Toronto apartment sales plummeted by 75%, and home prices fell by 13%!
The latest report released by the Canada Mortgage and Housing Corporation (CMHC) indicates that from 2022 to the first quarter of 2025, Toronto apartment sales have dropped dramatically by 75%, and investors' profit margins are almost "zero".
CMHC pointed out that high interest rates not only compress the purchasing power of buyers but also severely reduce investor returns. "The increase in holding costs, stagnant or even falling home prices, greater difficulty in financing, and pre-purchase prices higher than the market value at delivery are leaving investors facing systemic risks," the report stated.
For example, using Toronto as an example, CMHC estimates that many investors have already incurred a maximum paper loss of 6% during the pre-purchase phase when comparing recent delivered apartment units with the resale market.
Worse still, CMHC predicts that this situation will not improve in the short term. By the first quarter of 2025, the inventory of pre-built apartments in Toronto has increased by 14% compared to 2022. Based on current sales speeds, it would take nearly six years to clear the inventory.
Meanwhile, the number of new apartments under construction in Toronto is expected to reach a record high in 2024. In the context of inventory not yet being absorbed, this will undoubtedly further impact prices.
Investors are also caught in a dilemma in the rental market. According to CMHC data, since 2022, the holding cost for apartments in Toronto has risen by 24% to 29%, while rents have only increased by 12% to 15%. This means that rental income is far from offsetting the impact of rising costs.
CMHC warned that the current wave of project suspensions poses a threat to future housing supply. "The reduction in construction activities is expected to continue in the short term, which will directly hinder Canada's long-term efforts to address the insufficient housing supply," the report stated.
According to the agency's estimate, by 2030, Canada needs to build an additional 3.5 million homes to fill the current gap in housing affordability. Apartments, which were once seen as a key product for rapidly increasing supply, now face the risk of collapse.
CMHC's report once again sounds the alarm: Canada's real estate market is entering a structural adjustment period. With high-interest environments persisting, holding costs remaining high, oversupply, and weak demand, investors can no longer "lie back and earn" as they did in the past. If policymakers fail to quickly implement precise, structural support measures, what Canada faces is not just a market correction but possibly a future supply crash and a deeper housing crisis.
Source: https://www.toutiao.com/article/1834867735331840/
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