Toronto Condo Market Stalled

The Toronto condo market has entered one of its most pronounced buyer’s markets in over a decade. Prices have fallen sharply, inventory is piling up, and units are sitting on the market far longer than they did during the pandemic boom. For buyers, this is the most leverage they’ve had in years. For sellers and investors, it’s a challenging landscape that may take time to rebalance.

Below is a detailed look at what’s driving the shift, what it means for buyers and sellers, and how the next few years may unfold.

Prices Continue to Slide, Down Over 25% From Peak

The most striking feature of today’s condo market is the price correction. Average condo prices have dropped over 25% since the 2022 peak, with TRREB reporting a 5% annual decline in Q4 2025 and an average price of $652,945. Early 2026 data shows prices continuing to soften, down about 7% year-over-year.

Some units—particularly older buildings or studios—are now selling below $400,000, a price point that was nearly impossible to find just a few years ago.

This correction is driven by a combination of higher interest rates, investor pullback, and a surge in available listings.

A True Buyer’s Market: Negotiation Power Is Back

For the first time in years, buyers are firmly in control. The sale-to-list ratio has dropped to 97%, meaning buyers are negotiating an average 3% discount from asking prices. In a market that once saw bidding wars as the norm, this shift is significant.

Buyers are also taking their time. With condos sitting on the market for an average of 54 days, there’s no pressure to rush into a purchase. Many are waiting for further price declines, contributing to slower sales and rising inventory.

Inventory Builds as Buyers Hesitate

New listings remain high, but demand has cooled. Many prospective buyers believe the market hasn’t hit bottom yet, and this hesitation is creating a growing supply of available units. Investors, who once drove much of the condo market, are largely sitting on the sidelines due to:

• Higher borrowing costs
• Lower resale values
• Uncertainty about future price trends

This imbalance between supply and demand is one of the key reasons the buyer’s market is expected to persist.

Pre-Construction Buyers Face Appraisal Gaps

One of the most challenging dynamics in the current market is the pressure on pre-construction buyers who purchased between 2021 and 2023. Many are now facing appraisal gaps, where the completed unit is valued below the original contract price. This makes securing financing difficult and, in some cases, forces buyers to come up with tens of thousands of dollars in additional funds.

Some investors are attempting to assign their contracts, but with today’s lower valuations, assignment sales are often at a loss.

Rental Market Remains a Bright Spot

Despite the slowdown in condo sales, the rental market remains strong. High immigration levels, limited rental supply, and affordability challenges in the ownership market continue to push demand for rentals upward.

This strength has led some developers to convert unsold condo inventory into rental units, a trend that may continue if pre-construction sales remain weak.

Long-Term Outlook: A Temporary Dip Before a Future Supply Crunch

Experts anticipate that the buyer’s market will continue for 1–2 more years, driven by:

• High inventory
• Weak investor demand
• Ongoing affordability challenges

However, the slowdown in pre-construction sales during 2024–2025 could create a future supply shortage. Fewer new projects today mean fewer completions later in the decade, which could put upward pressure on prices once demand rebounds.

In other words: the market may be soft now, but this won’t last forever.

Key Takeaways

• Prices are down sharply, with a 25% drop from peak levels and continued declines into 2026.
• Buyers have leverage, negotiating an average 3% discount and facing little competition.
• Inventory is high, as hesitant buyers and sidelined investors slow the pace of sales.
• Pre-construction buyers are struggling with appraisal gaps and financing challenges.
• The rental market is strong, prompting some developers to shift units to rentals.
• A future supply shortage is likely, potentially pushing prices higher later in the decade.