Toronto’s condo market is facing a unique challenge as apartment prices continue to decline despite strong rental demand. While other segments of the housing market have remained stable or seen moderate price increases, condo values have softened, raising concerns among investors and sellers.
The shift is driven by rising inventory, changing buyer preferences, and affordability concerns that continue to impact the market.
This article examines why Toronto’s condo prices are declining, how the rental market is influencing the sector, and what buyers, sellers, and investors should expect moving forward.
The Numbers: Condo Prices vs. Rental Demand
The average condo price in Toronto fell to $741,000 in December 2024, marking a 1.5% year-over-year decline. This downturn comes despite the fact that condos still represent a major portion of home sales, with 972 units sold in the Greater Toronto Area (GTA) in the last month of 2024. While condo sales have remained steady, increasing inventory has created downward pressure on prices.
At the same time, Toronto’s rental market is experiencing a surge in demand. The average rent for a one-bedroom condo has climbed to $2,750, up 6.4% year-over-year, while two-bedroom rents now average $3,400, reflecting a 5.8% increase. The vacancy rate remains critically low at 1.7%, making it clear that demand for rental housing remains high.
Why Are Condo Prices Falling?
The drop in condo prices is largely driven by increased supply. Over the past year, developers have completed several large-scale condo projects, particularly in high-density areas like Downtown Toronto, North York, and Etobicoke. This influx of new units has given buyers more choices, reducing competition and putting pressure on sellers to lower prices.
Shifting buyer preferences have also played a role. During the pandemic, many buyers sought larger homes with more space, and while condos have regained some appeal, demand remains stronger for semi-detached and detached homes, especially in suburban markets. With working from home still common in many industries, buyers who previously would have chosen a condo in the city are now opting for townhomes or houses in Mississauga, Vaughan, and Markham, where they can find more space at a comparable price.
Affordability concerns are another major factor. While the Bank of Canada has started to ease interest rates, mortgage costs remain high compared to pre-pandemic levels. Many first-time buyers, the primary market for condos, are struggling to qualify for loans, leading to more cautious purchasing behavior. Additionally, some buyers are waiting for further rate cuts before committing to a condo purchase, further slowing demand.
Toronto Condo Bonus: Imagine waking up to breathtaking skyline views in a luxurious, fully furnished downtown Toronto condo, complete with two bedrooms and a generous balcony perfect for soaking up the sun or entertaining friends. This stunning residence, valued at $1,624,990, is nestled in the vibrant Harbourfront area, offering convenient access to upscale amenities, outdoor spaces, and the beautiful waterfront. With its prime location, chic party room, private dining area, and state-of-the-art gym, this condo embodies the perfect blend of urban sophistication and serene waterfront living. Residents can enjoy the ultimate in relaxation and recreation, from lounging on the expansive outdoor landscaped terrace to staying active in the fully equipped gym, spin studio, and tranquil yoga space. Whether you’re a busy professional or a lover of luxury, this incredible condo offers the ultimate Toronto lifestyle.
As Toronto’s condo market continues to evolve, real estate brokerages like RE/MAX are likely to play a crucial role in helping buyers and sellers navigate the shifting landscape. With condo prices softening and inventory on the rise, RE/MAX agents may need to employ creative marketing strategies to attract buyers and secure deals. Meanwhile, investors working with RE/MAX may be advised to focus on rental income rather than short-term appreciation, as the rental market remains strong despite the decline in condo prices. By staying ahead of market trends, RE/MAX can continue to provide valuable guidance to its clients in Toronto’s competitive real estate market.
How Investors Are Responding
Despite the decline in condo prices, investors continue to see value in the Toronto condo market, largely due to the strong rental demand. With rents rising and vacancy rates remaining low, many investors are holding onto their units rather than selling at lower prices. Some are choosing to convert their properties into long-term rentals rather than attempting to sell in a market where buyers have more negotiating power.
Other investors are taking advantage of the price decline by purchasing units at discounted rates, betting that condo prices will rebound in the coming years. Those looking for strong rental returns are focusing on transit-accessible neighborhoods like Yonge and Eglinton, Liberty Village, and the Distillery District, where demand for rentals remains high.
A Buyer’s Perspective: Finding Deals in the Condo Market
Lisa, a first-time homebuyer in Toronto, had been monitoring the condo market for over a year while renting in the downtown core. After seeing condo prices decline, she purchased a one-bedroom unit in North York for $735,000, securing a mortgage at a 4.6% interest rate. Her monthly payments are slightly higher than her previous rent, but she sees the investment as a long-term opportunity to build equity.
Lisa’s experience reflects a growing trend among buyers who are taking advantage of the softening condo market to secure deals, particularly in buildings with high vacancy rates or older units that need renovations.
What This Means for Sellers
For condo sellers, the declining market presents new challenges. Unlike the detached home market, where demand remains strong, condos now require more competitive pricing and strategic marketing to attract buyers. Sellers who need to move quickly may have to accept lower offers, particularly for units in buildings with high turnover.
Staging and upgrades have become more important than ever, as buyers are now more selective. Renovating kitchens and bathrooms, improving lighting, or offering flexible closing dates can make a condo more appealing. Pricing the property realistically is also essential; listings that remain on the market too long may struggle to attract interest.
What to Expect for Toronto’s Condo Market in 2025
The trajectory of Toronto’s condo market will largely depend on interest rates, inventory levels, and buyer sentiment. If the Bank of Canada continues to lower rates, buyer confidence could improve, leading to a rebound in condo prices. However, if supply continues to outpace demand, prices may remain flat or decline further in certain areas.
The rental market is expected to stay strong, which could encourage more investors to hold onto their properties rather than sell. This trend may help stabilize prices over time, as fewer units will be available for purchase. However, first-time buyers will continue to weigh the cost of ownership against renting, particularly in the face of ongoing affordability challenges.
A Market in Transition
Toronto’s condo market is at a crossroads, with prices softening even as rental demand surges. While the increase in inventory has given buyers more negotiating power, affordability remains a challenge for many. Investors are adapting by focusing on rental income rather than short-term appreciation, while sellers are adjusting their strategies to remain competitive.
As the city moves further into 2025, the condo market will continue to evolve. Buyers who can secure financing may find excellent opportunities, while those waiting for further price drops will need to weigh the risks of delaying their purchase. For investors and sellers, staying ahead of market trends will be key to navigating the shifting landscape of Toronto’s real estate sector.
