The Greater Toronto Area's condo market is experiencing a downturn that may rival the historic crash of the late 1980s to mid-1990s, according to a new report from TD Economics. That earlier downturn lasted seven years before prices began to recover, and the current correction is on track to approach that duration.
Current Market Conditions
Now in its fourth year, the condo downturn shows no signs of easing. In the first quarter, benchmark condo prices fell 10% year-over-year, the steepest decline since the downturn began in 2023. Condo sales dropped 11% from the previous year and were approximately 40% below the 10-year average. The sector continues to struggle with an oversupply of units and weak demand.
Factors Driving the Downturn
TD economist Rishi Sondhi noted that demand is likely to remain weak through 2025 due to economic uncertainty, sluggish job growth, and high living costs that deter potential buyers. Falling prices further discourage buyers who anticipate even better deals. Additionally, Ontario's declining population reduces demand for rental properties, lowering rents and driving investors away from the sector.
Supply and Inventory Challenges
Although condo completions have decreased, stalled sales have slowed the absorption of inventory, keeping supply elevated. This imbalance is expected to persist through the year.
Price Forecast
TD Economics projects condo prices will decline 6% to 7% in 2025 and up to 3% in 2026 before a recovery takes hold. Sondhi stated, "Putting all the pieces together, it will likely take until 2028 before condo prices trend higher in earnest." This would make the correction nearly six years long, "somewhat shy of the '80s-'90s meltdown," but the peak-to-trough price drop of up to 30% aligns with that historic crash.
Broader Economic Context
Canada has lost 112,000 jobs so far in 2026, the worst start to a year since 2009, excluding the pandemic. April's data showed all job losses were full-time and in the private sector, with weakness across 10 of 16 sectors. BMO Capital Markets chief economist Douglas Porter commented, "For the Bank of Canada, it's incredibly tough to see the logic behind the market's pricing of more than one rate hike later this year, when the economy is struggling mightily to take even one step forward."
