Experts say that even if demand in other major Canadian cities warms up, the condo market in the Greater Toronto Area is unlikely to shake off its current downturn in the short term.

Source: THE CANADIAN PRESS/Cole Burston

Despite a drop in borrowing costs over the past year, some argue that affordability remains a key obstacle for potential buyers due to ongoing supply increases.

"Interest rates did come down... but not enough to make a drastic difference," said Brendon Cowans, a sales representative at Property.ca based in Toronto.

"There are still many challenges in the market, and purchasing power hasn't significantly increased, nor have incomes risen dramatically."

Real estate observers note that 2024 will be a record-breaking year for condo completions in the Greater Toronto Area. Cowans pointed out that the latest data shows a severe mismatch between current market inventory and buyer demand.

According to the Toronto Regional Real Estate Board, approximately 1,400 condos were sold across the Greater Toronto Area last month, a 23.5% decline compared to March 2024. Meanwhile, about 5,500 new condos hit the market, bringing the total active listings for this category close to 4,700 units.

The board stated that condo sales volume in the first three months of this year dropped by one-fifth compared to the same period last year.

Cowans noted that buyer preferences are shifting. He said that with an abundance of options available, homebuyers are increasingly seeking higher value when choosing condo living over continuing to save for a detached house.

"They will say, 'If I'm going to spend this much money, I want a bigger space, or a wraparound balcony, and I want this kind of view,'" he said.

"These demands existed before, but in the past, many people thought, 'If I can get something like this, it's already lucky.' Now these have become essential needs, such as 'I must have this.' What was once optional has now become necessary."

Canada Mortgage and Housing Corporation (CMHC) predicts that due to the softness in the resale and rental markets, leading to reduced demand for pre-construction condos, the number of new condos built in Ontario may slow down this year.

"Looking at the current situation, the Greater Toronto Area may be the worst condo market in Canada," said Robert Kavcic, senior economist at BMO. "Because there were too many investors involved in the past, and now that investment demand has disappeared, while supply continues to enter the market." He added that many areas in southern Ontario show similar trends.

He noted that the Greater Toronto Area experienced a strong pre-sale buying boom from the pandemic to early 2022, resulting in record-breaking projects coming online now.

"The situation across Canada is similar because population growth is strong nationwide," Kavcic said.

"But in Toronto, the fundamental issue is that many pre-sold condos are held by investors. They originally planned to sell them after completion to gain profits, but that path is no longer viable... The market environment has become much more difficult."

On the other hand, Montreal's situation is entirely different. According to monitoring data from the real estate board tracking the Quebec market, condo sales in Montreal increased by more than 15% year-over-year in March, with overall growth reaching nearly 17% in the first quarter.

Although the median unit price rose by 5% year-over-year, it remains relatively affordable, averaging CAD 420,000, compared to an average price of CAD 682,000 in the Greater Toronto Area.

"I think the reality is that market has never been in a bubble, it has always been relatively affordable," Kavcic said.

"Now that interest rates have dropped, the market response is almost typical of an interest rate cycle," he added.

He said that apartment markets in cities like Calgary are also performing well because many people are moving there from Ontario to enjoy higher affordability.

The Calgary Real Estate Board stated that although apartment sales declined by about one-third year-over-year last month, as of early 2025, 1,383 units in this category have been sold, "far above the long-term trend level for the first quarter."

The market conditions in the Greater Vancouver area fall somewhere in between.

The ratio of condo sales to active listings in the Greater Toronto Area is about 60% below the long-term average, while in Vancouver it is about half of that, indicating a more severe oversupply situation in the Greater Toronto Area.

"This suggests a higher degree of imbalance in the supply-demand dynamics of the condo market in the Greater Toronto Area," Rishi Sondhi, an economist at TD Bank, stated in his report last month, noting that the situation in Vancouver is less extreme.

Sondhi noted that the relatively stable condo construction in Vancouver may be due to more resilient home-buying demand in recent years.

However, Randy Ryalls, a broker in Vancouver, said developers are aware of the challenges posed by the current economic environment. "Any project that can be delayed is being put on hold," he said.

"So far this year, the number of new condo projects launched is clearly lower than expected," said Ryalls from Royal LePage Sterling Realty.

"Many developers are keeping their projects 'on the shelf' as much as possible," he said.

According to Greater Vancouver Realtors, condo sales in the Greater Vancouver area fell by about 10% compared to March 2024, with the benchmark price at CAD 767,300, a 0.9% decrease year-over-year.

Ryalls said buyers in Vancouver have more options, so they are willing to take their time shopping around. He attributes this cautious attitude to prices remaining high, prompting developers to offer incentives to attract buyers.

He also said that those who can afford property are likely relying on parental support to cover the down payment.

However, Ryalls questioned whether the gap between supply and demand will worsen further over the next few years, becoming as severe as it is in Toronto now.

"The bad news is that no new projects are currently under construction," he said.

"So two or three years from now, when we emerge from this downturn cycle, assuming it takes that long, there will be no new inventory on the market."

Source:

https://www.cp24.com/news/2025/04/13/toronto-condo-market-unlikely-to-see-jolt-as-conditions-vary-elsewhere-in-canada/

Original article: https://www.toutiao.com/article/7493028185051775524/

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