The Toronto condo market in 2025 is facing a period of extreme turbulence rarely seen in its history. For both prospective buyers and sellers, the question on everyone’s mind remains: Is Toronto’s condo market in free fall, or is this just a rough patch in a resilient city’s long-term growth story? This blog explores the data, the drivers, and crucial mortgage strategies, referencing expert commentary from Cashin Mortgages Canada, to give you a clear-headed look at what’s happening and what to do next.
The Data:
A Market Struggling for Traction
The numbers don’t lie Condo sales and prices in Toronto have taken a serious hit in 2025. According to June 2025 real estate report, condo sales in the city in May were not only 23% lower than the year before, but also hit their lowest level in two decades (excluding the pandemic lockdown months). Meanwhile, new condo listings keep surging, up 8% in May year over year, the classic makings of a strong buyer’s market.
The situation isn’t confined to sales volume. The average Toronto condo price has dropped approximately 15-20% from its 2023 peak, as economists from TD project that this correction may persist through the end of 2025. Bullpen Research & Consulting reports that the average asking price per square foot for new, unsold condos fell to $1,524 in late 2024 and is forecasted to slip further in 2025.
Even the rental market, often a buffer for condo investors, is feeling pressure, with average rents for one-bedrooms down nearly 5% year-over-year by the end of 2024. According to the Canada Mortgage and Housing Corporation (CMHC), Toronto condo prices declined by about 13.4% between 2022 and Q1 2025, with transactions falling an astonishing 75%.
The Supply Tsunami:
Why Are Prices Dropping So Fast?
A key factor behind the freefall narrative is unprecedented inventory growth. There are several simultaneous forces here:
- Record New Listings: From 6,300 active condo listings at the start of 2024 to nearly double by year-end, with a further acceleration into 2025.
- Massive Completion Wave: Urbanation forecasts 31,000–40,000 new condo units completed in 2025, as pre-construction projects come online. Many of these were bought years ago, and today’s buyers face far higher borrowing costs.
- Unsold Inventory: The number of completed but unsold condos has more than doubled from last year, now at its highest since 1993.
This surge flows directly from investor-driven buying during the boom years and a subsequent evaporation of demand as affordability waned. Plus, as new supply floods the market, developers are forced to offer deep incentives and price concessions just to attract buyers.
Why is This Happening?
The Forces Colliding in 2025
1. Investor Pullback and Failed Closures
At least 75% of Toronto’s condo market is investor-driven. Many investors bought at peak prices and are now struggling to close deals in a market where bank appraisals are lower than their purchase price, or rental income no longer covers mortgage payments. It led to a spike in assignment sales (where buyers offload their pre-construction contracts), often at a loss.
2. Higher Interest Rates and Borrowing Challenges
Even though interest rates have started to fall, they remain elevated compared to just a few years ago. This is slowing new borrowing and leaving earlier buyers locked into less favorable mortgages.
Cashin Mortgages explains that mortgage qualification rules remain stringent, and even with small policy changes, like the new 30-year amortization option and increased purchase price cap for insured mortgages many buyers are still playing a waiting game for better affordability.
“With the sales-to-new-listings ratio now at just 29%, clearly indicating a buyer’s market, sellers no longer have the upper hand, and pricing strategically has never been more important.”
Cashin Mortgages Canada3. Construction Slowdown and Developer Stress
With prices dropping and investor appetite muted, condo project cancellations and construction slowdowns are rampant. Developers can’t get financing unless most units are pre-sold at profitable prices, something the current environment can’t provide. In Q1 2025, new condo construction starts fell 79% from the prior year, hitting levels last seen in the 1990s.
4. External Uncertainties
Federal elections, U.S. trade tensions, and evolving government housing policies add extra layers of hesitation for both buyers and developers.
Not All Doom and Gloom:
Is There Opportunity in Chaos?
While headlines scream collapse, some insiders, including those at Cashin Mortgages, advise that today’s market turbulence creates opportunities for informed buyers and strategic investors. As prices and rates adjust, those with stable finances and a long-term outlook can negotiate favorable terms.
“With more inventory and motivated sellers, buyers can take their time and secure better deals—especially if they’re working with mortgage options tailored to this market.”
Cashin Mortgages Canada
- First-time buyers may finally find entry points in locations previously out of reach.
- Assignment sales provide discounts on brand new units.
- Downsizers and move-up buyers can leverage negotiation power for the first time in years.
What Does the Future Hold?
Most forecasts suggest that further price declines are likely through 2025 as the market absorbs the wave of existing and new inventory. However, major banks and analysts note this might ultimately set the stage for renewed stability: as construction slows sharply, the market could swing from glut to scarcity within a few years, particularly if population growth remains strong.
Strategy:
What Should Buyers and Sellers Do Right Now?
For buyers:
- Take advantage of the deepening buyer’s market.
- Negotiate assertively—ask for incentives, upgrades, or closing credits.
- Consult a mortgage broker Cashin Mortgages to secure the best rates and understand how new federal rules can boost your buying power.
For sellers:
- Be realistic on price—overpricing leads to listings languishing.
- Stage and market aggressively; differentiate your property from the flood of inventory.
- Consider holding if you can, or be prepared to meet the market sharply for a faster sale.
For investors:
- Carefully analyze cash flow, as rental income may be under pressure.
- Monitor assignment and resale markets for distressed opportunities.
- Stay liquid and ready for a market rebound, potentially as early as 2026.
Final Thoughts: Free Fall or Correction?
Toronto’s condo market in 2025 is not in free fall in the sense of a total collapse, but it is undergoing a painful correction shaped by oversupply, weak investor confidence, and high costs. For those willing to do their homework, work closely with trusted experts such as the team at Cashin Mortgages Canada, and act strategically, today’s turbulence could lay the groundwork for tomorrow’s gains.
The next 12 months will be crucial to see if the market can absorb its glut and if buyers can regain confidence amidst uncertainty. Either way, Toronto’s resilience has been tested before, and while the condo market is battered, it’s far from beaten. Stay informed, stay flexible, and don’t be afraid to seek expert advice for your next move.
If you’re considering a condo purchase, sale, or need mortgage guidance tailored to volatile market conditions, reach out to Cashin Mortgages Canada for up-to-date advice and solutions tailored to your needs.
Sources
https://www.cbc.ca/news/business/condo-market-slowdown-1.7535704
