Canada’s condo market stalls as sales plummet and supply surges in Toronto and Vancouver. Experts warn recovery may take years amid investor pullback.
Canada’s once red-hot condo market is entering a period of prolonged stagnation. In Toronto and Vancouver — the country’s largest real estate hubs — condo sales are dropping sharply while inventory levels surge, creating a buyer’s market with few active buyers.
“We’re pretty much at a recession in the condo market,” says Robert Kavcic, senior economist at the Bank of Montreal, noting that the downturn is most pronounced in Toronto and southern Ontario, with Vancouver following closely behind.
According to the Toronto Regional Real Estate Board, condo sales in April dropped 30% year-over-year, while average prices fell 6.8% to $678,048, down 16.5% from 2022’s peak. In Vancouver, sales fell 20%, and the benchmark price dropped to $762,800, a 9% slide over three years.
Soaring Supply Strains the Market
A flood of unsold units is weighing down the market. Realtor Sean Miller describes the situation in Toronto as unprecedented: “We’ve got seven months of inventory… we haven’t seen that much in 20 years.”
Sellers, once able to command top dollar, are being forced to lower expectations. Buyers, meanwhile, have their pick of the market and are in no rush to close deals.
This excess supply is being compounded by a record wave of condo completions. In the Greater Toronto Hamilton Area, over 29,800 units were completed in 2023, with more expected in 2025. Vancouver is bracing for a 60% jump in unsold newly built condos by year-end, according to Rennie & Associates.
Demand Disappears: Affordability Still Out of Reach
Despite falling prices, many prospective buyers — especially first-time homeowners — remain on the sidelines. According to Realtor Steve Saretsky, “Affordability has improved modestly, but it’s still very unaffordable to the vast majority.”
Units remain too small or impractical for many end-users. In Toronto, the average condo size is just 650 square feet — often dismissed as “shoeboxes in the sky.” Developers, incentivized by investor demand, focused on building compact units rather than liveable family homes.
Investors Pull Back Amid High Rates and Lower Rents
The investor segment, which once fuelled pre-construction sales, is also retreating. With interest rates at 4% or higher, rising carrying costs and declining rental income, the math no longer works.
Rentals.ca reports that in April, average asking rents for a one-bedroom condo fell 6% in Toronto and over 4% in Vancouver. Some pre-sale buyers are now underwater — condos they bought for $2,500 per square foot are now appraising at just $1,900.
“A cohort of investors will be scarred for a long time,” Saretsky said. “That’s probably healthy. You get a bit of rebalancing and more end-users into the market.”
A Cloud of Uncertainty Hangs Over the Market
While well-priced, livable units are still finding buyers, overall confidence remains low. External factors — such as rising unemployment, global trade tensions, and macroeconomic uncertainty — are holding buyers back.
“A small interest rate cut in June might help,” said Miller, “but we’re in a period of uncertainty. We’ve got to ride it out.”
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