After years of rapid growth, a recent report from the Canada Mortgage and Housing Corp. highlights a significant slowdown in the condo markets of Toronto and Vancouver.
Sales of new, resale, and pre-construction units have sharply declined since mid-2022, signaling a shift from the previous boom fueled by low interest rates and investment.
By the first quarter of 2025, condo apartment sales had plummeted by 75% in Toronto and 37% in Vancouver compared to mid-2022 levels, according to the report.
This sudden drop is attributed to rising borrowing costs and reduced demand from both end-users and investors, who now face higher mortgage payments and lower expected returns.
Soaring supply
Despite the market slowdown, developers continued construction efforts. A record 25,572 units were completed in Toronto in 2024, along with 12,442 in Vancouver.
In Toronto, the months of inventory for pre-construction condos in Q1 of 2025 were more than 14 times higher than in 2022. It would take 58 months to sell the available stock at the current sales rate, according to CMHC.
This oversupply is exerting downward pressure on prices, with average resale condo prices in Toronto falling by 13.4% and in Vancouver by 2.7% between 2022 and Q1 2025.
Many investors who entered the market during the boom phase are now experiencing declining valuations and diminishing margins.
Investors under pressure
“High interest rates and stagnant price growth have significantly reduced potential returns for investors,” noted CMHC.
Based on recent prices of new and resale condo units, investors in Toronto could face up to 6% in capital losses on pre-construction purchases made in 2024.
“Accessing financing becomes more challenging for investors when the value of their units decreases between the pre-construction purchase and closing,” added CMHC.
New investors renting out their units are also feeling the impact, with carrying costs in Toronto and Vancouver rising by 24% and 29%, respectively, while average rents have only increased by 15% and 12% since 2022.
Wave of cancellations and conversions
In Q1 2025, 55% of pre-construction units in Toronto remained unsold, leading to a surge in project cancellations that increased fivefold in Toronto and tenfold in Vancouver since 2022.
This high level of unsold units poses a challenge for developers seeking funding, as lenders typically require a pre-sale threshold of 70% before releasing funds.
“The funding challenge for condo projects has prompted some developers to shift towards constructing rental units, where purpose-built rental unit programs offer potential financing,” explained CMHC.
A temporary break for consumers
The increase in condo inventories has led to price reductions and lower rents as more property owners compete for rental income.
While this brings relief to buyers and renters in expensive cities like Toronto and Vancouver, it also discourages new construction and exacerbates future housing shortages.
The cancellation of condo projects today translates to fewer housing completions in the future, as highlighted by CMHC.
“The relief for buyers and renters is temporary, with future housing shortages expected to worsen.”
Courtney Zwicker is a digital reporter and associate editor for REM. Based in Atlantic Canada, she has over a decade of experience covering daily business news.
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