Toronto Condo Market Enters Recession

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Toronto’s condominium market has plunged into a deep correction after years of investor-driven growth. Falling sales, rising inventories of unsold units and a surge in developer insolvencies are reshaping an industry that has long played an outsized role in Canada’s economy.

Oversupply after years of expansion

More than 8,200 condo units are currently sitting unsold in Toronto, with another 10,000 nearing completion and unable to be halted. Prices have dropped roughly 20% from their peak, reflecting the hangover from a construction boom that once made Toronto the city with the most cranes in North America.

Sales collapse to multi-decade low

New condo sales, largely driven by pre-construction purchases from investors, have fallen to their lowest level in 35 years. Rising interest rates and reduced immigration have stripped the market of its traditional investor base, leaving developers exposed just as supply continues to come online.

Because high-rise projects can take up to five years to complete, units sold during the boom years are still being delivered into a weakening market.

Developer insolvencies accelerate

As unsold inventory mounts, a record number of developers have been pushed into insolvency. Those that survive are being forced to rethink their business models. Economists describe the current downturn as the largest condo market correction Toronto has ever experienced.

The One tower symbolizes boom and bust

Few projects illustrate the cycle better than The One, an 85-story luxury tower once expected to become Toronto’s tallest residential building. After cost overruns and delays, the project entered receivership in 2023 with about C$1.7 billion in debt. Taken over by lenders, it is now being repositioned by veteran developer Tridel, which has scrapped investor contracts and shifted its focus toward end-users.

Shift toward end-users

Industry observers expect Toronto’s condo market to evolve away from reliance on small investor-owned units toward larger homes designed for people who plan to live in them. That transition requires developers to commit more of their own capital and reduces dependence on pre-sales, accelerating consolidation within the industry.

Rental housing gains ground

At the same time, rental apartment construction is overtaking condo development. Government incentives have encouraged developers to convert planned condo projects into rentals, with more than 27,000 units shifting to rental use in 2025 alone. For the first time in decades, new rental starts have exceeded condo launches in Toronto.

Risk of future shortages

While oversupply dominates today’s market, the collapse in new construction could create a shortage later in the decade. If immigration rebounds and housing demand returns, Toronto may find itself ill-prepared to meet future needs.

As International Investment experts report, Toronto’s condo recession marks a structural turning point rather than a cyclical dip. The shakeout is reshaping how housing is financed and built, but without a viable long-term model for condo development, the city risks trading today’s surplus for tomorrow’s shortage.