Short-Term and Long-Term CMHC Housing Predictions
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The Canada Mortgage and Housing Corporation (CMHC), which is the Canadian government’s housing agency, recently published its data-driven market overview and predicted the future of condos in the nation’s two most expensive cities (and largest high-rise markets): Toronto and Vancouver.
Let’s dive into the CMHC’s official condo market findings for Toronto.
Short-Term Condo Market Overview
Sales and Pricing
Condo sales in Toronto declined a shocking 75%, dropping from the post-pandemic peak at the beginning of 2022 to the first quarter of 2025. In the same span of time, condo prices dropped 13.4% in Toronto, counteracting the meteoric double-digit rise that characterized the market from 2020 to 2022. In a way, today’s market valley can be seen as a natural and necessary cycle correction of the market peak a few years ago.
Inventory
Record-high condo completions in 2024 added thousands of units to Toronto’s housing stock, which is part of the reason we are witnessing record-high inventory currently. This year, we are expected to hit a new record of over 30,000 completed units. Based on today’s lethargic sales, our current housing stock would take a staggering 58 months to sell if no new inventory were added.
Buyers and Investors
Investors have also been frightened off by depressed home values and higher carrying costs. Some have borne the weight of 6% capital losses from condos that closed in 2024. In Toronto, carrying costs have increased by 24% while average rents have increased by 15%, resulting in negative cash flow in many cases. Due to the market downturn, many potential buyers and investors have been deterred from entering the fray.
Developers
As a result, condo developers have also struggled to advance their projects, causing them to convert future condos into rentals or cancel stalled developments altogether. More than half of pre-construction units in Vancouver were left unsold in the last quarter of 2024 and the first quarter of 2025, and projects typically need to be 70% presold in order to begin construction.
Long-Term Condo Market Outlook
Sinking condo prices, inflated inventory, and desperate developers may be the perfect environment for a buyer’s market, but these factors will result in a major shift in a few short years. The CMHC warns that “present relief for buyers [comes] at the cost of discouraging new construction and fueling underlying housing shortages in the future.”
With very few projects being developed or starting construction this year, projections indicate that fewer than 10,000 condo units will be completed in 2028 and an even more dire 2,000 units will be finished in 2029. Rentals will become the norm in Toronto instead, making it more difficult and competitive for first-time home buyers to become homeowners in the future.
With vanishing inventory leading to a housing crisis on the horizon, home prices are expected to skyrocket again. Demand will outpace supply as the country grows (immigration will continue to add 1% of the population each year), and young Canadians will naturally continue to want to move out to become independent, while retirees will be looking to downsize.
What This Means For Buyers and Investors Now
While the news for the last two years has seemed dire, the CMHC points out that the short-term market downturn will make way for a long-term turnaround. Therefore, today’s buyers and investors have a brief window of opportunity to prepare for the future.
With many attractive short-term benefits — low home prices, lots of selection, and added negotiating power — first-time home buyers can and should make their move to join the housing ladder before the coming switch.
Additionally, many government-backed incentives, including the newly announced First-Time Home Buyer’s GST Rebate, make pre-construction and new homes an especially affordable option. Combining all the tax benefits offered on new homes, first-time home buyers can save up to $84,000 when purchasing now!
Current homeowners and investors, too, have something to look forward to in the future, as the properties they hold now won’t be sinking forever. If they can hold onto overpriced and undervalued homes and ride out the choppy waves, they can expect to see their returns in the next few years. The longer they hold onto their properties, the more their value will appreciate.
The market is headed towards a significant shift, and if you don’t buy this year, you won’t be able to take advantage of coming property value increases—in fact, you might be priced out! So, don’t miss this opportunity. Call Stan at 604-202-1412.
