As Toronto’s real estate market navigates through a period of adjustment in 2024, many experts are turning their attention to condo apartments as a potential driver of recovery. Once seen as a more volatile segment of the market, condos have experienced significant price adjustments and increased sales activity this year, positioning them as a critical factor in the city’s real estate rebound. With affordability concerns, changing buyer preferences, and favorable market conditions, there are several reasons why experts believe that condos may lead the charge in stabilizing the market and driving future growth.
A Key Segment: Condo Price Adjustments Create Opportunities
The condo apartment market has seen some of the most significant price declines across the Greater Toronto Area (GTA) in 2024, making it one of the more attractive segments for potential buyers. In September 2024, the average price of a condo in Toronto (416) dropped by 3.5% year-over-year, settling at $707,917. In the 905 region, condo prices fell by 4.1%, with the average price now at $633,606. These declines have made condos a more accessible option for a broader range of buyers, particularly first-time homebuyers and those seeking more affordable entry points into the market.
The softening of prices in the condo market is largely driven by an increase in new listings, which surged by 10.5% year-over-year in September 2024. As more inventory became available, competition among sellers grew, leading to price reductions and more favorable conditions for buyers. This price drop, combined with lower interest rates and relaxed mortgage lending guidelines, has created an ideal environment for condo sales, which saw a 10.7% year-over-year increase in September 2024.
Affordability: The Condo Market’s Key Strength
Affordability is one of the primary reasons experts are optimistic about the condo market’s role in leading the real estate recovery. While detached and semi-detached homes remain out of reach for many buyers, condos offer a more budget-friendly option, particularly for first-time buyers. The price difference between condos and other property types is substantial, making condos the go-to choice for individuals and families looking to enter the housing market without exceeding their financial capacity.
For example, in September 2024, the average price of a detached home in Toronto (416) was $1,423,056, while semi-detached homes averaged $1,090,749. By comparison, the $707,917 average price for a condo in Toronto makes it a more accessible option for many buyers. This price advantage, combined with the lower borrowing costs resulting from interest rate cuts, has boosted buyer confidence and helped sustain demand in the condo market.
Additionally, the Bank of Canada’s prime rate of 6.5% in September 2024 has made it easier for buyers to secure more affordable mortgage payments. As a result, condos have become an appealing option for buyers seeking both affordability and proximity to the amenities and conveniences of urban living.
Strong Rental Demand: A Key Driver of Condo Investment
Another factor supporting the strength of the condo market is the continued demand for rental properties. With Toronto’s employment growth attracting new workers to the city, rental demand has remained strong, particularly for centrally located condos that offer short commute times and access to urban amenities. In 2024, the average rent for a one-bedroom condo in Toronto increased by 5.6% year-over-year, reaching approximately $2,550 per month.
This sustained rental demand has encouraged investors to remain active in the condo market, as they seek to capitalize on rising rents and strong tenant demand. Investors are particularly drawn to the downtown core and surrounding neighborhoods, where proximity to employment centers and lifestyle amenities continues to drive tenant interest. For many investors, condos offer a relatively low-maintenance option compared to larger property types, while still generating attractive rental yields.
The combination of lower prices and high rental demand has also attracted new investors to the market, including those who had previously focused on other property types. As rental income becomes an increasingly important consideration for investors, condos are likely to play a key role in supporting both the rental and ownership segments of the market.
Market Adaptation: Condos as a Flexible Solution for Changing Buyer Preferences
The condo market’s ability to adapt to changing buyer preferences is another reason why experts are betting on it to lead the real estate recovery. As more buyers prioritize affordability, convenience, and access to public transportation, condos have emerged as a flexible solution that meets these evolving needs.
Many buyers are now placing greater emphasis on proximity to work, transit, and urban amenities, especially as hybrid and remote work models continue to influence housing decisions. Condos located in well-connected neighborhoods with easy access to public transportation, shops, restaurants, and entertainment options have become highly desirable. This trend is particularly strong among young professionals and downsizers, who are looking for low-maintenance living options without sacrificing convenience.
The adaptability of the condo market to meet these changing preferences, combined with its relative affordability, positions it well to attract a diverse range of buyers and investors. This flexibility makes condos one of the most resilient segments of the housing market, capable of weathering fluctuations in buyer demand and economic conditions.
Expert Predictions: Will Condos Drive the Recovery?
Experts are cautiously optimistic that the condo market will play a central role in the real estate recovery, particularly as buyer demand stabilizes and interest rates remain favorable. Jason Mercer, Chief Market Analyst at TRREB, stated that “the condo market is showing strong signs of resilience, with sales activity picking up and prices adjusting to meet buyer expectations. We expect this segment to continue performing well as affordability remains a top concern for many buyers“.
Mercer also noted that while price declines in the condo market may continue in the short term, they are likely to be followed by gradual stabilization as inventory levels normalize and buyer demand remains strong. With the Bank of Canada’s lower interest rates expected to stay in place for the foreseeable future, buyer affordability will remain a key factor supporting condo sales.
Looking ahead, experts predict that the condo market’s ability to attract both first-time buyers and investors will be crucial to sustaining the broader real estate recovery. As more buyers return to the market, particularly in the affordable condo segment, it is likely that this market will see continued growth and help offset some of the declines in other property types.
Conclusion: Condos Poised to Lead the Real Estate Recovery
As Toronto’s real estate market undergoes a period of adjustment, the condo market stands out as a key segment with the potential to drive recovery. With prices adjusting to meet buyer affordability, strong rental demand supporting investor activity, and condos offering a flexible solution to changing buyer preferences, this segment is well-positioned to perform strongly in the coming months.
While the real estate market as a whole may face ongoing challenges, experts believe that the condo market’s unique strengths—affordability, adaptability, and resilience—will make it a cornerstone of the city’s eventual recovery. For buyers and investors looking to capitalize on these favorable market conditions, now may be the time to explore opportunities in Toronto’s dynamic condo market.
