Toronto Condo Market Faces Reset Before Future Recovery

Toronto Condo Market Faces Reset Before Future Recovery

The Toronto condo market has shifted hard from the days of pricey pre-construction buys off floor plans papers to a moment where finished units are stacking up and buyers want to view, touch, and inspect before they commit. In May, the GTA logged only about 137 pre-construction condo sales, with just 42 in the City of Toronto. That’s basically a freeze on all new launches. The stuff that is moving tends to be near-completion leftovers: units that feel more like resale than “paper,” which is why prices are drifting toward resale levels. It’s not that buildings can’t sell; it’s that they need to sell at today’s market price, not at yesterday’s pro forma.


If you come from investing, the analogy makes sense. Buying pre-con was like venture capital or an IPO—you took risk on a rendering and a promise. Resale is the public market—real building, real comps, real fees. For years, developers counted on hitting around 70% pre-sales to unlock construction financing. Right now, many can’t even sniff 7%, so there’s no point launching. That’s why we’re in a clearing phase: completed nearly completed inventory has to be priced to where buyers will actually transact, and the market is slowly doing that.


The supply bulge is real. Completions jumped—roughly twenty-eight thousand condos delivered last year and close to forty thousand this year. So it’s like too many IPOs listing on the same morning. The system will need more time to absorb it. How long the absorbtion takes depends on rates, jobs, and first-time-buyer confidence. The pessimistic read is five years; the optimistic one is closer to two years if buyers reset expectations and accept a well-located condo as a first home instead of holding out for a townhouse. The demand for condos hasn’t disappeared. Many people who would like to buy are still living in basement apartments or sharing rentals with others. The problem is that high interest rates and high monthly costs are making them very cautious about buying, so they are waiting for better conditions.


Policy has also pushed the market in a new direction. Ottawa’s financing programs, especially CMHC’s MLI Select—made purpose-built rentals unusually attractive with long amortizations and easier debt metrics. Developers followed the incentives, and rental starts took off while condo starts rolled over from their 2022 peak. If you add in the big share of condos that end up as rentals anyway, the rental pipeline is the strongest in decades. The flip side is that we’re already seeing a bit more vacancy and a few incentives to attract tenants, e.g. free months period, because some underwriting assumed rents would rise forever. Even CMHC has started trimming loan amounts when achieved rents miss the plan, which tells you everyone is watching cash flow a lot more closely.


The plot twist comes later this decade. Because pre-sales have been so weak since 2022, the pipeline for 2029 to 2030 looks thin. Several condo sites have been converted to rentals or simply shelved. Charts of condos under construction show a clear step-down from the 2022 peak towards much smaller numbers by 2028. After this bulge gets absorbed, finished condo supply will likely feel scarce just as population growth keeps grinding higher. If rates are friendlier by then, you can see how prices firm first and rise later, not tomorrow, but plausibly around 2028.


So the condo market isn’t dead; it’s resetting. In the near term, sellers who price to the present will move product, and buyers who shop finished buildings can be choosy about location, build quality, fees, and reserve health. Investors need to underwrite what rents are today, not what they wish they were, and carry real buffers for vacancy. Developers, meanwhile, have to price to clear and structure financing that tolerates slower lease-ups. And if you’re watching from the sidelines, remember that supply in housing comes in waves; we’re working through a big one now, and the next wave looks smaller. If you can get through the next couple of years with clear eyes and patient capital, the turn on the other side tends to reward the people who stayed disciplined.




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