Why Toronto’s Condo Market Is Stronger Than Developers Claim

Toronto’s condo market is not collapsing. Despite what developers would have you believe, resale apartments are trading steadily, even if not at pandemic-era froth. Inventory has risen, prices have dipped slightly, and buyer leverage has returned. But this is a correction, not a crisis.

The market has indeed shifted in favour of buyers. In the resale segment, active listings are up 19% from a year ago, and demand has softened marginally by 1%.

The months of inventory, a measure of supply relative to sales, has risen from 5.8 to 7, its highest level in recent years. However, there’s a narrow buyer’s advantage. Sellers have had the negotiating advantage for the previous decade. Don’t buyers deserve to have their day in the sun?

Prices have responded accordingly:

• The benchmark resale condo sits at $585,100, down 1% over the past three months.

• Median prices tell a similar story, slipping 2% over three months to $588,000.

None of this signals a meltdown; it signals a normalizing market after years of aggressive appreciation.

The Real Weakness Is in Presales

Where the alarm bells are ringing, loudly and persistently, is in the presale market. Developers are facing the lowest levels of new apartment sales in two decades. The Building Industry and Land Development Association (BILD) reports eight consecutive months of historic lows. Some projects have been cancelled outright. Others are closing at lower market valuations than originally contracted, leaving buyers to bridge the financing gap.

The difference between old and new pricing is stark: the benchmark new apartment still commands more than $1 million, about $400,000 more than a benchmark resale unit.

Historically, pre-sales were priced at a discount that reflects project risk. The risk which developers shift onto the consumer. When you buy off-plan in Toronto today, you assume the risks of project delays, financing risk upon project completion, and price risk (if the market drops and you end up paying more than your neighbour for an identical unit). In return, you pay a lower price.

In the past decade of astronomical price growth, this was turned on its head. Buyers paid a premium because they were confident the price risk would work in their favour. Unsurprisingly, now that buyers are recognizing the risks they take on with pre-sales, they are pushing back.

Developers Want Relief—But From Whom?

Faced with slowing sales and rising costs, developers are lobbying governments for support. BILD argues that high development charges, GST/HST, and municipal fees are choking supply and threatening the region’s housing pipeline. They want intervention.

But the call for subsidies is politically awkward. Resale buyers, many of whom are selling for less than expected, receive no such aid. In April 2024, nearly half of condo resales fell within the $400,000–$600,000 range, indicating that affordability has returned, albeit with some losses for sellers. If individual homeowners must bear the market risk of lower prices when they sell their homes, why should developers be exempt?

Risk Should Be Priced, Not Passed Along

Toronto’s apartment market is not broken. It’s going through a painful adjustment to a more normal and balanced market.

The resale segment is functioning as markets should when buyers regain bargaining power.

One of the largest costs in building condos is land. Many developers overpaid during the boom years, assuming prices would keep rising. They now face thinner margins and fewer exits. While cost reductions are welcome, the presale model itself is under scrutiny. Buyers no longer want to pay a premium price while absorbing the risk of a project not yet built, especially in a softening market.

The danger is not to the market itself, but to developers who bet on never-ending appreciation. They now find themselves caught between cost pressures, cautious consumers, and the hard reality of market risk.

Resale apartments may have cooled, but they remain liquid and price-transparent. The same cannot be said of presales. The notion that government intervention will revive demand for high-priced, high-risk units is wishful at best.