Toronto’s Condo Market Slowdown: Who’s To Blame?

Toronto’s Condo Market Slowdown: Who’s To Blame?

Who is to blame for the condo market slowdown in Toronto, Canada? If you asked anyone who watched the ‘clickbait’ news articles you’d likely hear the response – “Toronto real estate investors.” The truth of the matter is though, Toronto real estate investors – while profit driven– are hardly the cause of Toronto’s systemic housing issues.

As someone who has sold real estate in Toronto for 18 years, I have a front-row seat to the cycles of boom and bust that characterize our city’s condo market. The latest data indicates a troubling trend: new condo sales (pre-construction condos) in the Greater Toronto and Hamilton Area have dropped to their lowest level since the 2009 financial crisis. This stark statistic from Urbanation Inc. underscores the severity of the situation we face today.

But how did we get here?

Table of Contents

My Reluctance to Endorse New Projects

In the last two years, I have not recommended a single project launch,” is a statement that I find myself repeating more often than I’d like, and one that was recently picked up by Toronto’s Globe and Mail. This isn’t a decision born from a sudden mistrust of development quality or potential but from a profound concern for my clients, their investment funds and their well-being. As I said, I’ve spent nearly two decades in this industry and I truly care about the professional friendships I’ve made and the investment portfolios I helped build.

I cannot in good conscience recommend something I do not believe in and would not personally invest my own money in. The essence of my advice is shaped by a market that seems increasingly disconnected from the everyday realities faced by average Canadians. Prices are spiralling beyond reach, and the economic conditions underpinning our industry are showing signs of strain.

The pre-construction market is dead

The sentiment I express is not mine alone but is echoed across the industry. Simeon Papailias, managing partner with REC Canada, has declared the pre-construction market in Toronto as “dead.” Such strong language from a seasoned industry insider underlines the severity of the current climate. “I would never use words like this, but I am because it is true,” he states, capturing the frustration and helplessness felt by many who have watched the market shift from vibrant to stagnant. This isn’t about dramatics; it’s a candid acknowledgment of our realities.

What should I invest in instead of pre-construction condos in Toronto?

This is truly nuanced and depends on your unique financial situation, risk tolerance and goals. There is no one-size-fits-all solution and it is highly dependent on what opportunities exist in the market at the time you’re looking to invest. There are plenty of re-sale properties and a number of pre-construction assignments that I’d consider before investing in pre-construction condos today. If you’re thinking about investing in the Toronto real estate market, we should talk. I’ve helped hundreds of people make smart real estate decisions, now it’s your turn. Book a call with me
here or send me an email, [email protected].

The pre-construction price-per-square-foot (PSF) new normal

We discuss topics on our blog like, the price per square foot cycle in Toronto and
why is Toronto so expensive so if you want more info on how we got here (expensive) or why the pre-construction market is stalled (cycle), I highly recommend you head over and read those blog posts. 

In Toronto, the pre-construction condo market has stalled, and that is, of course, no surprise to anyone with Toronto pre-construction condo launch pricing in the range of $1400PSF – $1800PSF. Naturally, institutional investors are deterred by these high prices as they well exceed the re-sale price per square foot norm of roughly $1000-$1200.

In theory, this would leave room for more re-sale buyers and more non-investors to move into the market. But in reality, this is exacerbating the problem.

How do investors not buying pre-construction actually make the problem worse?

The biggest problem lies in the
replenishment of the housing supply. While investors’ hold on real estate has become hard to ignore, leading the Bank of Canada and even Prime Minister Justin Trudeau to call them out for the commodification of housing – they aren’t to blame for the problem at hand. Both federal and provincial governments as well as the central bank share blame in creating the conditions that allowed investors to corner 20 percent of the market in Ontario, including 80 percent of pre-construction condo sales and 57 percent of newly built condos in Toronto.

Let’s read that back one more time 80% of the pre-construction condo market is purchased by investors. That means that Toronto relies on investors to fund and add 80% of new-build inventory to Toronto’s housing market. There are very few end-users who want to – or can afford to – pay both the downpayment necessary to secure a pre-construction condo while also paying rent for 4-5 years while they await their new home.

The government’s role in Toronto’s condo market slowdown

The government has not only allowed for-profit builders but has relied on them heavily to build the necessary housing to keep up with our population growth. Builders are building for-profit, they are businesses and they made their money selling to investors for the last twenty years.

