What’s Going On With the Toronto Condo Market?

If you have been following the news lately, you have probably noticed the Toronto condo market getting a lot of attention.

Some headlines make it sound like the sky is falling. Others say everything is fine and this is just a normal market cycle. As usual, the truth sits somewhere in the middle.

Over the past year I have been having a lot of conversations with clients about condos. Owners want to know if the market is in trouble, while buyers are wondering if this might finally be their chance to get into Toronto real estate.

The questions I keep hearing lately are mostly, is the condo market actually struggling? Has it crashed? Am I cooked? Can I get deal?

The reality is that the condo market has clearly cooled off. Prices have softened, inventory has increased, and some sellers are now adjusting expectations in ways we have not seen in several years.

And yes, while condo prices are not exactly free falling like the Leafs in the standings (don't even get me started...) the shift compared to the frenzy years is very real.

So what does that actually mean if you own a condo or are thinking about buying one?

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What This Means For Condo Sellers

For condo sellers, the biggest change right now is expectations.

Over the past few years many condos sold quickly and often above asking. Today the market looks very different. Buyers have more choice and are taking their time before making decisions.

Some sellers are also facing a tough reality. In certain cases units are selling for less than what owners paid a few years ago, especially in buildings with many similar units competing for the same buyers.

We are also seeing sellers offering incentives to attract attention. Things like flexible closing dates, price adjustments, or even including furniture or upgrades in the sale.

The sellers who are having success right now tend to share a few common traits.

They are realistic about pricing.
They pay close attention to the most recent comparable sales.
And they understand that the market today is not the same as it was two years ago.

Units that are unique, well maintained, or located in highly desirable buildings are still selling.

But cookie cutter units priced based on yesterday’s market often sit longer.

This is where strategy and analysis really matter. Understanding the latest sales, buyer behaviour, and building specific trends can make a big difference between a quick sale and months on the market.

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What This Means For Condo Buyers

For buyers, the current condo market is presenting opportunities that simply did not exist a few years ago.

More inventory means more choice, and buyers are often able to negotiate in ways that were nearly impossible during the peak market.

I have also noticed a trend with some of my buyer clients lately. Many are excited about the softer market and want to come in with very aggressive offers.

Sometimes those offers actually work.

But sometimes they are simply too low.

There are definitely deals to be found in the current condo market, but buyers still need to remain reasonable. Most sellers are not going to accept offers that feel unrealistic or far below recent comparable sales.

One example came up recently with a buyer client I mentioned in my February market report. We explored the possibility of submitting a lower offer on a condo because of how the market had shifted. After reviewing the latest sales and activity in the building, we adjusted the strategy and submitted an offer that was aggressive but still grounded in reality.

That balance is important.

Buyers have more leverage today, but successful negotiations still come down to understanding the numbers and reading the situation correctly.

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Why Investors Are Stepping Back

Another reason the condo market has softened is the changing role of investors.

For many years investors made up a large portion of condo buyers in Toronto.

The strategy was fairly simple. Buy a unit, rent it out, and benefit from rental income while the property increased in value.

That approach worked extremely well when interest rates were low.

Today the numbers look different.

Higher borrowing costs mean many investor owned condos are tighter financially than they used to be. When mortgage payments, maintenance fees, taxes, and other costs are added together, some units no longer cover their expenses through rent alone.

Because of that, some investors are choosing to sell while others are waiting before purchasing another property.

This has added more listings to the market and is one of the reasons buyers are seeing more options right now.

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Not All Condos Are Performing the Same

It is also important to remember that not all condos are behaving the same way.

In Toronto there can be a big difference between a well built unit in a desirable neighbourhood and a smaller investor focused unit in a large high rise building.

Older buildings often offer larger layouts, lower price per square foot, and more livable floor plans. Buyers often gravitate toward these units because they provide more space.

Newer buildings with many smaller units can feel the effects of market slowdowns more quickly. When several similar units become available at the same time, competition increases and pricing pressure follows.

This is why Toronto real estate always comes back to the same core idea.

Location, building quality, and layout matter.

Two condos just a few blocks apart can perform very differently depending on those factors.

The Connection Between Condos and the Rental Market

Another important piece of the puzzle is the relationship between the condo market and the rental market in Toronto.

A large portion of condo units are owned by investors and rented out to tenants. Because of that, changes in the rental market can influence decisions made by condo owners.

Over the past few years rents increased significantly across Toronto. That helped many investors offset rising mortgage costs.

More recently the rental market has started to stabilize. Rents remain relatively strong but they are no longer increasing at the same pace as before.

For some investors this creates a tighter financial picture. If rental income stops rising while borrowing costs remain high, the overall return becomes smaller.

That is one reason some investor owned condos are appearing on the resale market right now.

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Final Thoughts

The Toronto condo market is clearly in a different phase than it was a few years ago.

Inventory has increased, buyers have more leverage, and some sellers are adjusting to a market that is much more competitive than before.

At the same time, this does not mean the condo market has stopped functioning. Well priced units are still selling, especially when sellers understand current market conditions and price accordingly.

Toronto real estate has a funny way of doing this. When everyone thinks the market will only go up, it cools down. When people start assuming everything is falling apart, the market usually begins finding its balance again.

For sellers, success today comes down to realistic expectations and understanding the latest sales in your building and neighbourhood.

For buyers, there are opportunities in the current market, but the best results come from making offers that are informed and strategic rather than simply hoping for a massive discount.

As always in Toronto real estate, every building and every neighbourhood can behave a little differently.

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Ok! That's it for now. Thanks for reading and have a great day! 👋 - Tyson CR

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