Toronto’s condo market remains in limbo despite falling prices
Outsiders looking in at Toronto’s condo market might wonder why lower prices at last haven’t spurred a flurry of activity in a sector where soaring values shut first-time homebuyers out for years.
In February, average condo prices across the Greater Toronto Area (GTA) fell by a further 8.8% year over year, according to the Toronto Regional Real Estate Board (TRREB), marking yet another decline for the flailing condo market.
But while recent months have even seen the reappearance of Toronto condos priced in the $300,000s – a rare sight in the boom years of the past decade – there still seems no end to that deep correction, with most experts and market watchers expecting prices and sales to tumble further still.
And those falling prices, as well as the much-publicized struggles facing buyers who purchased preconstruction units in recent years only to see appraisals come in much lower than the agreed sale amount, are keeping a lid on activity for now.
Affordability and appraisal issues persist into 2026
Micky Khaneka, a Toronto-based mortgage broker, told Canadian Mortgage Professional affordability remained a “huge concern” for buyers even in a much cooler market.
“People are starting to pick up resales or newbuilds that are being built for closing at a much, much lower price than what they were initially sold for,” he said. “But the clients who bought at those prices are still in a little bit of limbo because unless there are blanket [appraisals] from the banks, it’s very challenging for them to get appraisals on them.
“In the last few years coming off higher rates, the disposable income is just not there. A lot of investors are facing a liquidity crisis which is why they’re in a bind where there’s not a lot of options available unless they have equity or disposable income to cover the shortfalls – or the banks are giving blankets on them.”
That means the buyer cohort that fuelled an enormous amount of activity in the condo market in the days of record-low interest rates during the COVID-19 pandemic – real estate investors – is now almost completely absent from the sector.
It’s creating some opportunities for buyers who were priced out of the market before, according to Khaneka. “One person’s misery creates opportunity on the other side. So there are people who aren’t able to get into the townhouses or bigger homes that are able to pick up a condo at a much cheaper price than they have been,” he said.
Still, that trend hasn’t been enough to arrest the market’s slide. One of the main reasons things are still frosty in the condo market, according to the Bank of Canada: there may be an oversupply of units, but many of those are simply too small for end users to view as a viable place to live.
A big problem for Toronto: Nobody wants to live in a micro condo
A recent report by the central bank highlighted that the net number of new arrivals to Canada plunged between 2023 and 2025, drying up rental demand and making smaller units a much less attractive proposition for investors.
The result is a glut of tiny, unlivable units in the city, with the BoC noting a “sizable mismatch between supply and demand” in Toronto. Put simply: catering mainly to investors who didn’t care about the livability of the condos they rented out was a disastrous policy that’s now come back to bite the market.
“The market has too many small units and not enough large units that buyers want,” the Bank said. “Specifically, we estimate that micro units – those with three or fewer rooms – represent 60% of new condo units coming onto the market.
“However, only 30% of new households have the characteristics typically associated with buyers of micro units. This mismatch is resulting in lower prices and rents for these small units.”
Source CMP
By Fergal McAlinden
