Why Toronto’s Condo Market Correction May Not Fix Affordability for Long

When condo prices started falling in Toronto, a lot of hopeful buyers finally felt a glimmer of relief. After years of bidding wars and skyrocketing values, it seemed like the market was finally cooling down enough to give people a real shot at homeownership.

But here’s the catch: while lower prices might help in the short term, this slowdown could actually make affordability worse in the years ahead.

The Current Reality

Toronto’s condo market is officially in a deep freeze. Prices have dropped about 5% year over year, and there’s a healthy amount of inventory sitting on the market right now. For buyers, that means less competition and more negotiating room.

Developers, on the other hand, are hitting pause. A growing number of condo projects are being cancelled or delayed because of weaker demand, higher construction costs, and tighter lending conditions. Banks are slower to approve financing, and buyers are taking longer to commit.

According to CMHC, condo completions in Toronto averaged around 25,000 units a year in 2023 and 2024. That number could climb slightly in 2025, but then drop sharply to about 15,000 by 2027. Fewer cranes in the sky today means fewer homes available later.

Short-Term Relief, Long-Term Problem

Right now, buyers have options. There’s roughly 58 months’ worth of condo supply on the market. But as developers scale back new projects, that supply will tighten again. When demand eventually rebounds, we’ll be right back in the same affordability crunch we’ve been trying to escape.

CMHC’s deputy chief economist put it simply: a market correction might look like good news for buyers, but it’s discouraging new construction. Fewer new builds today mean fewer places to live tomorrow.

And that matters because Canada is already short hundreds of thousands of homes needed to restore affordability by 2030. If construction slows now, the gap only widens.

Why This Isn’t the 1990s Crash

Some people are comparing today’s condo correction to the early 1990s collapse. The truth is, the fundamentals are very different. Back then, developers could start building with only half their units sold. Today, they need at least 70% pre-sold to even get financing. Regulations are tighter, and lending standards are stronger for both buyers and builders.

That means the current slowdown is more of a controlled correction than a full-on crash. Prices may soften, but CMHC doesn’t expect them to fall through the floor. The bigger risk is what happens after this pause — when demand picks back up and we realize we haven’t built enough to keep up.

What Homebuyers Can Take Away

If you’ve been waiting for the market to cool before making a move, this could be your window. But remember, affordability isn’t just about the sticker price — it’s also about timing, financing, and future supply.

A condo that seems affordable today could become harder to replace later if new construction keeps slowing. Working with a broker helps you look beyond short-term price drops and focus on your long-term financial plan.

Bottom line: Falling prices might feel like a win, but if fewer homes get built, affordability won’t last. The real opportunity is to make smart, informed moves now while the market is quiet.

Let’s review your numbers and see what kind of plan makes sense for you in today’s changing market.