The reality is that Canada has a deeply embedded housing crisis, impacting low- and middle-income households. Today, this problem is the number one concern of government executives at every level. That boom in immigration has, in turn, created record population growth and fueled extraordinary housing demand. Alarm bells are ringing. Toronto’s condo market is undergoing a dramatic collapse. It’s the worst it has been since the 1980s, leading to thousands of vacant and unsold units.
As Shaun Hildebrand, president of Urbanation, points out, one of the biggest reasons for the market crash. Further, he asserts that this decline is mostly due to the oversupply of condominiums. He defines the market as having “got way too ahead of itself,” leading to a large accumulation of unsold inventory. In the last two years alone, thousands of condos were constructed in response to the rapid population growth, yet many remain unoccupied.
The picture these last few years have created is an alarming one for hopeful buyers and investors. Before the pandemic, micro-condos sold for more than $500,000. Today, you can barely find them for resale anywhere under C$300,000 — and that’s in downtown Toronto. This rapid decrease in price serves as an indication of the larger issues at play in the market as demand keeps falling off a cliff. As Hildebrand cautions, what looks like a great price today will become a fleeting moment as the market self-corrects.
With the condo market plummeting, at least 18 projects have been canceled in Toronto in the last year. Experts say that is a trend that will only continue to worsen. That flow of small units jumped a major track in 2016. Currently, these units represent 38% of all new units under construction in Toronto, creating a very high market saturation. Before this latest boom, small units had only been 7.7% of condos produced.
Residents Maggie Hildebrand’s situation provides an example of the changing realities for Toronto residents as housing becomes more elusive. She had previously been paying C$ 2,200 per month for her micro-condo. Now, she’s living in a much larger, 700-square-foot apartment in an older building with a backyard—and it costs her C$200 more. This trend not only highlights how increasing costs and shifting priorities are playing a role in impacting tenants’ decisions.
Late last month, Hildebrand shone a spotlight on a desperate moment in the condo market. As he puts it, “It’s a race to the bottom selling these things. Investors now own three-quarters of the condos under 600 square feet in Toronto. This trend offers a real danger for those of us who are so deeply committed to these smaller units. The oversupply, on top of already-declining demand, presents enormous headwinds for current owners and future investors, no matter how you slice it.
The local home situation has become as challenging and complicated. In fact, last year Canada experienced its biggest population drop in 2025 since the 1940s, mostly due to new immigration/emigration caps. This aspect, among others, has played a significant role in changing market dynamics causing there to be less demand for brand new condos.
The Canadian government has taken steps to address the housing affordability crisis, including a freeze on foreign home buyers implemented in 2022. This measure was intended to relieve some of the pressure on a strained housing market. It might have backfired by creating a slump in the condo market as investors lose interest.
Prime Minister Mark Carney has committed to seeing double the number of new homes constructed in the next 10 years. This is a very ambitious goal but it shows the seriousness and urgency to address Canada’s housing crisis. The question is, will these initiatives make a difference now – on the existing condo market?
Opportunity and uncertainly await potential buyers in this current landscape. The downturn aside, experts say they will still invest if they can find attractive deals on a price per square foot basis. Cruz Alex, smart pricing will always have enough interest from buyers who are searching for a deal in a decreasing price environment.