Toronto Condo Market Analysis

The Toronto Condo Market Is a Mess. Here’s What’s Actually Going On.

I’m not going to sugarcoat this. If you own a junior one-bedroom condo downtown, the numbers are brutal. If you bought pre-construction in 2021 or 2022, the numbers are worse. And if you’re waiting for Bank of Canada rate cuts to save you — my read on this is that you’re going to be waiting a long time.

But “crash” headlines don’t tell the real story. The condo market isn’t one market. It’s several, and they’re behaving very differently depending on unit size, building quality, and whether you’re an investor or someone who actually lives there.

I had Tom Storey on the Supply and Demand podcast to break it down. Tom does roughly 50 condo transactions a year in downtown Toronto and runs a sizable YouTube channel covering the data. He’s not a commentator guessing from the sidelines — he’s having real pricing conversations with real sellers and real buyers every single day.

Here’s what he’s actually seeing on the ground.

Pre-construction: where the real pain is

The worst stories right now are all on the pre-construction side. Buyers who purchased at peak pricing are now facing closings on properties worth significantly less than what they agreed to pay. And when I say significantly, I mean deposit-wiping amounts.

“I’m getting a lot of calls saying, can you get me out of this? I can get you out of it if you’re willing to take a 20% loss, lose your deposit, and then some. But if you can close, find a way to close.”
— Tom Storey

Tom’s been telling people not to buy pre-construction since 2019 — well before rates spiked. The math just stopped making sense at those prices. For anyone holding a pre-construction contract right now, the advice is blunt: if you can close, close. The alternative — walking away and losing everything — is worse.

Resale: a tale of two markets

On the resale side, what you own determines everything. Tom broke it down with current inventory data, and the contrast is stark:

Junior one-bedrooms and bachelors: Roughly 10.8 months of inventory. Only about 10% of listings sell each month. This segment is in serious trouble, and Tom expects downward pressure to continue for at least two more years.

One-bedrooms (500-600 sq ft, no parking): About 9.5 months. Very similar dynamics — oversupplied and slow.

Two-bedrooms and two-plus-dens: Inventory in the high sixes to low sevens. Around 13-15% selling each month. Still a buyer’s market, but this is where actual transactions are happening.

The problem with the smaller units is structural, not cyclical. It’s not just a pricing issue — it’s a product issue.

“They built a product that never had an end user. They had an end renter, but not an end user owner that wanted to live in it. And that’s where the issue is today — because if investors are not going to come back and buy these products, who’s going to buy them?”
— Tom Storey

These units — sometimes called “shoebox condos” or, as mortgage commentator Ron Butler coined, “dog crate condos” — were designed for investors to rent out. Not for people to actually live in. With the investor thesis broken, there’s a demand problem that rate cuts alone can’t fix. Who’s the buyer? That’s the question nobody has a good answer to.

How far have prices actually fallen?

At peak, downtown Toronto resale condos traded around $1,100-$1,200 per square foot. Today, Tom says most good-building condos with parking are around $900 per square foot.

“If you go back to the day before the pandemic and you just drew a line across the graph — they’re back to where they started. In some cases, they’re back to mid-2019. In some cases, they’re back to late 2018 prices.”
— Tom Storey

That’s a 20-25% decline from peak on a price-per-square-foot basis. To put that in real money: Tom recalled selling a one-plus-den — about 600 square feet with parking, nice newer building — for $850,000 during the peak. His assessment: that price isn’t coming back for potentially a decade.

Two-bedrooms may hold near current levels. Junior one-beds and one-beds? Tom thinks there’s more downside ahead.

The investor exodus

This is the engine driving everything. Roughly 60-70% of downtown condos are investor-owned. Only about 30% of active listings are from people who actually live in their unit.

For years, condo investing in Toronto was an equity play. Prices went up, negative cash flow didn’t matter because you were building wealth on paper. That thesis is now broken on both sides:

“The equity play is now kind of gone. The cash flow really isn’t there either. So they’re just trying to get out. A lot of them are.”
— Tom Storey

Even investors who locked in low rates during COVID are now facing renewals at significantly higher rates. Many who own a house plus investment condos are dumping the condos first — because nobody sells their primary residence if they can avoid it.

And here’s where it gets really interesting. Tom described a cascade effect: he has five condo sellers right now who want to sell their condos to buy houses. That’s potentially ten transactions locked up because the condo can’t move in a reasonable timeframe.

“The property ladder has a broken step, essentially.”
— Tom Storey

When condos become illiquid, it doesn’t just affect the condo market. It freezes move-up buyers out of the freehold market too. That’s how condo pain spills into everything else.

Will rate cuts save the condo market?

Short answer: no.

Despite multiple Bank of Canada cuts, the condo market hasn’t responded. And Tom was direct about why.