The system favours institutional investors, not individuals building housing and without them, there would be no support for population growth. While the current system benefits GDP it leads to high prices and inventory controlled by profit-driven builders.

The cost to build in Toronto

We know Toronto is an expensive city, land is expensive and partially due to COVID-19, materials, labour and delays increased that expense. While the government upped development fees for builders by nearly 50% in two years. — equating to nearly $50k on a single one-bedroom condo. A cost that really will only be passed along to the buyer. 

Developers, while profit-driven are not fully to blame for Toronto’s housing issues or Toronto’s condo market slowdown. I will say that they certainly did raise their prices quickly over recent years. Whether that’s profit-driven, the cost to build or both, it surely exacerbated this problem.

3-4 years from now Toronto will face a major housing shortage

If you think the problem today is bad, in 2023/24 we had the largest number of new-build condos to ever hit the Toronto real estate market (sold in the boom of the market) … what happens when we have record-low levels of new-builds hitting the Toronto real estate market in 3-4 years?

Disconnect Between Market and Affordability

The root of our hesitation is not just the faltering numbers but the growing chasm between housing costs and what residents can reasonably afford. As developers push for higher profits and investors seek lucrative returns, the prices of condos have reached points where they no longer align with the financial realities of the average Toronto resident. This disconnect is not just problematic; it needs to be more sustainable. It threatens the very fabric of our community as more residents find themselves priced out of the housing market, compromising our city’s diversity and vitality.

On top of the high-interest rates and unaffordable price points, Lusink said another factor slowing down the market is that people’s income levels have not kept up with the rate of appreciation for real estate.

The Ripple Effects of Market Slowdown

The consequences of this market slowdown are profound and far-reaching. Projects are put on hold, developers become wary of launching new initiatives, and the construction industry—which relies heavily on a steady flow of new developments—faces potential downturns. This slowdown isn’t just about unsold condos; it impacts employment, reduces municipal revenues from development charges, and dampens economic activity in related sectors. Each unsold unit represents a missed opportunity for community growth and economic stability.

The True Culprits: Developers and a Flawed System


It’s easy to point fingers at investors for the high prices, but the root issue is deeper. The system itself is broken. For decades, our housing market has been constructed almost solely through new developments by profit-driven developers. This model has been necessary for growth but is fundamentally flawed. As detailed in our analysis on the factors driving up Toronto’s cost of living, the pressure to maximize profits often comes at the expense of affordability and accessibility.

Government’s Role and Missed Opportunities


Both federal and provincial governments have had opportunities to mitigate these challenges but have often needed to catch up. The recent government initiative allowing CMHC first-time homebuyers to take out a 30-year mortgage for a preconstruction home is a step in the right direction, yet, again highly flawed. It’s dependent on CMHC-insured properties with down payments of less than 20% but the reality is that the vast majority of new-build condos in all require 20% down payment.

Plus, as Urbanisation president Shaun Hildebrand notes, “It’s very difficult for investors to make the numbers work on buying new condos, given their record-high price premium over resales and steeply negative cash flow on rentals.” This shows that small fixes aren’t enough for a market that needs big changes.

Looking Forward: Solutions and Innovations


The path forward requires innovative thinking and a departure from traditional models. We need to encourage the development of purpose-built rentals that are not solely at the mercy of market forces. As I’ve noted, “If we didn’t have those institutional investors buying these properties, we would not have any of the building that’s happened over the two decades.” This underscores the necessity of rethinking our approach to housing development, making it inclusive, sustainable, and detached from speculative investments.



The downturn in Toronto’s condo market underlines a critical issue: many residents are being priced out of affordable housing. The solution may lie with the government using its resources more effectively. If the government can leverage its land for the construction of purpose-built rental properties and minimize the tax burdens on these projects, we could directly address the housing shortage. Without such measures, the situation might not improve, as relying on market forces alone could lead to even higher prices, further harming affordability. It’s crucial for the government to step in and help ensure that housing in Toronto is accessible for all.

Picture of Pierre Carapetian

Pierre Carapetian

Pierre Carapetian is the Broker Of Record for Pierre Carapetian Group Realty with over 12 years of experience in the real estate market. As a proud Torontonian and real estate broker, he prides himself on knowing this city inside out. He started investing at the age of 18 and has facilitated over half a billion dollars in real estate transactions.