Canada’s largest condominium market has “hit rock bottom” as sales for new projects in Toronto fell 52 per cent year-on-year to a 35-year low in the first quarter, according to a report from Urbanation Inc., and no projects were launched in the period for the first time in three decades.
“What stood out here was that for the first time in decades there were no new project starts; the market essentially came to a standstill,” said Shaun Hildebrand, president of Urbanation. “It’s probably safe to say we’ve hit rock bottom.”
The city’s condo market suffered a five-year slump, with completions increasing while sales slumped due to higher interest rates, a sluggish economy and economic uncertainty.
The report from Urbanation, which covers the Greater Toronto and Hamilton markets, said 4,295 condos were completed in the first quarter – a record high – and not sold. That was more than double per year and almost five times more than two years ago.
“There were 92 months of completed new condos on the market,” the report said, adding that pre-sold units where the buyer did not complete the deal were not included.
It also said 8,629 unsold new condos were under construction and expected to be completed in the next few years.
Hildebrand said some developers are taking steps to drive down prices, to the point where they are losing money on moving inventory.
The average cost per square foot of a new condo was $1,189 in the first quarter, compared to an average resale price of $859, a difference of 38 percent.
It is estimated that the new HST rebate Ontario announced in late March will reduce condo prices by an average of about $100,000, narrowing that price difference to about 20 per cent. Historically, the gap would have been 10 to 15 percent, but under better market conditions, Hildebrand said.
He said new condo prices must match those for resale for the new market to pick up, which would mean prices would fall below construction costs.
“(Condo developers) are losing money by cutting prices so low,” he said. “Some are more willing than others to offload these units at a significant discount compared to what they were previously sold for.”
However, Hildebrand expects some developers will rent out their condos because the new HST rebate rules allow them to do so.
Developers also took steps to demolish condominium projects and convert them into rental apartments. Since the beginning of 2024, 11,424 condominiums have been canceled. Just over 4,000 have been converted into purpose-built rental apartments, Urbanation said.
Another thing that will help the condo market is declining inventory.
Urbanation appreciated that
There will be 21,850 units completed in 2026, up from 29,616 units in 2025 and 29,924 units in 2024. This number is expected to further decline over the decade to approximately 2,000 completions in 2029.
“This is the largest drop in supply we will ever see,” Hildebrand said. “This should help stabilize the market.”
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