“If I’m a seller hoping that Bank of Canada is going to make my home sell — no, your price is going to make your home sell. A few more cuts is not going to solve things overnight.”
— Tom Storey

Buyers today are more educated than ever. They’re watching HouseSigma and Condos.ca. They know inventory levels, they know what units are actually trading for, and they know they have leverage. In that environment, the only thing that moves the needle is price. Not staging. Not marketing. Price.

Speaking of staging — Tom had a take that goes against conventional wisdom: in the condo market specifically, staging is getting way too much credit. His team has documented multiple cases where they staged a unit beautifully, it didn’t sell, the staging was removed, the price was reduced, and it sold to a buyer who saw it vacant. The price did the work. The staging didn’t.

So what does this mean if you need to sell?

If you’re selling a condo in this market, the conversation is uncomfortable. But uncomfortable beats delusional.

“We can stage it, we can paint it. We can make it look amazing. The only thing that matters in today’s market is — are you the best priced option? And the comparable that sold three months ago does not matter.”
— Tom Storey

In a declining market, past sales are the past. The only question: of everything currently for sale that’s similar to your unit, are you the most competitively priced? If there are 10 units like yours and only one or two will sell this month, you need to be that one.

Tom hears “I don’t want to give it away” from sellers constantly. His response:

“What you believe ‘giving it away’ is — is probably the price you actually need to be at to be in the small percentage that is selling every month.”
— Tom Storey

That’s a hard truth. But the math doesn’t lie. If 10% of listings in your category sell each month, you need to be in that top 10% on price. The emotional anchor of what you paid — or what your neighbour sold for in 2022 — is actively working against you.

Where the opportunities are for buyers

Despite everything I just said, there are real opportunities here — particularly for end users with a long time horizon.

Tom shared a story about a buyer who called him the morning of our recording:

“She’s like, I watch your videos, I get it. The market’s crashing, but I’m an end user. I’m a first-time home buyer. I’ve been saving up for years. I’m done paying rent, and I’m going to live here for 10 years.”
— Tom Storey

That’s the right mindset. If you’re buying to live in a condo for five-plus years, current pricing — especially on two-bedrooms in good buildings — represents value that hasn’t been available since 2019. Tom’s rule for every condo buyer right now: only buy if you’re prepared to hold for minimum five years, and don’t expect upward price pressure for at least two.

And not all buildings are equal. Tom flagged roughly 10 buildings downtown he’d steer buyers away from — ongoing issues, poor reputations, structural problems. He mentioned Ice Condos and certain CityPlace buildings as examples. When there’s this much supply, building selection matters enormously.

The supply cliff is coming — but it’s a few years away

One of the most forward-looking things Tom said concerns what’s not being built right now. Toronto has record condo deliveries in 2025 and 2026. But after that, the pipeline drops off a cliff.

“Past 2027, we have nothing coming. There’s like 3,000 units being delivered in 2027 across the GTA and most of them are in the 905. No one’s launching projects this year. If they don’t launch this year, they’re not being built at all — it takes five years from launch to completion.”
— Tom Storey

Development charges and municipal fees — which Tom estimates at 30-40% of the cost of a new home in Toronto — are making projects unviable. Until the city addresses this (Vaughan has already started reducing development fees), new supply stays frozen.

So today’s oversupply is likely temporary on a multi-year horizon. By 2028-2029, we could swing back to undersupply, particularly if population growth continues. Toronto has always worked in extremes. The current extreme will eventually give way to the opposite. The question is just timing.

Meanwhile, freehold is a completely different story

While condos struggle, Toronto’s freehold market is holding up. Tom’s bullish on freehold properties in the city, particularly under $2 million in family-friendly neighbourhoods.

“What have we built in the GTA in the last 15 years? We haven’t built any freehold. What property type continues to have demand and we’re not building any more of? It’s freehold in Toronto.”
— Tom Storey

In his own neighbourhood, homes are still selling in a week — including a property across the street that went for $3.2 million in seven days, listed at $2.9 million. Family-friendly areas with good schools in the 416 continue to see genuine demand even in this market.

The framework is simple: what has sustained demand and limited new supply? That points to freehold in established neighbourhoods. Every time.

The bottom line

The Toronto condo market is going through a painful correction, but it’s not a monolith. Junior one-beds and bachelors are in serious trouble with no quick recovery in sight. Two-bedrooms in good buildings are holding up better and represent real opportunity for end-user buyers with patience. Pre-construction is its own category of pain.

If you own a condo and need to sell, price aggressively and stop anchoring to the past. If you’re buying, this is the most choice and leverage buyers have had in years — but buy for the right reasons and the right timeline. And if you’re sitting around waiting for rate cuts to fix everything, I think you’re going to be disappointed.

The market always corrects. The question is whether you’re positioned to weather it — or take advantage of it.

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