Ontario’s condo market is showing signs of strain, with Toronto leading a trend of falling sales, rising inventories, and mounting financial pressure on investors. The Canada Mortgage and Housing Corporation (CMHC) says developers are cancelling projects, more units are sitting empty, and some investors are struggling to close as prices decline.
Industry veterans see echoes of the 1990s downturn, when Toronto’s overheated condo boom went bust, but this time the dynamics are different. Back then, soaring prices and a deep recession triggered a collapse. Today, the slowdown is being shaped by higher interest rates, stricter lending rules, and years of government policy that steered municipalities toward dense condo builds over family homes.
“Ontario is unique compared to other provinces right now in terms of market conditions,” said Scott Andison, CEO of the Ontario Home Builders Association. He warned that in 2025 only 40,000 homes will be built in the province — less than half the 90,000 to 95,000 constructed annually just a few years ago. At the same time, about 37,000 new homes, many of them condos, are sitting vacant without buyers.
Experts say this mismatch stems from long timelines in planning and approvals. Many condo projects hitting the market today were launched years ago, during low interest rate periods, when demand seemed endless. But by the time they were completed, higher borrowing costs, tariffs on building materials, and layers of municipal fees pushed prices out of reach for many buyers.
In Toronto, restrictive zoning also meant developers built mostly one-bedroom and one-plus-bedroom units, leaving little supply for families. Retirees, meanwhile, are choosing to age in place rather than downsize, weakening another expected source of demand. And with governments floating new incentives — like cutting HST on first-time home purchases — some buyers are simply waiting.
The result is a glut of condos not only in Toronto but also in suburban hubs like Vaughan and Mississauga, and even newer markets such as Hamilton and Kitchener, where condo stock has surged over the last decade. CMHC economist Anthony Passarelli says demand is weak across the board: “There is a lot of supply right now, the demand is really weak — and the cost of a condo is declining.”
With sales slumping, many builders are abandoning the condo model altogether, converting projects into purpose-built rentals instead. The province has pledged $1.6 billion to help municipalities expand infrastructure and unlock more land for housing, but Andison said benefits will take years to show.
He argues the housing market needs immediate relief, including cutting government fees that make up an estimated 36 per cent of the cost of a new home. Municipalities like Barrie have already reduced development charges to attract builders, lowering prices by tens of thousands of dollars per unit.
For now, Ontario’s condo market is at a crossroads — oversupplied, under-demanded, and searching for a reset. Whether the government delivers the stimulus developers are calling for could decide if today’s “glut” becomes a lasting crisis or a short-term correction.