Toronto’s housing market has been competitive, to say the least. In 2022, the average asking price of a new condo in the Greater Toronto and Hamilton Area (GTHA) peaked at nearly $850,000! Experts believe that, after a couple of years of pandemic uncertainty, pent-up demand overflowed, sending the real estate market into overdrive.
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However, the market is cyclical, and with extreme highs come heavy lows. Rising interest rates, combined with unreasonably high costs for units that got smaller and smaller, created a cooling effect. This prompted developers to cancel or cut back on new builds, and as of now, it is a buyer’s market.
Given current market conditions in Toronto, it is in fact a good time to buy a condo. But, making such a large purchase always comes with risks that need to be evaluated.
The price is right
It’s still a stretch to say that Toronto condominiums are affordable, but prices are certainly more reasonable now than they were 3 years ago. An April report released by the Toronto Regional Real Estate Board (TRREB) states that the average price for a condo is $710,724 within the Toronto area, and roughly $618,196 within the greater Toronto area.
Economists from TD predict that by the end of 2025, condo prices in Toronto will have dropped 15% to 20% from the third quarter of 2023.
TD estimates that nearly 75% of the condo market is investor-driven. That may explain, at least in part, why supply remains high even though projects have slowed. Investors buy with the intention of profiting from the property, but with the higher interest rates and lack of growth in the rental market, they may have a hard time breaking even right now.
More inventory on the market
When bidding wars were common, buyers were competing for small units that were cheaply made and overpriced. But now that the market has cooled, people have had time to question why they would spend so much on something that provides them with low value. They are saying no to tiny bachelor units or 1-bedrooms that won’t hold their value. Plus, increased choice provides buyers with more negotiating power on price.
Q1 2025 condominium sales amounted to 3,794 in the GTA, down 21.7% compared to 4,843 sales in Q1 of 2024, reports TREBB. There were 14,544 new listings in Q1 of this year – up 25.2% year-over-year from 11,614.
33% of sales were for 2-bedroom units, while 7% were for 3-bedroom units. Only 1% of Toronto condo sales were for bachelor units in Q1 of 2025, and 18% were for 1-bedroom units.
Political factors
U.S. politics and tariff threats have created an additional layer of instability for people who are already struggling with the cost of living. They are holding off on making the biggest purchase of their lives and instead assessing how their finances might look in the next few years.
Finally, federal policymakers have capped immigration, meaning there will be less demand for rental or “affordable” units. As a result, rents in many cities are coming down after years of steep increases.
In summary, buyers who are currently looking for a Toronto condominium:
- Have more negotiating power due to lack of demand
- Can capitalize on good locations that would have been too expensive a few years ago
- May see larger spaces in new buildings since developers are having difficulties selling tiny living spaces
- Are in a good position to make an informed purchase
Before you buy
Buyers still need to do their research and crunch the numbers before they purchase a condominium. As mentioned earlier, prices are better, but that doesn’t mean they are affordable for everyone.
Furthermore, sellers might be trying to use the buyer-friendly market conditions to offload units that comes with several long-term or hidden costs.
Research building financials, find out if there are upcoming assessments, and ensure you can handle modest volatility.
Pay attention to the details
If you are buying a pre-construction condo, make sure you research the builder using the Home Construction Regulatory Authority’s Builder registry (HCRA). The HCRA licenses builders and provides information on any disciplinary history.
The builder should also provide you with all of the documents listed below. Review them carefully with a lawyer:
- Pre-construction agreement of purchase and sale
- Information for buyers of pre-construction condominium homes
- The condominium home addendum
- Tarion warranty information sheet
- Disclosure statement
- Ontario’s residential condominium buyers’ guide
Make sure you understand things like what happens if your occupancy date is delayed or the project is cancelled completely.
If you’re interested in a resale unit, tour the property, understand what is included in the purchase price, and review the condo corporation’s governing documents before you buy.
If possible, schedule a tour after work hours when people are home to assess if there is enough soundproofing. And ensure you are comfortable with the building’s financial information. Watch out for recurring special assessments or suspiciously low condo fees. Keep in mind that older buildings will generally require more maintenance work than new builds.
Ask about less traditional amenities such as parcel lockers or resident portals.
Review meeting minutes so you can get a feel for what the community is like and what issues it is currently dealing with. Find out what the owner-to-renter ratio is, and if short-term rentals are allowed.
Here are some things you should do before buying a resale unit:
- Obtain a status certificate
- Find out the status of the reserve fund and age of the building
- Ask about monthly condo fees and how much they have increased over the past decade
- Read and reread the governing documents
- Find out what amenities are available to you
- Ask about current or past litigation
- Find out if the unit is still covered by any remaining new home warranties or protections under the Ontario New Home Warranties Plan Act
Don’t borrow more than you need
From early 2022 to the first half of 2023, the prime rate steadily increased in response to the Bank of Canada’s efforts to control high inflation. During this time, the Bank of Canada implemented a series of 10 rate hikes, pushing the overnight lending rate to 5% by mid-2023. This resulted in the prime rate rising to 7.2%.
Unsurprisingly, the trend reversed in the middle of 2024. By March 2025, the Bank had implemented 7 consecutive rate cuts, reducing its benchmark rate from 5% to 2.75%, offering much-needed relief to borrowers.
It is unlikely the overnight rate will dip below 1% again, but no one can say for certain what the rate will be 10 years from now. Therefore, it’s crucial to calculate what you can afford carefully.
Get pre-approved for a mortgage so you know exactly what your budget is before you start making offers. And don’t borrow more than you need.
Even with the stabilization of overnight rates, Ontario’s mortgage delinquency rate soared to record highs in the first quarter of 2025, marking the most severe year-over-year spike in the country.
The province’s 90+ day mortgage delinquency rate surged by 71.5% from the same period last year, reaching 0.24%, according to Equifax Canada’s latest report.
Consider personal circumstances
Buying a condo is still a big risk. If you are a contract worker, or work in a volatile industry, then you may be better off renting.
You should also consider what you want your future to look like, and whether the space you want will still be suitable in 10 years. If you hope to get married and/or have children in the near future, a 1-bedroom condo may not be the best choice for you.
What’s next?
Will the condo real estate market continue to plummet? Should interested buyers hold off a little longer to see if they can get an even better deal?
Unfortunately, there are no definitive answers to these questions. However, experts speculate that the market has not hit rock bottom just yet. Sales could remain low into the beginning of 2026, but that all depends on whether economic confidence improves in the months ahead, and the demand for condominium units improves.
Eventually, the market will favour sellers again, but for now, serious buyers should do their research and take advantage of the condo surplus.
