No one is building condos in Toronto anymore as market hits 20-year rock bottom

Almost every piece of data that has emerged about Toronto real estate in the last year-plus has served as a disheartening blow to anyone with a stake in the market, as the city's once-scorching sector has slowed to a crawl — and keeps waning further.

The latest analysis, published by the Canada Mortgage and Housing Corporation (CMHC) on Monday, reinforces that the country's new condo market specifically is in a state of deep turmoil, especially in locales like Toronto and Vancouver, where the housing type has long been a boon to investors.

The national housing agency says that as of May, housing starts nationwide have fallen slightly from this time last year, mostly driven by "weak condominium market conditions" in both Toronto and Vancouver that have pulled the stats for these hubs down drastically below this national average.

The west coast city broke ground on 10 per cent fewer homes over the course of last month than in May 2024, while Toronto saw more than double that decline, with construction starting on 22 per cent fewer units if looking year-over-year.

Meanwhile, nationally, home construction is only down about two per cent if looking at the total monthly seasonally-adjusted annual rate of starts, 0.8 per cent if looking at the six-month trend of this seasonally-adjusted rate, and actually up by 9 per cent if looking at the actual number of new units that started to come to fruition in towns and cities with 10,000 residents or more.

So, T.O. is lagging, and hard.

At the same time, though, the city is seeing little to no interest in condos, which doesn't give developers much reason (or pre-construction funds) to get projects moving.

There are presently greater than a jaw-dropping 32,000 active residential real estate listings in the GTA, the bulk of them condos, many in the city proper — a bleak record when the average property is sitting up for sale for weeks more than it would have a few years ago.

The region has also reached the point of having the largest disparity between supply and demand for real estate than it has ever seen, with sales dropping off a cliff while supply keeps growing, often by double-digit percentages year-over-year. This is the case for all housing types but townhomes in the 416, but especially for new and resale condo units.

As real estate agency Wahi wrote in its own national report on the same day that the CMHC stats were released, "the beleaguered condo segment, especially in the Toronto and Vancouver markets, is one of the main drivers of the overall cooling at a national level."

It noted that Canadian condo values fell seven per cent in May, which is "tied for the largest year-over-year decline in condo values since the RPS-Wahi House Price Index was established in 2005" and that "April and May of 2023, towards the tail end of the Bank of Canada's last rate-hiking cycle, were the only other times that condo values fell at this rate."

Though lending rates have been falling, the lingering effects of those 2023 rate hikes amid a prolonged cost of living crisis are still impacting things.

As Cameron Forbes, Manager of RE/MAX Realtron Realty Inc. told blogTO in response to these latest numbers from CMHC and Wahi, the hit of reduced affordability that those rates brought has helped spurr the now-vast supply of homes available for sale in the Toronto area.

"More recently, demand has been curtailed due to the short-term uncertainty associated with the actual and threatened Trump tariffs," he added over email.

 "Having said that, affordability continues to improve as interest rates drop further due to the continued dampening of inflation, and prices continue to adjust to the short-term increase in supply and reduction in demand.  The market will continue to respond to the overall economic and environmental situation."