Condominium apartment market risks in Toronto and Vancouver

The current state of the condominium market

A significant decline in condominium sales in Toronto and Vancouver

Following years of growth, condominium apartment sales (resale, new and pre-construction units) in Toronto and Vancouver, the 2 largest condominium apartment markets, began to decline in mid-2022. By the end of the first quarter of 2025, they had fallen 75% in Toronto and 37% in Vancouver.  

Prior to 2022, low interest rates boosted sales by encouraging demand from homebuyers and investors. Subsequent higher rates decreased demand by reducing affordability for homebuyers and potential returns for investors.

Growing inventories

For many years before interest rates began to rise, condominium developers operated in a market with high demand and low borrowing costs. A record high 25,572 and 12,442 condominium apartments were completed in 2024 in Toronto and Vancouver, respectively. Higher interest rates and trade uncertainty have reduced demand, coinciding with record levels of inventories.

In Toronto, where the market weakness is the most pronounced, the months of inventory for pre-construction condominiums in Q1 of 2025 were more than 14 times higher than they were in 2022. It would take 58 months to sell the available stock at the current rate of sales (Figure 1).

Declining prices

Increasing inventories and reduced sales lowered prices. Between 2022 and 2025 (Q1), average resale condominium apartment prices declined by 13.4% in Toronto and 2.7% in Vancouver.

In the 2 years before 2022, these prices had risen by more than 19% in both CMAs. Investors, who had made purchasing decisions in a market characterized by double digit price growth, are now facing a market where prices are trending down (Figure 2).

Declining profitability for investors

Profitability for investors in the Toronto and Vancouver condominium markets is under pressure. High interest rates, which increase carrying costs, combined with stagnant price growth that limits equity building, have significantly reduced potential returns for investors.

Based on prices of recently occupied new condominiums and similar units in the resale market, condominium investors in Toronto potentially face up to 6% in capital losses on pre-construction purchases concluded in 2024. It is also more difficult for them to access financing when the value of their condominium units decreases between the pre-construction purchase and closing.

New investors renting out their units are also negatively affected. Carrying costs¹ in Toronto and Vancouver have grown 24% and 29%, respectively, while average rents have only increased by 15% and 12% since 2022.

Project cancellations have increased

In Toronto, 55% of pre-construction units went unsold in the first quarter of 2025, marginally below the record high of 56% at the end of 2024. This level of unsold units presents a significant challenge for developers seeking funding for their projects. Lenders typically require a pre-sale threshold of 70% (PDF) prior to releasing funds.

The challenge in funding condominium projects has led to some developers shifting to rental unit construction where purpose built rental unit construction programs offer potential financing. This is an outcome that is reflected in both our key stakeholder meetings and our 2024 Canadian Rental Housing Construction Survey.

In 2024, condominium apartment unit cancellations were 5- and 10-fold higher than they were in 2022 in Toronto and Vancouver, respectively². Despite some condominium projects converting to rental, developers have still been cancelling an increasing number of them.

Short-term vs long-term implications

Growing condominium inventories have led to a reduction in prices for buyers. They have also led to lower rents as more condominium owners compete for rental cashflows.

In the short term, these developments present relief for buyers and renters in the most expensive cities in the country. However, they do so at the cost of discouraging new construction and fueling underlying housing shortages in the future. The condominium projects cancelled today mean fewer housing completions in the future. The relief for buyers and renters is temporary with future housing shortages compounded.

Outlook

The condominium market is expected to remain weak as completions remain near record levels and demand remains subdued. Given the national and global economic outlook, there is little evidence to suggest that price and rent declines are likely to quickly reverse. As a result, project cancellations and reduced construction activity are also likely to continue in the near term, hindering efforts to increase housing supply over the long term.