeing few takers in Toronto

For those who already own a unit and want to sell, getting rid of the property is proving easier said than done, Toronto mortgage broker Paul Meredith (pictured top), of PMT Mortgage Corp., told Canadian Mortgage Professional.

Some will still be able to eke out a sale, but many who purchased so-called dog-crate condos – tiny apartments they would never think of living in themselves – are facing huge challenges finding buyers.

“I’m seeing condos sitting on the market for six months or even more,” Meredith said. “A lot of it comes down to the desirability of the property, and this goes for not just condos but detached and semis as well. If you have a condo that’s been fully renovated and it’s in a desirable area and is priced right, then it will sell.

“But the problem is that a lot of people who are listing these condos have unrealistic expectations of what those condos should sell for.”

Speaking at the CAMLA expo 2025, Sal Guatieri of BMO noted affordability is rebounding as prices dip and mortgage rates fall, calling this “the best time to buy” in over 30 years. https://t.co/2h9GyMkjND

— Canadian Mortgage Professional Magazine (@CMPmagazine) May 9, 2025
Record-high immigration levels and a steady stream of new arrivals into the city kept demand for Toronto condo rentals high as Canada emerged from COVID-19, while rock-bottom interest rates during the pandemic also nudged plenty of investors towards the city’s condo market.

The current market reality is a far cry from those days – and plenty of sellers haven’t adjusted to that fact, Meredith said.

“So many bought their condo at the peak of the market in 2021 or 2022 and a lot of them are looking to recoup what they put into it,” he said. “So they’ve listed it high – but it’s just going to sit and no-one’s going to buy it at these elevated prices.”

Is Toronto facing a condo market meltdown?

The question on everyone’s lips about Toronto’s current condo woes is a big one: How bad will the crisis actually get? Prominent mortgage broker Ron Butler, who sounded the alarm on a potential sharp condo downturn early last year, described the market as “doomed” at a Canadian Alternative Mortgage Lenders Association (CAMLA) event in Brampton last week – and prices, ominously, have also started to slip.

Average condo prices fell by 3.4% in the city centre last month compared to April 2024, dipping to $711,061, while the 905 saw a 4.8% decline to $619,469.

They probably still have a ways to fall, according to Meredith – and the bottom isn’t in sight yet. “People are concerned for the state of the economy and as long as people have this concern and this fear, then I would expect to see prices decline further,” he said.

“As to how much further they’re going to decline, that’s anyone’s guess. Eventually, it will turn around. But the question is: How far will it go before that happens? How much lower will prices go before that happens?”

Source: Canadian Mortgage Professional