After a wave of rapid expansion, Canada’s condominium market is facing a dramatic reversal, as a glut of unsold inventory and a sharp retreat by investors have triggered a sector-wide slowdown.
A report from the Canada Mortgage and Housing Corporation in June found that condominium apartment sales in Toronto have dropped 75 per cent from 2022 to the first quarter of 2025. In Vancouver, condo sales have dropped 37 per cent for the same period, according to the report.
Condos built to invest in – not to live in
Meanwhile, a report from data firm CoStar Group found that Canada’s inventory of condos has risen 400 per cent over the last three years. Carl Gomez, CoStar’s chief economist and author of the report, told Real Estate Magazine that much of the inventory is smaller units that were primarily built for investors.
“Those condo units aren’t designed for people to live in,” Gomez said. “They’re basically more of a hedge, get an investor in.”
However, investors have now fled both the Toronto and Vancouver markets due to higher interest rates than during the pandemic, which have now made units unaffordable. Gomez said either prices will have to come down or units will have to be made bigger in order to start moving the inventory, a pivot that won’t be an easy pill for developers to swallow as both will eat into their profits.
It may be necessary, though, given they are currently bleeding capital, according to Gomez. CMHC’s report found that investors face as much as a six per cent capital loss on pre-construction purchases concluded in 2024 in Toronto, and project cancellations have gone up five times in the city since 2022. In Vancouver, cancellations have gone up 10 times in the same time frame, according to the report.
Risk was overlooked, says Toronto Realtor
Toronto real estate agent Christopher Bibby told REM that the condo market really began to unravel in 2022, after interest rates went up.
“The writing’s on the wall now,” he said. “Prices have started to come down.”
CMHC’s report says prices have gone down 13.4 per cent in Toronto between 2022 and the first quarter of 2025, and 2.7 per cent in Vancouver. Bibby said the price erosion over the past two months has been the fastest and steepest he’s ever seen in the more than 20 years he’s been in the business, but it has been a stimulus for transactions to start finalizing after being stuck.
Bibby said that when interest rates were low, pre-construction prices were more than the resale value because there was a belief that prices would keep going up, which turned out not to be true. Add to that inflation, which has raised the cost of materials, as well as higher development fees and the inability to raise rents to meet higher costs, and condos are not as profitable a business as they once were.
Bibby felt back in 2021 that the market had hit its peak, but he said sellers didn’t want to believe that prices would eventually come down. At the time he felt it was a risky business venture, and he is not surprised about the current situation.
“People weren’t assessing what they were buying,” he said. “There was this belief the market would only go one way.”
A ‘classic bubble’
In Vancouver, Realtor Steve Saretsky told REM that what led to this situation was 20 years of a bull market.
“It’s kind of like a classic bubble,” he said. “It’s just all unraveling on itself.”
When there was high demand and interest rates were low, there was a speculation frenzy, he said. Now the market is experiencing the hangover after the party, with a record number of units seeing completion at exactly the wrong time.
CMHC’s report says that a record high of 25,572 condos were completed in Toronto in 2024, while 12,442 were done in Vancouver. Toronto now has 14 times more months of inventory than it did in 2022, according to the report, and it would take 58 months to sell that current stock at the current rate of sale. That means that developers will now put a hold on new build starts, which will sow the seeds for the next crisis down the line in three to four years, when supply won’t meet demand, according to Saretsky.
He sees the current condo bust as a natural market correction, though, after about 20 years of no price correction.
“When you have 20 years of rising home prices basically every year, it creates complacency,” Saretsky said. “People think they can’t lose money in real estate. It creates malinvestment.”
Eric Stober has over 10 years experience as a journalist and writer at publications big and small, including Global News, Toronto Life, Post City Magazine, Greencamp.com, the Toronto Star and The Grid.
In Ontario the biggest problem we have with condos is no buyers want them as a rental property because of rent controls. To many investors have lost money because tenants stop paying and it takes to long to get bad tenants out. I have been 57 years as a broker and have watched the rental market change in 1982-3 when rent controls came into effect. Cheers
Bill Gray Broker 416-826-2288
right on !
No one wants condos because people want a yard, don’t want smelly neighbours that close, and don’t want to pay an extra $700+ a month in ridiculous condo fees that provide zero amenities.
Right ridiculous
One of the few solutions that I can see in this market is to start knocking down walls, or create access to adjoining units. NO ONE wants to live in a ONE BEDROOM home. I know that it made sense at that time to create affordable housing by making them smaller, but the realities of life kick in, and you’d better adjust or die in this new market situation. People want square footage with at least a balcony. Anything less than that is going to run into some insurmountable issues in this age of short attention spans and overblown expectations on initial home purchases. There’s no such thing as creating sweat equity. They want it right now, and it had better have orange peel ceilings
Nice point Elaina – Condo prices, condo fees & taxes had out-stripped consumer incomes – now its becoming a nice time for the buyer side of the coin. Basic Smithsonian supply and demand As to rent controls, they are part of the industry – need to think about that in ROI planning. –
Can I ask why the article wasn’t titled ‘Why Toronto & Vancouver’s condo markets are unraveling’ instead of ‘Why Canada’s condo market is unraveling’?
Canada has many condo markets in many major cities, and while we may come to experience what you write about in your article, this is not the case right now in Halifax, NS, Canada. So, why sum up all of Canada, citing only 2 markets?
…..because for many, the real estate world revolves around the GTA. I am actually surprised that Vancouver was mentioned. I don’t just find this annoying, I find it very disrespectful. To be fair, this doesn’t just apply to this article or REM. I see it daily in other publications, FB groups etc.
I’m not sure the Moose Jaw condo market has much relevance or significance to the condo industry.
It’s called the financialization of housing and everyone is doing it because BC doesn’t have natural resources (after our boom in Forestry dried up). But all natural resources come to an end, especially if they are not fostered and revitalized. Real Estate is one of the biggest industries in Vancouver (and likely around the world) because there’s nothing left that can provide the same kind of return. But now that no one can afford to live in those towers (that governments and social advocates claimed would come down in price/rent if only enough of them were built) people are beginning to question that theory. It’s true that if governments repeat something often enough people will start to believe it. They got so used to it in Vancouver that funds from new housing starts went straight into government coffers. Some of those same politicians who put out this nonsense, like the new federal Housing Minister Gregor Robertson, are still hanging on to the notion that we need to build a huge amount of more new housing to fix the “housing crisis,” knowing full well that it was never about a housing crisis; it was about and remains an unaffordable housing crisis in Vancouver. Unfortunately, the City continues to make matters worse by continuing to approve record numbers of tower developments.
The government can only help the housing market (by building new homes) if those homes are affordable.