The Greater Toronto Area condo market is facing what could become one of the longest corrections in its history. According to forecasts from TD Economics, the downturn may continue until 2028, putting it close to the length of the severe condo market decline experienced in the late 1980s and early 1990s.
Toronto condo prices are now in their fourth consecutive year of decline. In the first quarter of 2026, benchmark condo prices fell approximately 10 per cent year-over-year, marking the sharpest annual decline since the correction began in 2023.
At the same time, condo sales remain significantly below historical averages, reflecting weaker buyer demand and ongoing market uncertainty.
Oversupply Continues to Pressure the Market
One of the primary factors behind the prolonged downturn is excess supply.
Over the past decade, Toronto experienced a major condo construction boom driven largely by investor demand and expectations of continued population growth. Many of those projects are now reaching completion at a time when market demand has weakened considerably.
As inventory levels remain elevated, prices continue to face downward pressure.
Investor Demand Has Weakened
The condo market has also been impacted by changing investment conditions.
Higher interest rates have increased mortgage carrying costs, while slower rent growth and rising operating expenses have reduced profitability for many investors. As a result, some investors are choosing to delay purchases or exit the market entirely.
This decline in investor activity has contributed to slower sales and reduced demand across the condo sector.
Buyers Remain Cautious
Economic uncertainty and affordability challenges are also influencing buyer behaviour.
Many prospective buyers are waiting on the sidelines in anticipation of further price declines. Even as prices soften, higher borrowing costs continue to affect affordability and purchasing power.
According to TD Economics, condo prices are expected to decline further through 2026, with a modest recovery potentially beginning in 2028.
Long-Term Market Implications
A prolonged condo correction has broader implications for the Greater Toronto Area economy. The condo sector plays an important role in:
- housing supply,
- construction activity,
- employment,
- and the rental market.
While the current slowdown presents challenges for developers and investors, it may also create opportunities for future buyers entering the market at lower price levels.
Conclusion
Toronto’s condo market is undergoing a significant adjustment after years of rapid growth and investor-driven activity. While the market is expected to stabilize over time, current forecasts suggest the recovery process could take several more years.
For buyers, sellers, and investors, the coming period will likely require patience, careful planning, and close attention to changing market conditions.