Toronto’s Condo Apartment Market: Is April 2025 a good time to buy?
The Toronto condominium market in spring 2025 stands on the brink of a major slump.
While the textbook definition of a balanced market, where buyers and sellers hold roughly equal negotiating power, may still apply on paper, the underlying dynamics are shifting decisively in favour of buyers, casting a long shadow over the prospects for would-be sellers.
Canadian confidence that property values will rise near pandemic lows.
Inventory Surges, Demand Falters
The most salient feature of the current landscape is a perceived glut of unsold units. It feels like a glut because the last decade has been characterized by an extreme shortage of listings. Now that conditions are balanced, it’s clear that peak Toronto condo apartment values were not sustainable in a market with adequate supply.
Months of inventory for Toronto condos have nearly doubled year-over-year, rising from 3.5 to 6.8 months, the highest level looking back to 2016. Yet, it is not a buyer’s market. Technically a buyer’s market has 9 or more months of inventory.
Purchase demand has plummeted by 29 percent. The result is a market where sellers, once able to dictate terms, now find themselves having to negotiate on an even footing with buyers.
Real estate brokerages and developers are pleading for government help to cope with what they feel is a fundamental imbalance. Their arguments have several weaknesses.
The market is balanced and shouldn’t require government intervention.
Montreal and Calgary markets are bustling and don’t face the same challenges as Toronto, so a federal government intervention to help Toronto might cause bubbles in Calgary and Montreal.
The government has been promoting the construction of supply and restricting foreign buyers to balance the market.
Developers should have stress-tested their budgets for a balanced market; it’s not the responsibility of taxpayers to bail them out when they take on too much risk.
During the pandemic, prices got out of hand and shot too far past local economic fundamentals, and perhaps the current market reflects a backward swing on the pendulum.
While the market was poised to have a better year in 2025 than in 2024, the US trade war has stifled its growth. Lower rates and taxpayer handouts will not solve the trade war and cajole buyers back into the market.
Prices Under Pressure
Against this backdrop, prices are struggling to find a floor. The benchmark condo apartment price has eked out a 1 percent gain over the past three months, but the median price has slipped by 5 percent, underscoring the downward pressure exerted by excess supply.
Benchmark condo prices are down 22 percent from the peak and down 7 percent over the past year.
TD Bank has sounded the alarm on a potential bear market, predicting a 6 to 7 percent price decline in 2025.
The Investor Squeeze
The pain is particularly acute for investors, who own nearly half of Toronto’s condo stock. Many are now contending with higher-than-budgeted mortgage rates and falling rental yields, prompting a wave of listings as they seek to sell homes at a loss.
A Precarious Outlook
Supply is likely to increase further in the near term. A record 31,000 new condo units are slated for completion in 2025, and 90,000 homes in construction pipeline.
Is it a good time to buy?
For Canadians pondering a purchase, the numbers are clear. Today is a much better time to buy than at any time in the past two years, but conditions could improve further, and prices could continue to fall.
Marketing timing is very difficult. However, lucky for buyers, the property market moves more slowly than the stock market. Buyers are trying to avoid buying today only to learn that they could have saved thousands by waiting a few months.
With a growing selection of homes for sale, prices are trending downward, and buyers are firmly in the driver’s seat. While a well-located, competitively priced unit may still attract interest, most sellers will find themselves forced to offer concessions or accept lower prices to secure a deal. This is a huge adjustment from previous markets where there were bidding wars and people made unconditional offers.
Unless compelled by necessity, like an addition to the family, patience may prove a virtue.
