Toronto’s condo market faces decline amid rising inventory and high borrowing costs

Toronto’s condo market is experiencing a significant downturn, characterized by a sharp decrease in sales and an oversupply of units. This downturn is likely being driven by soaring borrowing costs, a growing surplus of inventory, evolving investor sentiment, and the broader implications of current policies.

Recent data showed a sharp decrease in new condominium sales within the Greater Toronto Area (GTA), with reports showing new condo sales having plummeted by over 80% from the previous year, reaching a 30 year low. Further, data from October showed unsold new condo inventory had risen by 58% over the past two years, with approximately 35,000 units launched for presales since mid-2022, but only 22,000 units sold during that period.

Further, the elevated borrowing costs are also proving to be a significant factor contributing to the decline in condo sales, with TRREB data showing the impact of high borrowing costs on the GTA condo market, with sales down 4.4% year-over-year in the third quarter of 2024.

The combined effect of all of these factors leads to the poor investor sentiment that we are currently seeing. This withdrawal of investors, who have historically fueled the construction boom, contributes to the significant drop in new condominium sales and slows down new construction, exacerbating the supply-demand imbalance. The decline in new condo sales and rising inventory levels may discourage developers from launching new projects, potentially constraining supply and putting upward pressure on prices in the long term.

Policymakers may need to consider measures to stimulate demand and support the market, such as revising mortgage stress test rules or offering incentives for international buyers.As these reports and data shows, the real estate marketplace is always continuously evolving. Thus, the decision to buy or sell real estate should always take into careful consideration all such factors. Therefore, it is crucial to carefully evaluate your financial situation, long-term goals and local market conditions before making a decision. 

As a real estate professional with over 20+ years of experience in the industry, I have first-hand witnessed the housing affordability crisis and worked with both buyers and sellers in this market in my every-day practice. If you need expert guidance for your buying and selling needs, please don’t hesitate to reach out to me.