Posted On Sep 19, 2025

Walk through any of Toronto’s core neighbourhoods just a couple of years ago, and you couldn’t miss them: cranes in the sky and the shimmering glass of new condominium towers. For years, the condo market was the entry point for first-time buyers and a workhorse for investors. But after a period of cooling, the question on everyone’s mind is: what’s next?

With affordability still the number one challenge in the GTA and the recent dip in interest rates, some analysts are pointing to renewed demand for condos eventually. But will this start another boom for the condo market, or are we ignoring the bubble and is this a property type that will forever be tarnished?

As with most things in real estate, it’s not a simple answer. Let's look at both sides of the coin.

The Argument for a Condo market improvement

 

Several powerful forces should push the condo market forward.

  1. The Affordability Equation: The price gap between a detached home and a condo in Toronto remains massive. For first-time buyers who are tired of waiting on the sidelines, condos are not just an option; they are often the only option to enter the market and start building equity.

  2. Immigration and Population Growth: Toronto remains a primary destination for newcomers to Canada. While there is pressure to slow down immigration to Canada until structural challenges are resolved, the vast majority that do arrive will rent before they buy (which puts constant upward pressure on rental rates). This makes condos a perpetually attractive asset for investors seeking steady cash flow and appreciation.

  3. A Renewed "Back-to-Office" Push: As more companies solidify their hybrid work policies, the appeal of living closer to the downtown core is strengthening once again. The convenience of a shorter commute is a lifestyle driver that directly fuels demand for centrally located condos.

The Fear of a continued Condo Market Decline

While the demand is real, there are undeniable risks to consider.

 

  1. The Supply Question: There is a significant number of new condo units recently constructed and completed around the same time and demand has faltered.  That, along with tons of re-sale condos up for sale, we are seeing an oversupply -  leading to price stagnation and dips (particularly in the pre-construction assignment market).

  2. Investor-Driven Volatility: A large portion of the condo market is owned by investors, not end-users. This segment can be more sensitive to market shifts. If rising condo fees, new rental regulations, or better investment opportunities emerge elsewhere, a wave of investors selling could soften prices.

  3. The "Cost of Carrying" Squeeze: While purchase prices are lower, the monthly cost of ownership is rising. Skyrocketing maintenance fees, coupled with property taxes, can make the monthly outlay for a condo surprisingly high, eating into rental profits and straining affordability for first-time buyers.

My take: Opportunity with a Side of Caution

 

So, boom or bubble? My perspective is one of cautious optimism. The fundamental demand for housing in the GTA is too strong to allow for a long-term collapse. However, the days of buying any unit and expecting a 20% annual return are over.

Success in today's condo market, whether as a homeowner or an investor, requires a strategic approach. It means focusing on quality buildings in prime locations, understanding the financial health of the condo corporation, and having a long-term perspective.

The market is rewarding smart, well-researched decisions. If you're considering a condo purchase, it's crucial to have your financing in order and a clear understanding of the numbers. Let's work together to make sure your investment is a solid one.

Let's connect!

Ready to discuss your home ownership goals and a Better Mortgage by Dom?

 

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