Fortunes lost in Toronto’s condo correction

Fortunes lost in Toronto’s condo correction

June 19, 2026 discoverhiddenusacom Business

Toronto’s condo market is experiencing one of its longest corrections on record, with TD Economics reporting a 10% year-over-year drop in GTA resale benchmark prices during the first quarter of 2026. The bank projects prices will not trend higher until 2028, potentially falling 25% to 30% from their early 2022 peak.

Why are Toronto condo prices falling?

A persistent imbalance between elevated supply and insufficient demand is driving the downturn, according to TD Economics. The bank reports that condo sales declined 11% year-over-year in the first quarter of 2026, which is roughly 40% below the 10-year average for that period.

Inventory remains a significant hurdle. The Toronto Regional Real Estate Board (TRREB) recorded 6,668 active condo listings in the GTA at the end of the first quarter of 2026. Real estate research firm Urbanation found the median number of days on the market for a sold condo rose to 41 days in the first quarter, up from 36 days the previous year.

Realtor Tim Yew of Re/Max Ultimate Realty notes a distinct lack of showings, stating that buyers simply are not out there. Davelle Morrison of Bosley Real Estate observes that buyers no longer feel a sense of urgency and now have the luxury of time to make decisions.

Did You Know? According to TRREB, benchmark condo prices peaked in the mid-$700,000 range in early 2022, but TD Economics estimates they could bottom out in the mid-to-high $500,000 range.

How are investors and owners affected?

Owners who purchased properties at the market peak are facing the steepest losses. Teranet data shows that by 2025, 36.6% of homes bought in 2022 sold for less than their purchase price, compared to only a 5% loss rate for properties bought in 2020.

How are investors and owners affected?

Some investors are now cash-flow negative. Tim Yew described one investor with a variable-rate mortgage whose monthly carrying costs surged from $2,200 to over $3,000. These owners must either absorb monthly losses or sell at a significant deficit.

The assignment market has become particularly volatile. Jeff Carr of Re/Max City Teams reported a case where a client sold a pre-sale contract for $300,000 less than the original purchase price to avoid closing costs and negative rental cash flow. Royal LePage adviser Thomas Delespierre characterized the current assignment market for sellers as a “bloodbath.”

Expert Insight: Samantha Carter suggests that the current crisis highlights the fragility of speculative investing. When the gap between original contract prices and current market values widens, as seen in the assignment “bloodbath,” the financial risk shifts entirely to the investor, often leaving them to pay hundreds of thousands of dollars just to exit a deal.

What is the impact on developers?

Development activity has stalled as pre-sales collapse. Pouyan Safapour, president at Devron Developments, reports that sales are down approximately 90% from the 10-year norm, leaving almost no projects able to move forward.

What is the impact on developers?

Developers are burdened by high carrying costs for debt-financed land. Safapour notes these costs can range from $25,000 to $500,000 per month per land parcel. Michael Cooper, CEO of Dream Unlimited, stated his company is carrying land for years longer than expected because they cannot sell condos to fund construction.

Cooper adds that new projects must compete with resale inventory being sold below cost. This makes it difficult to price new units high enough to cover land, financing, and development charges.

Will government incentives revive the market?

The Ontario government introduced temporary Harmonized Sales Tax (HST) relief on new homes and an $8.8-billion initiative to reduce municipal development charges. However, early data suggests these measures have had little impact.

A joint report from Altus Group and the Building Industry and Land Development Association (BILD) found that new condo sales hardly improved in April, the first month of the HST rebate. Only 199 units were sold, which is 88% below the historical norm.

BILD recorded 13,331 units of unsold inventory in April. TD Economics attributes the continued stagnation to a soft labour market, slower population growth, and cost-of-living pressures.

Frequently Asked Questions

When is the Toronto condo market expected to recover?
TD Economics projects that prices will not trend higher until 2028, though the rate of decline may slow in 2027 as demand recovers.

What is an assignment sale?
It is the transfer of a purchase contract to another buyer before the property officially closes, allowing the original purchaser to exit the deal.

Are other Canadian cities seeing similar price drops?
Yes. Prices in the Greater Vancouver Area have declined by about 10% since peaking in fall 2023, and Calgary prices have also dropped by 10% since the third quarter of 2024.

Do you believe government tax rebates are enough to entice buyers back into the condo market?