The Shifting Landscape of Vancouver and Toronto’s Condominium Markets

Written by Steve Huebl
June 10, 2025

As two of Canada’s most vibrant housing markets, Toronto and Vancouver have consistently attracted buyers and investors. However, recent reports from the Canada Mortgage and Housing Corporation (CMHC) reveal a dramatic shift in the condominium landscape, with sales declining and inventories skyrocketing. Let’s delve into the nuances of this market transformation, exploring the contributing factors, current conditions, and potential implications for the future.

A Sharp Decline in Sales

According to CMHC, condominium apartment sales in Toronto have plummeted by 75% since 2022, while Vancouver experienced a significant 37% reduction as of the first quarter of 2025. This steep downturn can be attributed to several interconnected factors:

• Higher Interest Rates: In an effort to control inflation, the Bank of Canada has increased interest rates. This has made borrowing more expensive, leaving potential buyers sidelined.
• Reduced Affordability: As housing prices soared during the pandemic, many first-time buyers found themselves priced out of the market, exacerbating the demand-lag situation.
• Waning Investor Appetite: Previously robust investor interest in pre-construction units has diminished as profitability metrics shift.

Ballooning Inventories

In stark contrast to the declining sales, the number of condominium units available has surged. In Toronto, the months of supply for pre-construction condos has reached 58 months—a staggering 14 times higher than in 2022. Vancouver faces a similar, though less severe, inventory challenge.

Falling Prices and Rising Losses

The price drop in the condo market further reflects the sluggish conditions. Resale prices in Toronto have decreased by 13.4%, while Vancouver has seen a 2.7% drop since 2022, erasing gains enjoyed during the housing boom of the previous years. For investors, the reality is stark—those who purchased pre-construction units may face potential capital losses of up to 6% on purchases made in 2024.

CMHC has indicated that profitability for investors in both markets is “under pressure,” citing soaring borrowing costs juxtaposed against stagnant price growth. From 2022 onwards, investor carrying costs have escalated by 24% in Toronto and 29% in Vancouver, while rental growth has lagged behind, at 15% and 12%, respectively. As resale values dip below purchase prices, the path to securing financing at closing has become increasingly elusive.

A Wave of Project Cancellations

The fallout from unsold inventory is cascading into future projects. As of Q1 2025, a staggering 55% of pre-construction units in Toronto were unsold—close to the record 56% observed in late 2024. This level is far below the 70% required for lenders to greenlight project funding. Consequently, developers are canceling projects at alarming rates, with the number of canceled units increasing five-fold in Toronto and ten-fold in Vancouver between 2022 and 2024.

Some developers have opted to pivot toward purpose-built rental projects, while others have chosen to shelve plans altogether, leaving the future of construction in limbo.

Short-Term Relief Amid Long-Term Risks

The slowdown may offer short-term relief for buyers and renters, as prices soften and rents moderate. In fact, there has been a sustained downward trend in asking rents, easing competition in Canada’s two most expensive housing markets.

However, CMHC warns that this respite might come at a cost. "Today’s canceled condominium projects mean fewer completed housing units for the future," it cautions. As completions remain high and demand continues to languish, the potential for a structural housing shortage looms ominously on the horizon.

Conclusion

The condominium markets in Toronto and Vancouver are undergoing a significant transformation, dictated by macroeconomic factors and internal market dynamics. While the immediate environment may seem favorable for buyers and renters, the long-term implications point toward a challenging future. Stakeholders—both aspiring homeowners and investors—must remain vigilant about these evolving trends, as today’s decisions will shape the housing landscape for years to come.

Navigating this uncertain terrain requires keen insight into market conditions, financing options, and future housing availability. Those who adapt and respond to these changes will be best positioned for success in an ever-volatile marketplace.